Highlighted Trades - 04/03/2024
Today was more active than usual for our system - it made 20 trades in total. These included 8 longs and 12 shorts, across 8 unique tickers.
Our most profitable trade of the day was a short on INCY. Our initial entry here made us 0.19%. It’s unfortunate that we lost most of those returns on a bad re-entry. I’m quite fond of our initial entry, but I don’t like our re-entry nearly as much. The reason is something we’ve seen previously: a simple lack of directional momentum. During our initial entry, there’s solid bearish momentum going into the position, but by the time we make our first exit, that momentum has evaporated, leaving the re-entry looking much less appealing.
Our worst-performing trade of the day was a series of positions on NI. In total, we lost 0.38% across 1 initial entry and 2 re-entries. I don’t want to call this chart “choppy”, but it’s highly erratic - and the MACD differentials back me up on that. Signals all look solid enough on our initial entry - we can consider that a position that just didn’t work out. But shortly after our first exit, the MACD differential goes notably positive. MACD is negative again by the time our system re-enters, but given how erratic the MACD is, I wouldn’t have trusted that. It shows that, by then, the bearish momentum that made our initial entry appealing is largely no longer present.
Overall, I don’t think our initial entry was easily avoidable. That was a trade that we just got unlucky on. But given how inconsistent that same momentum is after our first entry, I think both of our re-entries were fairly avoidable here.
Our other big loser today was HCA - we lost 0.35% over the course of 4 entries - and my feelings on it are very similar to my feelings on our NI positions. The initial entry is very strong-looking, although it doesn’t work out. By the time we get to entries #3 and #4, the MACD differential has gone from positive to almost completely flat, only briefly being above 0. Once again, there’s an absence of directional momentum. While that’s easy to see visually, it’s difficult to evaluate algorithmically. It’s one of those red flags that’s significantly easier for a human trader to evaluate.
Overall, today was a weaker day for our system. Some days are always going to yield better performance than others, but we’re working to improve things all the time.
That’s all I have for you tonight - thank you for reading and happy trading!
