US Election Jitters: To Trade or Not To Trade?
In this article, we’ll answer a question from a member, one that’s likely on a lot of people’s minds.
Question from subscriber Paul:
[To begin trading The Chartist’s US Momentum Strategy] the recommendation is to buy all positions and fully fund at the start of a new month. Given the potential volatility around the US Presidential Election in early November, would you suggest holding off until December to let things settle, or would you stick with the recommendation to fully fund in November regardless of the election timing?
Great Question.
The goal with systematic trading is to follow the rules and ignore the noise – easier said than done! If you override the strategy once, you will tend to do it again. This defeats the purpose of following tested rules. It’s all about trusting that the strategy will get you out if things start trending lower.
Back in 2016, when Trump first got elected, we were fully long US equities across all strategies. When the election result was announced the US market was closed but the futures went limit down. It looked like some blood would spill when markets opened the following day. A few clients decided to exit positions thinking the trend lower would continue. I didn’t – because I follow the strategy knowing that if a trend lower were to occur. The strategy would, eventually, exit. I finished that month +10%.
At the end of the day, we shouldn’t be swayed by short term movements – everything in the short term is random. Only over the long term can we have certainty. Which means we need to apply the strategy for the long term and ride the near-term ups and downs with impunity. The US Momentum strategy has been tested back to 1955 and it’s constantly been a winner over long stretches of time.
If you are interested in trading the US Momentum or any of our other portfolios. Why not take a 14 Day Free Trial and have a look inside of our members area. You will also gain access to our Systematic Guidebook which has detailed statistics on all of our portfolios.
