High volatility on the US market

Products SPA3 Investor
1

Hi,

I was unable to join the live webinar yesterday but caught up with the recording this morning. I was expecting the opening discussion to be a tutorial about the fact that the NASDAQ Composite had just exceeded the 3.5 ATRVE high volatility limit and about the consequences of that - however it wasn’t discussed.
I note that it is still a rule in the US public portfolio trading plan and whoever has it as a rule in their trading plan should be mechanically following the rule. So I suppose everything ought to be happening correctly anyway.

Regards
Don

2

Hi Don, yes I missed it so thanks

3

Don,

Thanks for raising the HVMR on the $COMP. I did miss it.

The HAE position was opened in error in the US EW Stocks portfolio and in the Leveraged portfolio so will be closed in today’s US trading session.

As soon a trading error is realised it must be rectified.

Regards
Gary

4

Hi Gary
When this new rule was brought in during Covid I recall there being two option, one to sell everything, the other to just take no new trades until the volatility settled down. Could you give everyone a reminder please as to which methodology gave the best results. I took the ‘sell everything’ option at the time as it was so wild but in hindsight I know I had Adobe and Amazon at prices that they never came back to again and would have been much bette had I held.
thanks

5

Hi Tim,

Please follow the link to view the Webinar Discussion around the High Volatility Market Risk Rule for SPA3 Investor: Watch Webinar Recording

I can’t find any resources with regard to selling everything immediately. From our point of view, the rule has always been to stop taking entry/bap signals when the rule is in effect, and to only exit any open positions when the standard exit signals occur.

Are you perhaps confusing this rule with the High Market Risk Rule for SPA3 Trader?

In fact, from a research & results point of view, it is actually better to continue trading as normal during these periods of increased volatility. However, from a psychology perspective, executing the strategy correctly in these periods will be very challenging for most.

Imagine entering a trade with a trailing stop that is sitting 50% away from the entry. Would you be willing to risk that much? We know through experience that most of our customers would not be comfortable with this. That is why this rule came into effect.

You can learn more about the High Volatility Market Risk Rule for SPA3 Investor here: Learn More.

Regards,
Vince.

6

Hi Vince, yes I recall now - I got that wrong. The rule was to close positions we’d just opened by mistake with the new volatility rule - which is why I sold Adobe and Amazon the day after having bought them.