Tuesday, May 13, 2014

IPM Trade Matrix - Trade 10 (Part 2)

Today's market action was more of a consolidation. Trend is up & looks like the market is ripe for another rally. At least till IPM turn window. According to latest compilation of the lessons learned, IPM trade matrix can now adapt to following situations:

  1. Weekly IPM Influence Window
  2. Handling of situation if market rallies or declines below IPM turn window inflection level.
  3. Handling of situation when two IPM turn windows are close to each other. This situation was seen in Nov 2013, Aug 2012, April 2013 etc.
  4. Enhanced trailing stops.
Next few trades will be interesting.

IPM Trade Matrix 2014 Trades

TRADE - 1: (Long) = +2.6%
TRADE - 2: (Short) = +9.3%
TRADE - 3: (Long) - Non IPM Trade Matrix trade -0.2%
TRADE - 4: (Short - 1/31/14 to 2/5/14) +7.25% 
TRADE - 5: (Long - 2/11/14 to 2/22/14) = +9.8%
TRADE - 6: (Long - 2/22/14 to 3/07/14) = +11.7%
TRADE - 7: (Long - 3/18/14 to 4/11/14) = -18.1%
TRADE - 8: (Short - 4/23/14 to 4/28/14) +11%
TRADE - 9: (Short - 4/30/14 to 5/12/14) +0.3%

TRADE - 10: 
Bought TNA at 68.5. 

When: IPM Model Bottom window - Date info e-mailed to subscribers
Next IPM Turn Window: Top
Trigger: SP500 = 1879
Supporting Indicators: 8/4 Test negated. Uptrend reinstated.  

Profit Target 1: 1930
Profit Target 2: -

Stop: SP500 = 1867, DJIA = 16500 and GDOW = 2513.
Trailing Stops: - 
Typical IPM Trade Matrix Risk: -
Actual IPM Trade Matrix Risk: - (Entry = 1879 , Exit = 1867 , Risk = 0.6% )
Risk Reason: Risk is high because we are outside of the IPM turn window. This makes it difficult to time the turn exactly.

Applicable Rule: 
  1. Sell (1/2) at profit objective 1 to minimize draw-down
  2. No Trade in opposite direction
  3. Do not go long or short without trigger to prevent losses by market moving against you.  
  4. Observe stop-losses to minimize draw-downs
  5. If stops are hit ==> Wait on the sidelines for new opportunity near IPM Turn window

Note: IPM Trade Matrix Trades will be posted in the first half of 2014. This is an experiment to understand and enhance the capabilities of this Matrix.

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  1. Hi, Your trading looks interesting, and thanks for sharing.
    One question I have is why do you trade using small cap etf TNA when your analysis appears to be based on major market indices such as SP500 and DJIA? Wouldn't it be better to use something like SPXL and SPXS as small caps often diverge from large caps performance, as seen recently.

  2. Russell is more sensitive to movements. I agree that Russell can be a not so good proxy at turn points. Will research the other etfs. Thanks.

  3. Windows are out of whack? went short and market went up...going long and the market is going down...what's wrong?

  4. I agree. It is kind of crazy. This window does not expire till later. Market should bottom in current window.

    Every bad trade results in diminished confidence, but one should keep in mind that last 2 trades taught us very good lessons. I think these lessons were invaluable and worth the anxiety. Now, lets see how current IPM model turn window unfolds. We will add longs, as market approaches low risk levels.


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