Introducing Merlin

A quantitative strategy for trading stocks and ETFs.

No one should have to navigate the markets alone.

Many greats had advisors by their side, guiding them through the tough decisions, including none other than King Arthur and his trusted counsel, Merlin.

Allow Merlin, a quantitative strategy developed by The Trade Risk, to guide you through the chaos of markets and help you profitably trade individual stocks and ETFs.

See Performance Disclosures: Equity Curve.

We built two model portfolios to showcase Merlin's track record and profitability. A Margin portfolio which allocates up to 150% invested (50% margin), and a traditional IRA portfolio, which uses no leverage.

Both portfolios take the same strategy signals, they simply position size differently. Subscribers will receive a position size calculator pre-loaded with our model portfolio defaults but you are encouraged to adjust those settings to fit your own risk tolerance and objectives.

Here are the backtested performance results for the IRA and Margin portfolios compared to our 60/40 benchmark. (see Performance Disclosures: Portfolio Statistics):

MEASUREMENTMargin PortfolioIRA Portfolio60/40 Portfolio
CAGR+19.80%+12.70%+7.19%
Top 3 Drawdowns-17.60%, -14.70%, -13.70%-12.00%, -9.90%, -9.50%-27.96%, -8.70%, -7.00%
Sharpe1.151.010.75
MAR1.131.060.26
Trades Taken976976N/A
Correlation0.670.62Benchmark

Finally! A trading strategy that can profit across changing market environments. 

Merlin's real magic is in its unique ability to toggle the strategy from its aggressive growth state into a more defensive mode during unfavorable market conditions, helping you step aside and preserve capital during high volatility periods and achieve superior risk-adjusted returns.

The following table shows backtested, followed by live returns starting November 2019, for the Margin Portfolio going back over a decade. Click on any of the links in the table to read our performance letter from that month.

See Performance Disclosures: Monthly Performance.

 JanFebMarAprMayJunJulAugSepOctNovDecYTD
2020+4.29%-8.25%-7.38%+0.73%-10.61%
20190%+0.42%-0.84%+0.77%-0.01%+2.63%+1.89%-1.57%+5.32%+1.11%+8.19%+5.42%+16.53%
2018+18.01%+0.32%-0.74%-0.75%+2.26%+0.66%+1.07%+8.22%-1.1%-7.5%0%-5.67%+14.78%
2017+7.07%+8.82%+1.09%+3.34%-4.02%+4.84%+4.28%-5.38%+4.91%-0.61%+2.10%+1.84%+28.28%
2016-6.99%-1.61%0%0%-0.10%+1.39%+5.65%+0.1%+1.88%+2.77%+9.12%+5.25%+17.45%
2015-0.38%+5.38%+0.54%-0.67%+1.42%-1.1%-2.11%-0.25%0%+2.64%-0.02%+1.13%+6.59%
2014+2.17%+5.65%+1.09%-3.83%+5.24%+8.01%+1.74%+4.49%+0.66%+1.18%+2.25%-1.52%+27.14%
2013+9.94%-0.76%+3.39%+4.77%+7.42%-1.87%+8.4%+0.56%+0.37%+5.6%+4.48%+2.95%+45.26%
2012+1.29%+1.22%+2.23%-0.49%-4.18%+4.74%+4.89%+3.4%+7.03%-1.43%-5.03%+4.96%+18.63%
2011+5.61%+4.52%-0.47%+6.88%+1.1%-7.35%-1.58%-4.63%0%+0.83%0%+0.40%+5.29%
2010+7.09%+1.31%+17.12%+10.7%-8.52%-5.35%+1.97%-0.4%+9.29%+8.28%+0.7%+2.85%+45.06%
20090%0%0%0%0%0%0%+0.37%+2.97%-2.13%+3.28%+5.06%+9.55%
2008-3.99%0%0%0%0%0%+0.75%+0.73%+1.46%0%0%0%-1.05%
2007+6.42%+1.34%+0.69%+6.72%+2.96%+3.34%-1.26%-2.35%+3.08%+2.28%+1.41%0%+24.62%
2006+0.38%-0.05%+2.57%+4.48%-4.5%-2.39%+0.79%+1.53%+1.89%+8.92%+2.54%+1.39%+17.54%

Here's how the strategy works.

Merlin is a long-only algorithm that buys retracements in momentum stocks during healthy market environments. It trades individual stocks, equity ETFs, and all signals are generated using daily closing prices.

That means no intraday screen watching is required and all orders can be placed after the market closes. 

Trade Example. Click to enlarge.

If you're looking for a systematic, evidence-based trading system, this is it. 

Merlin is based on the time tested, academically approved factors of mean reversion, momentum, and growth, and its execution refined from over a decade of bar-by-bar price action analysis and live trading by Evan Medeiros.

The strategy has been backtested and validated across thousands of stocks and ETFs with careful considerations not to data mine or overfit. All historical data used in these tests are total return, split-adjusted, and survivorship-bias free. 

Merlin Margin Portfolio Trade Statistics (see Performance Disclosures: Trade Statistics):

  • Percent of trades profitable: 64.24%
  • Average winning trade: +10.62%
  • Average losing trade:  -11.60%
  • Largest winning trade: +104.70%
  • Largest losing trade: -55.85%
  • Average (R) win to average (R) loss ratio: 1.13

Additional Statistics

  • A fully invested portfolio can range from 10 to 30 positions.
  • The average trade hold time is 47 trading days.

"So far three months in, I am very satisfied with the service. I track things closely and the returns in my Trade Risk (TR) account are significantly better than when I trade on my own in other accounts.  I have been a trader for several years, but unfortunately, I never found the consistency that I needed. TR has really made me a happy trader!"

DAVID D.

Stay up to date with the strategy in real time!

Get trade signals texted and emailed to you as they trigger. 

We deliver text messages to over 100 countries worldwide so even if you're outside of the United States, we've got you covered.

We also keep a member-only trade management page updated so you can view the latest stop loss levels and profit targets 24 hours a day. 

About Evan Medeiros

Swing Trade Alerts Picture of Evan
  • Founder of The Trade Risk and creator of Merlin
  • Coder for 20+ years and active trader for over 10
  • B.S. Computer Science, University of Massachusetts Boston
  • Frequent speaker at meetup groups and conferences, including Stocktoberfest West, MoneyShow, and more
  • A Stocktwits recommended and suggested follower
  • Nearly 100,000 followers across social networks

"Thanks for the service you provide. The videos and text are very well done and much appreciated. As a new trader, I have found the service very helpful in keeping me on track especially with regards to FOMO and the urge to constantly push buttons."

- BH from Fort Mcmurray, Alberta, Canada

Frequently Asked Questions

What is a quantitative strategy? What are the benefits?

A quantitative strategy means all of the buy and sell decisions are based strictly on mathematical computations and probabilities. There’s no gut feel or subjective analysis – the system contains all of the rules to make the best decisions possible.

There are many benefits of quantitative strategies:

  • 100% discipline, the system always executes flawlessly
  • No emotional biases
  • The strategy has been tested and verified over past market environments
  • The strategy is easily measurable and can be enhanced over time

What makes Merlin extra special is that it was built by a trader first. Evan’s market observations and live trading for over a decade are at the core of Merlin’s decision making process. That means Merlin is not just applying random and impossible to explain mathematical theory, instead, it’s a simple system based on how markets really work.

How do I interpret the performance measurements above?

We pride ourselves on transparency and we want to be sure you have all of the information possible to properly evaluate the Merlin trading system. This is why we give such a detailed view of performance measurements so you can make an informed decision about the strategy. 

Some of these terms get pretty complicated with in-depth equations which is why we created a Trading System Performance Metrics glossary to share all of the details behind everything like: Sharpe Ratio, MAR, Correlations, etc.

If you're confused about anything you see in the table above, or if you simply just want to learn, head to the Trading System Performance Metrics glossary.  

How many trades can we expect a week?

Merlin has averaged about 1 to 2 trades per week over the past decade, however, the actual distribution of trades tends to be much lumpier. Instead of consistently trading every week the strategy tends to go through busy periods followed by quiet periods.

During busy periods you might get a full month of five or more new signals each week. What follows after a busy period like that is usually a month or two of quiet activity as the trades play themselves out. Of course, Merlin's activity is largely dictated by the overall market environment so the healthier things are the more likely it is that Merlin is going to be active. 

Why the 60/40 stock/bond portfolio as a benchmark?

The 60/40 stock/bond portfolio is widely accepted as the gold standard default allocation for every investor. It's a hard allocation to beat on a risk adjusted basis over the long term and we believe it's the right benchmark for Merlin since it corresponds with the approximate amount of time Merlin spends in the market taking equity signals.

We use a 60% S&P500 (SPY), 40% 10-year US Treasuries (IEF), rebalanced monthly to track our benchmark. 

What is your refund and cancellation policy?

We offer 14-day free trials for all of our memberships, so you can test drive Merlin to make sure it lives up to your expectations. If you are not satisfied for any reason, cancel before the 14th day and you won't be billed a dime.

To view our full refund and cancellation policy, click here

"I’ve been with The Trade Risk for years now and their latest system, Merlin, is hands down the best yet."

- MATTHEW PEPIN

Find out what a professionally built trading strategy can do for you. Get started with a 14-day free trial today!

Quarterly Membership

$275 per quarter
  • Access to open trades page
  • Nightly trade reports
  • Email & text notifications
  • Access to TR150 Watchlist
  • Access to Position Size Calculator
  • -

Annual Membership

$895 per year
  • Access to open trades page
  • Nightly trade reports
  • Email & text notifications
  • Access to TR150 Watchlist
  • Access to Position Size Calculator
  • Save 18% choosing annual

"Merlin has been on fire! Wow! Great and courteous support by Evan. Texts are timely and clear. A true bargain. Highly recommended!"

JIM B.

General Disclaimer: Please be advised that trade signals are provided as an educational tool for informational purposes only and do not constitute investment advice. Signals, trading tools, and all published analysis should always be used as a starting point for doing additional independent research so that you can form your own opinion regarding investments. Under no circumstances should trade alerts be treated as financial advice.