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This is a strategy to trade bonds based on the principals discussed in our prior report on buying bonds when inflationary pressures are low and gold stocks are going down and selling bonds when inflation is a concern and gold stocks are going up.
Long entry Rules- Buy IEF when gold stocks are declining
Long Exit Rules- 1.4% stop loss, opposite signal or Average true range ratchet.
Signals are emailed out the night before and new trade entries are at the open.
Short entry Rule- Sell Short IEF when gold stocks are advancing.
Short Exit Rules- 1.4% stop loss, opposite signal or Average true range ratchet.
Signals are emailed out the night before and new trade entries are at the open.
If you aren’t familiar with the ATR ratchet it is a profit taking mechanism that progressively ratchets up an increment of average true range multiplied by the amount of time added to the lowest low in the trade, this brings the stop closer and closer to the current price as time goes by. Watch the video for an example.
This chart below shows the hypothetical growth of $100 invested in this trading strategy, the average annualized rate of return is 9.8% with a maximum peak to trough drawdown of 6.5%. This strategy doesn’t have a down year, the worst performing year was 2007 with a +3% return, the best performing year was 2009 with a +19.75% return!
If you would like to receive signals to this bond trading strategy for the IEF, check out oursubscription options!
Below is the performance report of this Long and short trading strategy, based on trading the IEF which is an ETF that tracks the 10 year treasury bonds. Results are based on trading 100 shares per trade, since the IEF started trading in 2003 to present ( April 2011)
This is a performance report that shows how the LONG trades performed on the IEF! Click image to enlarge
This is a performance report that shows how the SHORT trades performed on the IEF! Click image to enlarge
If you would like to receive signals to this bond trading strategy for the IEF, check out oursubscription options!
