Drawdown!

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The U.S.S. SlopeRules continues to get stronger, smarter, and better every day, thanks to the support of Slope Premium Members.

In fact, let me stop myself right now and make this offer: if you subscribe to a Slope membership – ANY membership – I’ll send you a free copy of my new Joy of Charting book. The usual deal is you have to sign up for a year. But I’m in a good mood, and I want you to try a premium membership, so for the next 48 hours, ANY monthly membership gets you the free book. Sign up by clicking here, and just email me where you want the book sent. You’ll love it!

Now, on to the new feature: now you can add a rule to exit a trade based on a drawdown! As you may recall, yesterday we introduced the ability to add rules based on a percentage profit or a percentage loss. But now we’ll also let you do an exit based on the security dropping from its maximum price during your holding period, which frankly is a lot more useful.

Let me give you a simple example. I just whipped up a new SlopeRules which buys AMD when it crosses above its 198-day moving average and sells when the opposite happens. I clicked on Test and got these results.

Next, I added a new rule for the Close section………

……which will get out of the position any time it drops 32% from its price peak, just for the sake of this example:

This improved the results. To be sure, the improvement is a modest one, but I think you get the idea.

The idea behind these three new rule types is that you can protect yourself from runaway losses (% Loss), avoid being greedy (% Profit), and also not to let big profits diminish too badly (% Drawdown).

One other improvement we made is that on the chart results, it will show profitable trades in green and losing trades in red. This will really help you visually understand what is going on.

This is starting to get awfully cool, don’t you think?

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