Trend Following Update – Exit Signals on Short Bonds and Long Euro

Probably not a complete surprise that with today’s volatility we got another two signals on our trend following system, this time to exit two positions, both of which finish with a small profit.

Short 30yr T-Bonds ($ZB_F) 2/1 +$93.75 per contract

This one exiting so soon is a function of how it’s been relatively volatile and gone nowhere in 3 weeks, although longer term it still looks bearish to me. That’s OK. If it resumes its downtrend I’m sure we’ll get another signal.

Long Euro ($6E_F) 12/21 +$337.50 per contract

I was less surprised to see this one exit. It’s come back a long way putting the intermediate trend in doubt. The fact that we gave back nearly all of our gains is not an issue for me. Remember we discussed here we only exit when our rationale is invalidated. Never take a position off just because that’s where you bought it and it’s your break-even point.

If you do that you’re basically saying the position could still be a good one but you won’t be able to handle it psychologically if a winner turned into a loser. If you do that then it says more about you than it does the position, you need to stop trading now and get your head straight.

The remaining positions are:-

Long S&P 500 ($ES_F) 1/28 +$650.00 per contract

Short Japanese Yen ($6J_F) 11/21 +$19,662.50 per contract

Short Sterling ($6B_F) 1/24 +$3,750.00 per contract

Long Crude Oil ($CL_F) 1/3 +$780.00 per contract

Short Gold ($GC_F) 2/19 +$4,660.00 per contract