Introducing the "Money Every Week" system

Trading and Markets
1

The “Money Every Week” strategy is a day-trading system. As specified in the description, this system will only trade the most liquid MICRO (and e-mini) Futures contracts available in the market.

Launched on May 6, 2019, these MICRO futures contracts became extremely popular right from the start, thanks to their reduced contract sizes, tick values, and margin requirements, as this short video from the CME website explains: https://www.cmegroup.com/education/courses/micro-e-mini-futures/micro-e-mini-futures-products-overview.html

The system will mainly day-trade the micro S&P 500, Nasdaq 100, Dow Jones, Russell 2000 and a few liquid commodities such as the micro Gold, Crude Oil and Natural Gas.

It will use trend AND counter-trend techniques to find trading opportunities each day.

As you probably know, trend-following (and buy-only) systems make tons of money as long as the (up)trend is still strong, but they get crushed and start losing money fast as soon as the market switches to reversal mode, that’s why this system has been designed to profit from trends AND reversals.

The maximum loss per trade will be set to 3% (starting next week, July 4, 2022), and each new trade will have its own stop loss in place, as soon as the position is initiated. The trading results will be posted in this forum at the end of each week.

That said, did the system make any money during its first week (week ending July 1, 2022)?

Yes, starting with only $5,000 the “Money Every Week” system has already generated $1,276 in profits (subscription fee, auto-trade fee and commissions included).

Take care for now and happy trading.

2

Is that a real 32% drawdown in one week or a C2 error?

Any estimate on how big you expect overall drawdowns to be?

3

Hi InteractiveAssets:

Yes the 32% drawdown is real, due to a terrible mistake on my part: one of my trading parameters was incorrectly set to 17 (instead of 71), by error, so the system started generating tons of false buy/sell signals with large stops!

I was finally able to find this serious bug and the problem has been corrected, so everything is under control now.

As mentioned above, now that the problem has been fixed, the maximum loss cannot exceed 3% of trading capital.

And while no Trade Leader can guarantee anything, I am more than confident that this accidental drawdown will be the last and never be exceeded in the future.

Also note that even with the wrong parameter, the system was still able to turn a profit during the first week.

Thank you for your interest.

4

A few words about drawdowns.

Even excellent systems can experience a sudden drawdown, for all sorts of reasons: the trader used the wrong settings/parameters by mistake, or the system is temporarily but seriously out of sync with the current market conditions (extremely choppy market for instance).

Some systems can experience this sudden drawdown almost immediately (say 30% or more). For some other it can take months or years to experience the same exact drawdown.

But make no mistake, a drawdown is still a drawdown, no matter how long it takes to develop.

Here is a real life example. Go the LeaderBoard Leading Trading Strategies and you will notice that the system at the top (as of today July 3, 2022) experienced a sudden 68.8% drawdown in less than 2 weeks, just 4 weeks after it started.

And yet that system quickly recovered and is now averaging 120% a year, while the S&P 500 went nowhere but DOWN, since that strategy started.

And this is just one example.

Bottom line: Systems with “slow” drawdowns are no better than systems with sudden and/or immediate drawdowns, although they appear “safer” at first glance.

Just something to keep in mind.

5

Thanks you for the detailed answer. Do you know what the maximum leverage is that you expect to use?

1 Like
6

You are welcome.

Good question.

The maximum number of contracts that the system will buy and sell depends on the trading capital available, the margin money required to open 1 micro position (say S&P 500), the size of the stop in points, and the maximum loss allowed per trade.

For instance if:
Capital = $6000
Margin for 1 micro S&P 500 contract = $600
Stop = 36 points
Maximum loss allowed = 3% of capital ($180)

Then the system can open 1 micro S&P 500 contract. If the micro S&P 500 moves 36 points against me I lose $180 of my capital (5 X 36 = $180), which represents a 3% loss, and the position is immediately and automatically liquidated.

If the stop is only 18 points then the system can trade 2 micro contracts, and so forth.

No matter how many contracts I buy or sell, the maximum loss is always 3% (or less in most cases).

But wait, what happens if the stop is greater than 36 points, in this micro S&P 500 example ?
The answer is simple : the system will NOT trade the S&P 500 that day, simple as that. Instead, it will start looking for a safer trading opportunity (Nasdaq, Dow Jones, Gold, etc…)

Keeping losses small and manageable, that’s the highest priority of this system.

7

Can you help me understand what you believe would happen if you were caught on the wrong side of a trade during an overnight gap.

For example, on March 3rd, 2020 there was an overnight gap of about 3% if I am not mistaken in micro S&P 500 futures. If you were using 5X leverage would that result in the 3% stop loss triggering at 15%? I realize you may not have been long that day, but we never know when we will be caught on the wrong side of a trade. So, I just want to understand what you think will happen during an overnight gap up or down that moves against you.

1 Like
8

It won’t happen, the “Money Every Week” system trades from 9 AM to 5 PM (New York time), to avoid any potential gap risk (a few and very brief scalp trades could also take place during the Asian session but these are rare).

Most losing systems, including losing Collective2 systems, lose because they allow a small loss to turn into a BIG, HUGE loss, simple as that.

Again, the highest priority of this system is to keep the inevitable losses under control.

PS: I could not find any “overnight” gap on March 3rd, 2020 on the S&P 500 by the way.

9

Gotcha, I didn’t realize it was day trading only. I must have had the date wrong or something.

1 Like
10

No problem my friend, it is always a pleasure reading your comments.

As a side note I must add that June, July and August are the worst months to trade!

These summer months always generate tons of phony breakouts and plenty of fake reversals that go nowhere.

11

Can you help me understand why C2 shows a 12% drawdown on one trade in light of the 3% maximum stop loss requirement your investment plan has? I am referring to the trade opened 7/6/22 14:07 ET and was closed about 5 minutes later.

15

Due to all the trading mistakes from last week this system is now beyond repair.
I will make a few adjustments and create a new version in a couple of weeks or so.
As a courtesy the current SIM followers will be able to subscribe for a full month for free.

Thank you for stopping by and see you soon.