The Presidential Election Cycle Strategy Is Up $1.7M
Plus an analysis of which risk management systems work best for trending vs ranging markets.
Important: There is no guarantee that our strategies will have the same performance in the future. We use backtests to compare historical strategy performance. Backtests are based on historical data, not real-time data so the results we share are hypothetical, not real. Forward tests are based on live data, however, they use a simulated account. Any success I have with live trading is untypical. Trading futures is extremely risky. You should only use risk capital to fund live futures accounts and if you do trade live, be prepared to lose your entire account. There are no guarantees that any performance you see here will continue in the future (good or bad)—that’s what makes the hunt for the holy grail so difficult. This is why the best way to trade is with a simulated account on live data. I recommend using ATS strategies in simulated trading until you/we find the holy grail of trade strategy.
We haven’t found the holy grail of automated trade strategy yet, but we get closer with every strategy. Click here for links to all strategy descriptions.
Strategy 73: Election Day Strategy Update
This is a quick update on Strategy 73, the Presidential Election Year Strategy originally published in October of 2023. It is based on research by Yale Hirsch, publisher of the popular Stock Trader’s Almanac (f. 1967).
In addition to the “Santa Claus Rally” in December and the “Best Six Months” hypothesis, which suggests that stocks tend to under-perform in the summer months, Hirsch also found that campaign spending tends to increase in the first term to secure a second term. I imagine it’s even worse when that first term President has dementia. No doubt, there will be a lot of spending over the next five months. You can read more about the actual patterns found in the election cycle in the original post, but in general, here’s an overview of election spending from 1990 to 2022:
It’s worth noting that during the 2020 election cycle, campaigns raised over ~$9.0 billion between January 2019 and April 2020.
Fast-forward to the current election cycle. Between January 2023 and April 2024, US political campaigns collected ~$8.6 billion, so we’re on pace with 2020 even though spending in 2020 was considerably higher than it was in years past. And, as you will see in a moment, Strategy 73 has already surpassed its own full year performance for 2020, so the party’s just getting started.
The Martingale vs. The Natural: Which Risk Management System Is Best For Strategy 73?
Strategy 73 is one of a few strategies I’ve published that is run on a daily chart. Consequently, it is also one of the riskiest. Needless to the say, the risk management system chosen for this strategy must be tailored to its unique cash flows.
Since Strategy 73 was created to take advantage of trending market cycles, we’re in need of a risk management system that takes advantage of trending markets. By doing so, we can take a strategy like Strategy 73, that would have made $88K on a buy and hold strategy, and make $1.7M over the same time period.