Unfortunately the TQQQ Trading Strategy suffered another loss this week. It is weeks why I say that only a small percentage of a portfolio is used to trade the strategy. That is just good money management.
Trading is a tough game. When losing trades happen, emotions show up a sense of dread, regret, and fear come into play. It is what a trader does with those emotions that matter the most.
When the Red Bar signal showed up on Tuesday, pretty quick after getting in the trade, even I had thoughts of doubt in the system and fear. I saw that this was most likely going to be a losing trade again.
However, I thought back to the backtested data and realized that I do not know more than the market. All I have is an understanding of past patterns and what has been successful. Does that mean that it is going to be successful all the time going forward? No. But is does help with the decision to trade unemotionally and trade the system.
Even dividend investors need to trade a system. Buy dividend-growth stocks and don’t sell those stocks when the market inevitably goes through a rough patch. That requires trading according to a system – even a simple buy and hold one – without letting emotions like fear or greed get in the way.
I will stress every time that when trading the TQQQ Trading Strategy, no more that 5% should be allocated to the strategy. Diversification is the only free lunch, and that goes with using a diversified set of strategies in your portfolio.
Trading Strategy Analysis
In the most recent trade, a Green Bar signal was generated on September 23rd. That meant that 25% of the capital allocated to the strategy was used to buy TQQQ at $138.72 the next day. On September 28th, a Red Bar signal appeared which meant we sold TQQQ on the 29th at the open for a price of $127.78. That is a loss of $10.94 per share or -7.76%.
TQQQ TRADING STRATEGY PERFORMANCE SINCE FEB 3, 2020
The tracking portfolio for the site started trading on February 3, 2020. Even with this losing trade, the system has turned a $25,000 allocation into $50,135. That is an annual return of 52.27% or a net profit of 100.54%.
Comparing an equal investment into the S&P500 (SPY), that portfolio would have turned $25,000 into only $33,952. That is an annual return of 21.42%.
