All of our trading systems are built with three goals in mind:
OUTPERFORM BUY AND HOLD
Everyone can passively index into the S&P500 or 60/40 portfolio for no cost. If we're going to actively trade then we need to do better than that.
DO IT WITH LOWER DRAWDOWNS
The worst part about buy & hold indexing is the 60%+ drawdowns! To us, that is unacceptable, which is why our systems protect against the downside.
SPEND LESS THAN 10 MINUTES PER DAY TRADING
No intraday babysitting required. Trade them quickly any time after the market closes.
In order to maximize our chances of achieving these goals each and every year, we're going to want to trade multiple uncorrelated trading systems. Let's explore why.
They complement one another
Lamorak operates on a short-term time horizon.
Merlin operates on an intermediate-term time horizon.
Both systems generate high winning percentage over their respective timeframes and carry different exposures across market environments.
Lamorak Win Rate
Merlin Win Rate
Better together: Smoothing out the lows
Let's look at some actual returns to illustrate an important point:
| Month | Merlin | Lamorak | 50/50 Blend |
|---|---|---|---|
| November 2016 | +9.12% | -3.75% | +2.68% |
| March 2020 | -7.38% | +12.48% | +2.55% |
| September 2020 | -1.32% | +7.99% | +3.33% |
Notice in each of these months, we saw one trading system perform exceptionally well while the other trading system wasn’t so strong. Of course, if you were "all in" on the strong system, you were very happy, but the point is, you will never know which is going to be strong ahead of time, so the optimal strategy is to allocate to both.
By trading both systems, you can see in all of these cases, the 50/50 blend produces a more even keeled return stream and prevents the extreme ups and downs.
Read more: Trade Risk Index
Diversify your portfolio and improve risk-adjusted returns when you allocate to both Merlin and Lamorak
- Reduce your maximum drawdowns
- Enjoy more positive performing months
- Reduce your portfolio volatility
- Improve your Sharpe ratio
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- 2 unique trading systems
- Long and short signals
- Member-only pages
- Daily trade reports
- Position size calculator
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- 2 unique trading systems
- Long and short signals
- Member-only pages
- Daily trade reports
- Position size calculator
- BONUS: TR150 watchlist
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