Helpful lecture, about letting go of ego and paying attention to the charts when trading; Allan uses Gold (DGP) as an example.
In the past nine months, DGP (double beta ETF for Gold) has risen from $15.28 to $19.74, a gain of about 30%. This represents a Buy & Hold return, with the leverage inherent in the double beta construction of this instrument.
Or, DGP can be traded with a rule-based trend following system. The system represented in the chart below traded DGP long and short during the same time period, September 2008 to July 2009. There were 12 trades, 10 winners and 2 losers. The total cumulative gain was $25.82, or about 170%. The average trade gained about 13%.
This is a Daily chart, more trades and a greater cumulative total can be seen in intraday time frames, but for comparison sake, I want to compare Daily returns.
We are talking about a system that trades about twice a month and yields about 5-6X the return of Buy and Hold.
By now you should recognize the 3-line point break chart, embedded with the Blue Wave Trend Model, Precision CCI and Precision Moving Average.
If you click on the Seeking Alpha link, you will find 47 articles written about Gold during the time frame charted above. That’s one site. Multiply that by 100 other sites writing about Gold. Ask yourself, how in the hell are you going to figure all that out and have any expectation of getting Gold’s investment story right?