Long Term Secrets To Short-Term Trading

Figure 10.5 Buying bonds on TDM 18. 

---

153 
Figure 10.6 Bond TDM 18 buy signals backed by gold. 
Although total profits dip $2,000, the accuracy slightly increases while our "all important" average 
profit per trade jumps up over $100 per trade and drawdown improves substantially by being cut almost in 
half! 
Better and Better 
We can do even better than the preceding results by delaying our entry until TDM 22. There are a lot 
less trades as the Figure 10.7 shows, only 50, but a 
Figure 10.7 Bond TDM 22 buy signals. 

---

154 
Figure 10.8 Bond TDM 22 buy signals backed by gold. 
higher accuracy, 76 percent, an amazing $496 average profit per trade, and very livable drawdown of a little 
over $4,500. 
I know, I know, you want to know what happens when we back this trading opportunity with the trend 
of Gold. Well, Figure 10.8 shows the answers and they are very impressive, $20,156 of profits. Again, the 
trend criteria is that Gold close lower than 24 days ago, same stop and exit as in the previous results. 
Although our drawdown has a major improvement, crashing all the way down to $1,500, the accuracy 
skyrockets to 89 percent and average profit literally zooms to $719 per trade. 
This is an exceptional trading opportunity; the problem is not many months have a TDM 22, but when 
they do, I will be buying. Check out the string of winners with the Gold filter, 17 winners in a row, whereas 
without the filter, we only had 5 winners in a row. 
A Time to Sell as Well 
Bonds have also dipped around mid-month most of the time, as Figure 10.9 reveals. The rules called 
for selling on the open of TDM 12 with our usual 3-day exit and $1,400 stop. From 1986 to the middle of 
1998, this dip has been profitable to trade 76 percent of the time with an average profit per trade of $133 on 
the 152 trades. Drawdown is acceptable at $6,093, but larger than the ideal ratio of profits to drawdown. 
Ideally, drawdown should be no more than 15 percent of the profits of $20,281. In this case, the drawdown 
was 20 percent profits. So, although we are certainly onto something here, I would like a shot at making it 
better. 

---

155