I took a hiatus from my daily post yesterday so that I could evaluate the latest trades in my High-Probability, Mean-Reversion Strategy.
I closed out my Silver (SLV), Russell 2000 (IWM) and S&p 500 (SPY) positions during the last two trading sessions for an nice overall return.
Both the SLV (+19.8%) and IWM (+21.3%) trade were profitable. However, the SPY trade did not experience the same good fortune. The strategy experienced its first loss since it was initiated back in November as SPY lost 20.2%.
The High-Probability, Mean-Reversion strategy is now up 34.6% since it was initiated six months ago with a win ratio of 92.3%. So far the strategy is up 14.2% for the month April.
Obviously I am pleased with the win ratio (92.3%) since I initiated the High-Probability, Mean-Reversion strategy, but I am a realist. I realize there is no holy grail in trading. One thing that I do know for certain is that I have a unique, concrete and most important, profitable options trading strategy that makes the world of sense to me and I trade it to make money over the long-term. Furthermore, I realize that the less I trade, the better my strategy will perform over the long run: and the long run is what matters. Hopefully, I can continue my winning ways and extend the gains going forward. Remember, this is a marathon and not a sprint.
The key to my strategy is patience. Waiting for the appropriate scenario to recommend a trade with a high probability of success is what makes my strategy a success.
Opportunities are made up easier than losses. If you let a few pass you by don’t dwell on what could have been. There will always be more opportunities around the corner. Again, this a marathon not a sprint.
I will continue to patiently wait for opportunities to arise and only trade scenarios where the probability is overwhelmingly on my side.
Couple this approach with sound risk management and you can see why I have been able to beat the major benchmarks by a substantial margin.
Current State of the Market
There are several oversold ETFs listed below and a few of them are currently on my short-term watchlist. However, none of ETFs have yet to push into an extreme oversold state, but another day of declines will surely create a few extreme states. If so, I could be making yet another trade in the strategy.
As always, if a trade does come to fruition, I will let my paid newsletter subscribers know in real-time. Stay tuned!
Have a great night!
Short-Term High-Probability, Mean-Reversion Indicator – as of close 4/13/11