Tuesday, October 21, 2008
Bad Market! Time-Out
My newly created Black Swan Rule went into effect for all my trading setups this week. As I posted last week here, I've adopted this new risk-control rule in order to limit losses when markets are acting out of sorts in relation to the historic data. The rule is this: in any four-week period, if my portfolio experiences a loss greater than six percent (calculated using the weekly close values), I will close all trades on the next weekly open and cease trading new signals for four weeks. Think of it as a time-out for a badly behaving market. That was the case as of Friday's close. So my rule is to close all current trades and cease trading new signals. I will resume following new signals with the Commitments of Traders report for the week of Nov. 11. I will still keep updating my latest signals table and posting as usual during this time. Good luck this week.