With the release of the TQQQ Trading Strategy eBook, I will be regularly writing about the performance of the system.
My goal is to be very transparent about the performance of the system. I will cover the winning trades, losing trades, and overall performance of the system.
It would be very easy for me to simply show the backtested results since May 2010, when TQQQ started trading. However, I want to show the performance of the system going forward so you can decide if it is a system you would like to trade on your own.
Remember what all the investing industry lawyers say: Past Performance Is No Guarantee of Future Results! I want you to use the same scrutiny on this strategy as you do on all other trading strategies. That is why I want to show you as close to real-time performance as I can.
I am going to track performance of the system starting from February 3rd, 2020. By starting with this date, the performance will include the huge downturn in the market as as result of COVID-19.
In February and March of 2020, the TQQQ dropped approximately -72%. If you were a buy and hold investor of TQQQ that would have been brutal to live through. The system was in cash for that drop.
It would be dishonest of me to not include this period and simply start tracking the performance of the system starting at the bottom of the crash. I want to be totally transparent with potential users of the TQQQ Trading Strategy, so including this recent market crash is very important.
TQQQ Trading Strategy Simulation
I want to be clear that what I am going to show on this blog is a simulation of the results a trader would have achieved by trading the system. Personally, I trade this system, so my own results are very close to what the simulation shows.
Amibroker will be used to show the in-sample results of trading the system. Amibroker allows me to show exactly what happens with each trade, including the associated equity chart (growth of portfolio value), drawdowns, and trading statistics.
Here are the parameters of the in-sample trading simulation:
I chose to start with a portfolio value of $25,000 to make the simulation more realistic to a higher population of traders. The system can be traded with much less – perhaps as little as little as $1,000.
However, I wanted to make sure I showed results with a higher dollar value on the line. This way you will be able to see what is possible from the system, both in terms of winning trades and losing trades.
Performance Since February 3, 2020
As mentioned on this site, I use Amibroker to do my backtesting. With Amibroker I can easily backtest the performance of the system, and I can also watch how it performs in an in-sample test.
This in-sample test started on February 3rd, 2020.
Below is the Amibroker equity chart that shows the TQQQ Trading Strategy system performance from February 3, 2020 to November 9, 2020.
As you can see the portfolio value for the TQQQ Trading Strategy as of November 9th is $45,759 (remember the portfolio started with $25,000). That is a net profit of 83%.
The yellow portion of the chart is the TQQQ Trading Strategy, and the blue line is what an investment in the S&P500 (the SPX is the S&P500 index) would have been. You can see that huge drop in March when COVID-19 hit.
The TQQQ Trading Strategy was safely in cash during that period.
Another important chart is the drawdown chart. In the chart below, you can see that the strategy had a max drawdown of -8.7%. That does not mean that the strategy lost 8.7%. It means that at sometime during the period between February and November, the strategy was down an unrealized amount equal to -8.7%. That has been a manageable drawdown to live with.
As a comparison, for buy and hold investors of SPY (ticker that tracks the performance of the S&P500), here is the drawdown chart for that buy and hold strategy. March was a brutal month!
Trades Since February 3, 2020
On the TradingView chart below, you can see each of the buys and sells that were generated.
The buy signals are the Green Bars at the bottom of the chart. The sell signals are the Red Bars. I included green and red arrows to show the actual trading days.
The buys and sells occur at the open the day following a Green or Red bar signal. In March, the system started to buy TQQQ, and made four purchases as the market declined and then started to recover.
To learn more about the rules and which signals to take (the system does not take all the signals), please consider buying a copy of the TQQQ Trading Strategy eBook.
Summary of TQQQ Trading Strategy Performance
The system has performed will since February 3rd, 2020. I will continue to update the performance so please consider subscribing to the email that will let you know when new posts are added . In fact, on November 10th the system is going to sell the current position so I will update that when it happens.
In the meantime, here is a summary of the results to date:
|Metric||TQQQ Trading Strategy||S&P500|
|Net Profit %||83.04%||9.27%|
|Annual Return %||119.91%||12.26%|
|No. of Trades||8||1|
|Winning Trades (%)||6 (75%)||1 (100%)|
|Losing Trades (%)||2 (25%)||0 (0%)|
|Max. System % Drawdown||-8.73%||-33.93%|
If you want to learn more and potentially trade the TQQQ Trading Strategy yourself, then consider purchasing the TQQQ Trading Strategy eBook. The eBook covers all the details including the Pine code to set up the TradingView chart to give you the trading signals.