The Holy Grail Trading Environment

The $SPY is less than 1% away from all time highs and this is roughly day 10 of this latest leg and trend higher (using 5/24 as the breakout day 1).

We’ve talked about this changing landscape and newfound momentum in our market recaps and blog posts since that date, so hopefully this all doesn’t come as a surprise.

What I want to highlight is a bit of data based on our recent trades.

8 of our last 9 closed trades have been profitable (89% win rate)

Additionally, we have 9 open trades on right now, 4 of which we’ve already scaled profits off of and are extremely unlikely to turn into losers.

So why is this important, beyond me just bragging about our latest results?

These statistics are important because they represent outlier results that cannot last.

I know our historical win rate is closer to 50/50, and when I start seeing a long series of trades working at this win rate I do two things.

  • Don’t stop taking signals, this is the holy grail environment (otherwise known as high momentum) — it’s the time to step on the gas and make money.
  • Get mentally prepared for the holy grail environment to end when momentum inevitably slows.

Will momentum peak today? tomorrow? next week? In two weeks? I have no idea.

But I know once it does, our win rate will start to reflect those conditions and ideally we will dial back our aggression accordingly.

Your own trading results can provide pretty reliable context about the market environment, in fact, if I only had my results and was blind to the chart of the SPY I have no doubt I could deduce if we were in an uptrend, range, or downtrend.

I hope this post gives you something to think about.

If you would like to receive market analysis delivered to you on a daily basis as well as all of our trade alerts in real-time then learn more about our membership here.



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Evan Medeiros

Evan is the founder of the Trade Risk. With 25 years of coding experience and a B.S. in computer science, Evan brings a systematic discipline to investing in the stock market.

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