FAQ Link: Blue Line Classic Trading System
FAQ Link: Blue Line Prime Trading System
This is a trend following system and the trend-signal line is BLUE.
But it’s much more than a simple blue line. It is a lifeline for surviving and even prospering through the ups and downs of an increasingly treacherous global financial market.
Twice in the 21st century financial assets have crashed, wiping out small medium and even large investors. In the financial crash of 2008, the big guns went down, only to be saved, at least a select few, behind the closed doors of the Federal Reserve. Most though, including ALL of the baby boomers generation, came out of these crashes with a fraction of what they had built-up over a lifetime in savings and retirement accounts.
What if we were on the precipice of the third great financial crash of modern times? What if we’re not? What if there was a way to answer both of those questions? What if that answer was a simple blue line, drawn by a not so simple trend algorithm?
Needless to say, knowing when to get out of equities makes a big difference in the value of any portfolio. But what about the downside, what if an active trader when short the market, and what if that short was implemented by the inherent leverage of options?
We can get a sense of what is possible by a trade we took in 2015 when GPRO broke down below since blue signal line. It then went on to fall 70% before bottoming in early 2016. Our option strategy was illustrated in a chart I sent out as the trade came to an end in March:
During that 70% decline, we instituted three option trades along the way (all in real time and can be seen in our archives). Even though the third an final trade ended in a 50% stop out, the total return for the 70% crash in GPRO was just over 700%.
That doesn’t guaranteed we can do it again when the stock market as a whole entered its next great bear market, but it does suggest just how much money can be made by nailing these intermediate term trends and using options to leverage gains.