Bond, James Bond

Closed out my short bond position today with a profit of $16,313, using my Highlow Breakout system. As you can see from the graph below, I shorted at 135.0000 on 5th January 2009, and exited the trade at 118.6785 on the 1st June 2009. This is quite possibly the last trade of my first set of trading systems that I’ve been using this year.

Snapshot 2009-06-01 02-48-32

Easily, this was my best trade of the year, the one that earned the majority of my profits. However, I need to remind myself that this might have been pure luck. The Highlow breakout system is flawed, as I’ve learnt from trading it this past year. For example, if the low had broken through the threshold level (as shown by the horizontal line) but not the high, and if the price continued to climb upward after that, the system would not trigger a trade even if a trend is clearly underway. Furthermore, this gave the system a “profit target” to meet. The price, however, could have approached the target steadily before turning around and giving back most or all of the profits without ever hitting the target.

More research is warranted on this asset market. I like my system, but I’m going to have to be able to find a way to incorporate smaller stop-losses in it, as well as an indication of how I can take profit. Interest rates are supposedly the easiest to trade trend-following systems with, so perhaps I might look into that using Neuroshell.

As for now, I’ll take my profits and reconsolidate. I’d give myself a tiny pat on the back, but I wouldn’t let my ego get too big over it. I’ll start serious research on Tuesday.

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