The system algorithm is influenced by the principles of trend following system. More specifically, it is a breakout system and is used to take a position within a trend’s early stages.

The trading cycle begins when a trade position is taken in anticipation of a major price movement, usually happen during a period of expansion in volatility.

Under this trading strategy the algorithm will define the most relevant support and resistance (S&R) price levels, taking long and short positions when prices breaks the resistant level and below the support level respectively. The positions of the trades are then given sufficient time to develop.

Time is an important factor in breakout and trend trading. For price range in the vicinity of sensitive price point where large position are taken i.e. support and resistant levels, the bulls and the bears will take time to challenge each other determining the eventual trend.

The eventual outcome of any challenges is categorised into two main category.

The S&R is breach and a new trend emerge. At this stage the algorithm has already placed at least one position at the early stages of the trend and already profitable. Usually there will be multiple position taken as a new impeding trend will break multiple S&R. This forms a multiplying effect on our position rewarding the system with profits that is more rewarding when compared to trading within the range of the S&R. Statistically it constitute 35% to 40% of the total trade taken by the system.

The S&R is breach but price move back to prior range. At this stage the algorithm will be able to recognise that the attempt to from a new trend is unsuccessful and will exit the trade in the earliest time possible. This will constitute up to 60% to 65% of the total trades taken by the system. To note, the losses incurred is 60% of a profitable trade. In another words, for every $1 lose incurred the profit made is $1.67.

It is clear that the system has a less than par accuracy. In fact 60% of the time investors will experience a losing trade. However, be assured that when the trend is on your side profits will come in multiples of what you paid in losses. An investor in trend trading usually exercise patient and wait for the profit to come. Thus capital management must be design to ensure such waiting.

Breakout System Investment Statistics

Total Gross Growth

Total Gross Growth

587.31%

Strategy Inception Date

Strategy Inception Date

2009 Feb

Max Historical Draw Down

Max Historical Draw Down

-11.39%

Invested Capital in USD$

Invested Capital in USD$

$10,000.00

Breakout System Cumulative Gross Return

Monthly Gain by Year

2019

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

3.155%

-4.926%

15.319%

-2.619%

11.836%

17.857%

-13.068%

8.755%

3.958%

-16.012%
2018

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

6.433%

7.359%

-1.436%

-3.244%

-14.056%

7.251%

-1.997%

3.421%

-11.123%

30.245%

-1.982%

6.922%

2017

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

5.758%

0.070%

5.370%

1.290%

8.344%

17.499%

12.491%

1.099%

17.445%

-5.177%

-10.590%

17.297%

2016

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

-3.226%

9.832%

3.829%

15.812%

7.637%

16.477%

9.907%

0.431%

-1.101%

7.306%

8.353%

3.097%

2015

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

5.137%

-2.704%

-10.071%

10.237%

2.350%

-6.019%

0.079%

-9.323%

24.170%

-5.700%

11.156%

12.005%

2014

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

-1.615%

-0.529%

7.975%

19.026%

14.824%

13.556%

9.070%

10.787%

5.957%

13.607%

12.154%

-5.540%

2013

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

12.380%

0.865%

-5.467%

18.871%

1.046%

10.103%

-4.722%

7.026%

10.224%

11.896%

5.195%

13.096%

2012

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

3.903%

-4.832%

13.713%

2.419%

3.737%

14.606%

4.088%

5.541%

5.486%

5.426%

6.013%

-0.886%

2011

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

8.561%

-4.466%

3.669%

2.078%

6.040%

9.469%

0.473%

15.546%

10.407%

-2.054%

11.419%

11.068%

2010

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

0.880%

9.533%

0.971%

6.777%

0.149%

-5.112%

0.672%

-0.810%

-4.316%

3.991%

4.122%

4.216%

2009

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

-0.099%

-6.889%

6.382%

5.440%

-3.703%

7.170%

-1.321%

-2.233%

-0.019%

7.566%

10.119%

General Performance DATA

General Performance DATA

Sample porfolio: 11% Downside Risk

FORECAST

You could have

SGD $68,731.00

If you invest SGD 10,000 lumpsum for 10 years

FORECAST
If I invest a lumpsum of SGD
$$$$
for years?
Then this portfolio could
grow to

 

Market Traded

Market Traded XAU/USD

Risk subjected by the system.

There are basically two risks that the system will be subjected to:

news
A sudden or unexpected announcement of significant news.

A typical situation will be a position that is held over the weekend where international news can influence the opening of the price come Monday open. Causing a gap in price that could be against our position.
Statistically, such a situation happens/makes up 1% of all the trades taken for the past 10 years. (2009 to 2019).
Statistically, each of this situation may potentially suffer up to 5% DD. (max DD)
Statistically, such a situation in dollars terms contributes 4% of the total loss experienced by the system.

With an event of a risk happening 1% of the time coupled with manageable DD of 5% each time it happens. It is assessed that the system will be robust to handle such events demonstrated through backtesting statistic where just 4% of the total dollar loss experience by the system is from the announcement of significant news. However, it must be highlighted that the dollar loss will grow if you choose a more aggressive DD when you subscribe to our system.

An extended period of absence in volatility in the traded market.

An extended period of absence in volatility in the traded market.
An average losing trade will take up 0.3% of Capital.
Loss makes up 60% of the total trades taken
Not successful in predicting when the period of large avoid any trade because

traded market
Mitigation for Risk / Rules of Trading Break System

Trade with 15 to 25% DD at best
Stand aside for that trading week when system suffers from a DD of $50 or more. Restart trading the next week
Take early/partial profit when a period of lower than norm volatility is detected.

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