The Miners Trading System

A lot of you emailed me last night and today asking my opinion. My opinion is when a trading system works well I don't like to mess around with the signals too much, but you simply cannot account for divergences in 3C and other factors in a backtested system. In essence, a trading system works well (when you find one that works-I've tested probably thousands and most of the ones that you see in some of your favorite books, you'd be disappointed with the real backtested results) because you are taking yourself out of the trade and are sticking by signals that have been tested and shown to work.

That being said, 3C is a unique indicator and showed us some trouble spots late yesterday. So I suppose the question is, can our intervention help the equity curve when it comes to tweaking the entries and exits. I'd say largely the answer is no, but yesterday we did have some strong signals. My answer to all of you was that I would exit DUST and enter NUGT. The very nature of the system will always put you 1 day behind the signal, there's no way around that, but in this particular case, there was enough evidence to take the NUGT long and thus far it's worked out well. We'll see f trade system #2 gives the same signal tonight as trade system #1 did last night.

Here's what NUGT is looking like so far today

Up over 4% on the day. Still, the answer to trade system intervention I suspect won't be answered in one day's gains.

If I get a little time today, I'm going to run the same criteria that triggers trades in the miners on some different asset classes to see if perhaps I may have stumbled on a more useful system. I'll keep you informed.