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.
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 (see Performance Disclosures 1 and 2 below):
|Top 3 Drawdowns||-11.65%, -7.77%, -7.57%||-16.37%, -10.87%, -10.69%||-29.48%, -6.85%, -5.76%|
Finally! A trading strategy that can profit across changing market environments.
Merlin's real magic is in its unique ability to toggle the strategy on and off during unfavorable market conditions, helping traders like 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 account going back over a decade (see Performance Disclosures 1 and 3 below):
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.
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 Trade Statistics - Model IRA
- Percent of trades profitable: 65.08%
- Average winning trade: +10.48%
- Average losing trade: -9.20%
- Largest winning trade: +104.84%
- Largest losing trade: -26.18%
- Average (R) win to average (R) loss ratio: 1.07
Additional Portfolio Statistics
- Holds anywhere from 14 to 20 positions at full exposure
- Average hold time: 42 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
- 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
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 trade signals.
We use a 60% S&P500 (SPY), 40% 10-year US Treasuries (IEF), rebalanced monthly to track our benchmark.
It means all new trade signals from Merlin are generated based on daily time-frame closing prices. After the market closes for the day the system runs through the activity and generates signals for the next market open.
Trading using end-of-day closing prices has a number of benefits:
- Spend less time staring at markets during the day.
- Fewer, but more quality, decisions to make.
- Avoid intraday volatility and whipsaw.
- Focus on more reliable data points.
- Instill a natural layer of discipline.
- Ability to trade the market entirely after hours if desired.
Profit taking and stop losses do occur intraday, but because we'll always know those levels ahead of time, we can have orders placed with our broker so we don't need to babysit the charts.
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.
Sticking to the system rules and staying patient while the strategy is signaling risk-off is a key contributor to the strategy's long-term outperformance. Back in the first week of October 2018, Merlin produced a sell signal for the market and stopped taking new individual stock exposure. What followed was a -18% market decline that bottomed on Christmas Eve.
Merlin didn't start taking stock signals again until the start of February, (the strategy did have some existing longs on throughout this period). We at The Trade Risk believe these periods are when the real magic shines from Merlin, but we understand that subscribers might want to do more during these periods.
We have a couple of solutions:
- The most straightforward and conservative approach is to make sure you have a cash management plan in place. When Merlin is telegraphing risk off, it's time to consider high yield savings, money market funds, or short-term treasuries until Merlin begins accumulating equity risk again.
- The Trade Risk does have other strategies in the pipeline that will activate during more volatile market regimes. These are much shorter-term tactical trading systems that are entirely separate from Merlin and the rules you read above. More info about these strategies will be posted when they go live, however, if you're already a Merlin subscriber before they release you'll be grandfathered in to receive signals with your membership.
Here are some past trade signals, delivered to subscribers by email and SMS text:
- New Entry Signal - Long EXAS 80.92 STOP 15.75% away at 68.35. This is a M-STK setup with initial profit target of 93.49.
- New Take Profit Signal - Target #1 achieved in ADBE. Sold 50% at 291.99 for 24.38 or 9.11% gain.
At the end of every session, a Trade Report is generated with all of the activity from the day. The report also includes upcoming trade setups for the next trading session. This means you will have plenty of time to research the setups and prepare orders so you are not left scrambling in real-time to get into trades.
All sales are final and non-refundable.
Because new subscribers get instant access to our open trades, position size calculator, and our reports, we do not issue any refunds.
Canceling your account is extremely easy.
Simply log in to your Trade Risk account and head on over to the Account page and click on the cancel link under your membership level. At that time your Trade Risk account will be closed out and you will no longer be billed going forward.
There's no need to contact anyone to cancel, you can do it on your own, at any time.
"I’ve been with The Trade Risk for years now and their latest system, Merlin, is hands down the best yet."
- MATTHEW PEPIN
Allow Merlin to guide you through the stock market and help you become a more profitable trader. Select a membership to get started today!
"Merlin has been on fire! Wow! Great and courteous support by Evan. Texts are timely and clear. A true bargain. Highly recommended!"
- JIM B.
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.
Disclosure 1: January 2006 through October 2019 performance is based on backtests and simulated trading. All tests use survivorship bias free, total return, split adjusted Nasdaq 100 stocks for the trading universe. Tests include slippage and normal market impact of entering/exiting positions. Tests do not include: trading commissions, interest earned on idle cash balance, rotation into treasury or bond funds during periods where the strategy is not invested, or any borrow costs which is only applicable to the margin portfolio when the strategy is taking advantage of leverage.
Disclosure 2: The top 3 drawdowns calculation has been computed on backtested results on a closing trade basis. That means intraday and intra-trade drawdowns may have exceeded those thresholds.
Disclosure 3: Live trading for Merlin started in November 2019 and all performance metrics ongoing are mark to market snapshots from a live Interactive Brokers Pro account. Live trading is conducted on The Trade Risk's dynamically generated Leadership Watchlist. Live trading results include: 0.05c per share in commissions, slippage and normal market impact of entering/exiting positions, margin borrow costs when applicable (IBKR Pro rates), Idle interest earned on cash balances, and opt in to IBKRs stock yield program.
CFTC Rule 4.41
HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVERCOMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.