The trader with 75 percent profits

Ivan Scherman, a world champion quant trader with a 491% return, shares a strategy that has a 75% win rate with 3-to-1 profit potential. I will explain his strategy in this mega post:

(1) Ivan Scherman, CMT, CFTe, is Portfolio Manager and CIO at Emerge Funds Investments, is known for his outstanding track record in managing algorithmic strategies.

(2) Scherman said that the strategy, tested from 1957 to now, had a win rate of 75.3% and a win factor of 3.16, which means that you earn 3.16 for every 1 lost. So he has a 75% win rate.

(3) Conditions of recruitment and admission:

Installation requires both S&P500and VIX on the same chart. When the S&P 500 drops, it suggests a correction, and the VIX often rises, showing that institutions may be buying puts to hedge against the correction.

(4) When the S&P 500 makes a second lower bottom after the first correction, the VIX should spike again, often higher than before.

But if the second VIX spike is not higher than the first, it is called a divergence, according to Scherman.

(5) The second rule is that the S&P 500 price should not exceed two standard deviations from the 30-day moving average.

If the price goes beyond this, it is too far out. If all the criteria are met, the trader should buy the S&P 500 at the end of the trading day.

(6) Exit strategy:

Once in the trade, there are two exits: – If the S&P 500 goes above the 30-day moving average. In that case, the trader exits at the close of the day. – Second exit occurs with a loss if the S&P 500 closes more than two standard deviations below its 30-day moving average, outside the Bollinger band.

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