CHAPTER 8

Tutorial—The System in Action

You’ve been given a lot of information concerning The Non-Timing Trading System. Some of it may be a little confusing to you at this time. Nothing works better than a tutorial complete with commentary on what is going on in order to give you a better understanding of how The Non-Timing Trading System works.

The examples in this tutorial occurred between November 1, 2013, and October 18, 2018. This is a five-year period. During that period of time there were three major corrections and one false correction. The Non-Timing Trading System successfully got you out in plenty of time during the three major corrections and kept you in during the false correction. In the S&P 500, 2014 was a fairly decent year, 2015 was flat, 2016 was decent, 2017 was fantastic, and 2018 actually resulted in a loss for the calendar year for the S&P 500 even though for our fiscal year the S&P 500 had a profit.

For the calendar year 2018, the S&P 500 suffered a loss of 7.6 percent. Since we were forced to exit in October 2018, we actually had a 21.74 percent gain for the calendar year.

Therefore this is a good five-year cross section of the market.

In each of these years The Non-Timing Trading System did better than the S&P 500. The average yearly return over the five-year period was 34.06 percent whereas the average yearly return of the S&P 500 over the same time period was 12.16 percent.

The trades depicted in the following tutorial during this five-year period were never actually put on. Instead it was an end-of-day simulation using Think or Swim’s “Thinkback” system. Since this is an endof-day simulation we were able to use the $0.75 discretion for the upper limit or the fixed-dollar amount option.

The information listed for calendar years 2019 and 2020 beginning in April 2019 was from actual trades that were executed using the fixed-dollar gained method of exiting.

It is valuable not only to show that The Non-Timing Trading System does work over a long period of time, but is illustrative as to what should be done using the system in each one of the circumstances. For each trade there is substantial commentary on why the trade was made and at what price.

It would be valuable if you would follow along with each of the trades while looking at a chart of the SPY complete with the two moving averages. In this way you can visually see what was happening with each trade.

In order to be as conservative as possible as to the capital available at each point, the $5,000 starting capital is never increased if it is in excess of $5,000. On the other hand during losing periods the $5,000 available capital is decreased with each closing trade if it is below $5,000. The capital does not return to $5,000 until such time that it has gained enough to exceed the initial $5,000. In this way you can see at any point in time what the true draw down is.

The percentage gain each year is based on $5,000 invested. In reality the entire $5,000 is never actually invested and put at risk. Most of the time it is only $1,000 to $1,800 working at any one time. Even though the percentage gain each year is impressive based on $5,000, the reality is that it is substantially much higher based on the average amount of capital actually at work at any one time.

Please do not just gloss over this tutorial. Look at each trade as though you were actually trading. Along with the commentary you will get the feel of how The Non-Timing Trading System works and many of your questions will be answered.

Ten-Point Long Call Spread

November 1, 2013

Status	Open/Buy	Units	2	P/L		Upper	180.94
Date	11/01/13	Strike	176/186	Equity	5,000.00	Cost	750.00
SPY	176.21	Days	112	+/–	4.73	Initial BP	5,000.00
Exp	Feb 21	Price	375.00	Lower	171.48	End BP	4,250.00

Let’s begin by taking a look at how the data is portrayed in each one of these examples.

Status: There are four possible conditions. Open/Buy: Buy the number of units to open. Close/Buy: All open units will be sold and closed and new units will be bought and opened. Close Units: You will sell and close the number of units specified. No additional units will be bought and opened. This will always be the last units purchased. Close All: All open units will be sold and closed and no new units will be bought and opened.

Date: Date of the trade.

SPY: This is as close as we can get to the price of the SPY at any given time during the trade. In live trading the actual execution would be occurring many times between 3:30 and 4:00 p.m. or earlier in the trading day. Therefore the price of the SPY would be constantly changing.

Exp: Expiration month that was used.

Units: The number of units purchased.

Strike: The strike price of the options in the spread. The order in which they are presented is as follows:

The first number represents the strike of the long call purchased and the second number is the strike of the short call sold.

Days: Number of days remaining until expiration.

Price: Total cost of one unit for the long call spread purchased. Cost is where you will find the amount of money actually spent to purchase the total units in the spread.

P/L: The profit/loss any time a position is closed.

Equity: The actual equity position at any point in time. This will only change when a position is closed and the profit/loss is calculated.

+/–: The expected move for 30 days.

Lower: The lower limit for the expected move. This number is subtracted from the value of the SPY.

Upper: The upper limit for the expected move. This number is added to the value of the SPY.

Cost: The total cost for the transaction. This is the price for one unit listed in Price times the number of units listed in Units.

Initial BP: The buying power prior to the transaction.

Ending BP: The resulting buying power remaining after the transaction. Any time all positions are closed, buying power will revert to no more than $5,000.00 even though we may have grown our equity. Any loss will be subtracted from the Initial BP. Since the cost of our last trade was $750.00 our buying power has been reduced to $4,250.00.

November 27, 2013

Status	Close/Buy	Units	2	P/L	330.00	Upper	185.87
Date	11/27/13	Strike	181/191	Equity	5,330.00	Cost	724.00
SPY	181.12	Days	114	+/–	4.75	Initial BP	5,000.00
Exp	Mar 21	Price	362.00	Lower	176.37	End BP	4,276.00

The upper limit expected move is reached and all positions are closed. New positions at the current level are established using two units.

February 3, 2014

Status	Open/Buy	Units	1	P/L		Upper	181.00
Date	02/03/14	Strike	174/184	Equity	5,330.00	Cost	363.00
SPY	174.17	Days	46	+/–	6.83	Initial BP	4,276.00
Exp	Mar 21	Price	363.00	Lower	167.34	End BP	3,913.00

The lower limit expected move has been reached and one unit is being added. This additional unit costs $363 and its buying power is reduced to $3,913.00. Since there are more than 45 days remaining we will use the same expiration as our initial two units. We now have three units active. New expected moves are created.

February 11, 2014

Status	Close/Buy	Units	2	P/L	250.00	Upper	187.21
Date	02/11/14	Strike	182/192	Equity	5,580.00	Cost	740.00
SPY	181.98	Days	94	+/–	5.23	Initial BP	5,000.00
Exp	May 16	Price	370.00	Lower	176.75	End BP	4,260.00

The market proceeded to rally and the upper limit has been reached. All positions are closed. We made a $250 profit on our three units. The cycle begins again. Two new units are established.

If there had been more than 45 days remaining until expiration we would have just closed the one unit which we used to cover and left the other two intact. But there are only 37 days remaining until expiration. Therefore all positions are closed and two new units are established. Any time a cover is closed we always revert back to two units.

March 4, 2014

Status	Close/Buy	Units	2	P/L	446.00	Upper	193.12
Date	03/04/14	Strike	187/197	Equity	6,026.00	Cost	834.00
SPY	187.58	Days	108	+/–	5.54	Initial BP	5,000.00
Exp	Jun 20	Price	417.00	Lower	182.04	End BP	4,166.00

The upper limit expected move has been reached. All positions are closed and the profits are taken. Two new units are established with new expected moves.

April 11, 2014

Status	Open/Buy	Units	1	P/L		Upper	187.74
Date	04/11/14	Strike	182/192	Equity	6,026.00	Cost	383.00
SPY	181.51	Days	70	+/–	6.23	Initial BP	4,166.00
Exp	Jun 20	Price	383.00	Lower	175.28	End BP	3,783.00

The market moved sideways for a while, and then there was a small retracement which reached our lower limit expected move. Remember to always wait until 3:30 p.m. Eastern Time (1/2 hour before the markets close) to determine if the lower limit has been reached. Even if it has been reached during the trading day it may still go lower, or it may rally above the lower limit expected move. Since there are more than 45 days remaining until expiration we will use the same expiration date. One additional unit is established.

April 22, 2014

Status	Close 1	Units		P/L	244.00	Upper	193.40
Date	04/22/14	Strike		Equity	6,270.00	Cost
SPY	187.89	Days	59	+/–	5.51	Initial BP	3,783.00
Exp	Jun 20	Price		Lower	182.38	End BP	4,410.00

The upper limit expected move has been reached. We close all units more than the initial two. Therefore we now close the last unit created on April 11, 2014. Since there are still 59 days remaining we will leave the other two units open. Remember that any time any positions are closed new expected moves will be created.

May 21, 2014

Status	Close/Buy	Units	3	P/L	–146.00	Upper	194.62
Date	05/21/14	Strike	189/199	Equity	6,124.00	Cost	1,182.00
SPY	189.13	Days	121	+/–	5.49	Initial BP	4,854.00
Exp	Sep 19	Price	394.00	Lower	183.64	End BP	3,672.00

Even though the upper expected move has not been reached, we are now 30 days from expiration and all positions must be closed regardless. As this was closed because of being 30 days from expiration and only two units were established we are going to open one additional unit with the new position.

Therefore three new units are established at the current level and new expected moves are created.

June 6, 2014

Status	Close 1	Units		P/L	207.00	Upper	199.72
Date	06/06/14	Strike		Equity	6,331.00	Cost
SPY	195.38	Days	105	+/–	4.34	Initial BP	3,672.00
Exp	Sep 19	Price		Lower	191.04	End BP	4,273.00

The upper expected move has been reached. Since there are more than 45 days remaining only the last unit used to cover is closed leaving two units. The buying power is computed as one-third of the original cost and is restored plus the profit made.

August 20, 2014

Status	Close/Buy	Units	3	P/L	864.00	Upper	204.58
Date	08/20/14	Strike	199/210	Equity	7,195.00	Cost	1,116.00
SPY	198.92	Days	93	+/–	5.66	Initial BP	5,000.00
Exp	Nov 21	Price	372.00	Lower	193.26	End BP	3,884.00

On August 7, 2014, the SPY actually officially closed one penny below the lower expected move. But this was a technical close which was not reported until a few minutes after the close of the market. Therefore there was no opportunity to add another position. The next day it opened above the lower limit so nothing was done.

On August 20, 2014, two things are occurring at once. First we are very close to the upper limit and second we are 30 days from expiration and would close all positions anyway. As this was technically closed because of being 30 days from expiration and only two units were established we are going to open one additional unit with the new position. Therefore three new units are established at the current level and new expected moves are created.

Notice that there is no 209 call strike. Therefore an 11-point spread is created with the 210 call strike.

October 9, 2014

Status	Close/Buy	Units	4	P/L	–726.00	Upper	200.29
Date	10/09/14	Strike	193/203	Equity	6,469.00	Cost	1,788.00
SPY	192.74	Days	99	+/–	7.55	Initial BP	4,274.00
Exp	Jan 16	Price	447.00	Lower	185.19	End BP	2,486.00

The lower expected move has been reached and one unit is added. Since we are less than 46 days from expiration all positions are closed and new positions are created. A four-unit position is established and new expected moves are created.

October 31, 2014

Status	Close 2	Units		P/L	490.00	Upper	207.87
Date	10/31/14	Strike		Equity	6,959.00	Cost	894.00
SPY	201.66	Days	77	+/–	6.21	Initial BP	2,486.00
Exp	Nov 21	Price		Lower	195.45	End BP	3,870.00

The upper expected move has been reached. Close two units. Remember you want to bring your position back to two units.

Let’s recap what happened during the month of October 2014.

On October 13, 2014, the price of the SPY closed below the 200-day moving average. Now we looked to see the percentage distance the 50-day moving average was to the 200-day moving average. We see that it was well above the 1 percent threshold. Therefore we stayed in the market for the time being. We then started the five-day rule.

On the fifth trading day of the five-day rule the market rallied and even though the price of the SPY was still below the 200-day moving average, it was really close, and the price closed almost at the high of the day. As such a decision was made to stay in for one more trading day. If the next day was going to open lower all positions would be closed and trading suspended.

As it turned out it was a good decision that we decided to wait because the next day on October 21, 2014, the market gaped up substantially above the 200-day moving average. For the time being it looks like we are home free.

On October 31, the market rallied to the upper expected move and two units were closed out. When you have more than three units working you want to close out enough units to leave you with your initial two units.

How Did We Do the First Year?

October 31, 2014, marks about one year since we began. Even though not all positions are closed out at this point, our closed out equity is $6,959.00. That’s a $1,959.00 increase and a 39.18 percent gain. It is much better than the S&P 500. Remember this is based on $5,000 available capital. The most that we had working at any one time was $2,514.00. During that same time frame the S&P 500 increased 14.44 percent. All of our goals were met.

November 26, 2014

Status	Close/Buy	Units	2	P/L	898.00	Upper	213.46
Date	11/26/14	Strike	207/217	Equity	7,857.00	Cost	856.00
SPY	207.64	Days	113	+/–	5.82	Initial BP	5,000.00
Exp	Mar 19	Price	428.00	Lower	201.82	End BP	4,144.00

The upper expected move has been reached. We are using the $0.75 option. The actual upper limit is 207.87. We closed at 207.64. Don’t be a slave to pennies.

All positions are closed and profit taken. It may seem like the profit is excessive but remember this is a second upper expected move for these original two units. We started on October 9^, with four units because first we reached 30 days from expiration level and we added the third unit. Then we reached a lower expected move and added the fourth unit. The market then rallied to an upper expected move and we close out our two cover units. So for these two initial units the market has gone from 192.74 to 207.64, about a 15-point gain. Also remember on October 9, we took a loss.

December 12, 2014

Status	Open/Buy	Units	1	P/L		Upper	210.05
Date	12/12/14	Strike	200/210	Equity	7,857.00	Cost	470.00
SPY	200.89	Days	97	+/–	9.16	Initial BP	4,144.00
Exp	Mar 19	Price	470.00	Lower	191.73	End BP	3,674.00

After such a large run-up the SPY had a retracement which caught our lower limit expected move. With 97 days remaining we’re going to add one unit using the same expiration month. New expected moves are established.

February 17, 2015

Status	Close/Buy	Units	2	P/L	438.00	Upper	218.30
Date	02/17/15	Strike	210/220	Equity	8,295.00	Cost	940.00
SPY	210.11	Days	115	+/–	8.19	Initial BP	5,000.00
Exp	Jun 19	Price	470.00	Lower	201.92	End BP	4,060.00

The upper limit expected move has been reached within our $0.75 limit. Since there are less than 46 days remaining all positions are closed and the profits are taken. Two new units are established with new expected moves.

May 20, 2015

Status	Close/Buy	Units	3	P/L	–70.00	Upper	219.49
Date	05/20/15	Strike	213/223	Equity	8,225.00	Cost	1,215.00
SPY	212.88	Days	93	+/–	6.61	Initial BP	4,930.00
Exp	Aug 21	Price	405.00	Lower	206.27	End BP	3,715.00

We are now 30 days out from expiration and all units must be closed. Since we only have two units then one unit will be added. Three units are now established at the new price level. New expected moves are established. The $70.00 loss is subtracted from the $5,000.00 initial buying power to reflect the new initial buying power.

June 29, 2015

Status	Open/Buy	Units	1	P/L		Upper	214.24
Date	06/29/15	Strike	206/216	Equity	8,225.00	Cost	420.00
SPY	205.42	Days	53	+/–	8.82	Initial BP	3,715.00
Exp	Aug 21	Price	420.00	Lower	196.60	End BP	3,295.00

The market had been absolutely flat over the last two months. It finally dropped below the lower expected move. One new position was created giving us a total of four units, and new expected moves are established.

July 22, 2015

Status	Close/Buy	Units	4	P/L	–562.00	Upper	217.23
Date	07/22/15	Strike	211/221	Equity	7,663.00	Cost	1,856.00
SPY	211.37	Days	93	+/–	5.86	Initial BP	4,368.00
Exp	Nov 20	Price	464.00	Lower	205.51	End BP	2,512.00

We are now 30 days out from expiration and all units are closed. Since we already have four units we do not add any more because of expiration. Four units are established and new expected moves are established.

Remember if you have three units established because you have previously reached a lower limit and have never added a unit because of expiration then you may add one more unit bringing your total to four. Under no circumstances add a unit because of expiration if you already have four units established regardless of the reason they were added.

August 20, 2015

Status	Close All	Units		P/L	–1,010.00	Upper
Date	08/20/15	Strike		Equity	6,653.00	Cost
SPY	206.46	Days		+/–		Initial BP	4,368.00
Exp		Price		Lower		End BP	3,358.00

Today, August 20, 2015, the price of the SPY dipped below the 200-day moving average. When we look at where the 50-day moving average is we see that it is less than 1 percent of the 200-day moving average. Therefore we are not going to use the five-day rule, and we’re going to close all positions immediately. Notice that if the 50-day moving average is <1 percent of the 200-day moving average, the price by 3:30 p.m. Eastern Time only has to close below the 200-day moving average by any amount, not by a substantial amount.

Now that all positions are forced closed we cannot reenter the market until either we cross back above the 200-day moving average followed by the five-day rule or, after a correction, we cross back above the 50-day moving average whichever is lower, and again applying the five-day rule. The 50-day moving average after a correction should be below the 200-day moving average.

For the time being we are completely out of the market. We are not trying to predict where the market is going. According to our rules the market is just too dangerous at this point.

October 15, 2015

Status	Open/Buy	Units	5	P/L		Upper	209.31
Date	10/15/15	Strike	202/212	Equity	6,653.00	Cost	2,330.00
SPY	202.18	Days	92	+/–	7.13	Initial BP	3,358.00
Exp	Jan 15	Price	466.00	Lower	195.05	End BP	1,028.00

Wow! It’s a good thing we got out of the market when we did. It took a wild ride all the way down to a low on the SPY of 182. Volatility increased tremendously. This lasted for a little less than a month. On October 7, 2015, the SPY closed above the 50-day moving average which is by now well below the 200-day moving average.

We then waited the five trading days according to the five-day rule. October 14, 2015, was the fifth day. That was a down day and the SPY did not close above the top of the body of the candle of the trigger day which was October 7. So we could not reenter at that point.

The next trading day, October 15, 2015, the SPY closed above the 50-day moving average. At this point we’re using the rolling five-day rule. This means that we looked back five trading days and we saw that on October 8, 2015, the SPY also closed above the 50-day moving average as it had done the day before. Therefore since five days later on October 15, 2015, the SPY is now above the top of the body of the candle of the new trigger day which was October 8, we are permitted to reenter the market.

The next thing we do is to see where the last lower limit expected move was. It was at 205.51. We are now at 202.18. Since we are below the last lower limit we are going to reenter the market with one additional unit from what we had when we closed which was four units. We now reenter the market with five units. New expected moves are established.

November 2, 2015

Status	Close All	Units		P/L	1,147.00	Upper
Date	11/02/15	Strike		Equity	7,800.00	Cost
SPY	210.39	Days		+/–		Initial BP	3,358.00
Exp		Price		Lower		End BP	4,505.00

The market rallied and on November 2, 2015, the upper limit expected move was reached. All positions are closed. The reason that all positions are closed rather than just the three units is because this is the first successful trade after being forced out of the market. You are permitted one successful trade after you reenter the market when the 50-day moving average is below the 1 percent level of the 200-day moving average. After that one trade when the upper expected move has been reached you must stay out of the market until such time as the 50-day moving average is ≥1 percent above the 200-day moving average.

At this point according to the rules, all trading is suspended until such time as the 50-day moving average is above the 200-day moving average by 1 percent or more.

Another thing to note, since the previous buying power was $3,358, and $1,147 profit was added, we’re are not back to $5,000. Therefore the current buying power is only $4,505.

How Did We Do the Second Year?

It’s November 2, 2015, two years after we began, and our equity stands at $7,800. During the second year we made $841. This is a 16.82 percent gain. This is exceptional when you consider how flat the S&P 500 was during 2015. Our two-year average gain per year is 28 percent. We definitely met our goals. Even though we did not reach the 20 percent level for the year, we did almost four times better than the S&P 500. Its gain for the year was only 4.33 percent and its average yearly gain for the two-year period was only 9.39 percent.

March 3, 2016

Status	Open/Buy	Units	2	P/L		Upper	207.27
Date	03/03/16	Strike	199/209	Equity	7,800.00	Cost	948.00
SPY	199.78	Days	106	+/–	7.49	Initial BP	4,505.00
Exp	Jun 17	Price	474.00	Lower	192.29	End BP	3,557.00

This is a prime example of the wisdom of waiting after the first reentry following a correction until the 50-day moving average is ≥1 percent above the 200-day moving average. For four months the price of the SPY meandered above and below the 200-day moving average. The 50-day moving average never even got above the 200-day moving average. We would have been whipsawed. During this time there was even a major correction to the downside which we avoided.

When we look at the chart on March 3, 2016, we see that the 50-day moving average is still below the 200-day moving average. But one thing is now different. During that time there was another major correction and now the price of the SPY has rallied above the 50-day moving average for the second time after that correction.

Because of that major correction we can now take advantage of the second crossover of the 50-day moving average by the SPY. This occurred on February 22, 2016. Using the five-day rule we look at the close on February 29, 2016, and find that it is below the top of the candle body of the trigger day which was February 22. As such we do not reenter the market at this point. Using the rolling five-day rule, the next time the SPY closed above the 50-day moving average was on February 25, 2016. Again we apply the five-day rule and on March 3, 2016, the SPY closed above the top of the body of the candle of the new trigger day which was February 25. We are now ready to reenter the market.

We enter with two units and establish new expected moves. We do not add a unit because our last trade reached the upper expected move.

April 1, 2016

Status	Close All	Units		P/L	436.00	Upper
Date	04/01/16	Strike		Equity	8,236.00	Cost
SPY	206.92	Days		+/–		Initial BP	4,505.00
Exp		Price		Lower		End BP	4,941.00

The upper limit of the expected move is reached within our $0.75 limit. The actual upper limit was 207.27 and we closed at 206.92. All positions are closed. As before we look to see if the 50-day moving average is above the 200-day moving average by 1 percent or more. It is not as yet. As a result we will suspend all trading until such time as the 50-day moving average is ≥1 percent above the 200-day moving average unless there is another major correction. Remember since the last trade was to reenter the market it is a one and done.

April 27, 2016

Status	Open/Buy	Units	2	P/L		Upper	215.93
Date	04/27/16	Strike	209/219	Equity	8,236.00	Cost	958.00
SPY	209.35	Days	114	+/–	6.58	Initial BP	4,941.00
Exp	Aug 19	Price	479.00	Lower	202.77	End BP	3,983.00

The 50-day moving average is now greater than 1 percent above the 200-day moving average and it is time to reenter the market. We reenter with two units and establish new expected moves.

June 27, 2016

Status	Open/Buy	Units	1	P/L		Upper	210.31
Date	06/27/16	Strike	200/210	Equity	8,236.00	Cost	438.00
SPY	199.60	Days	52	+/–	10.71	Initial BP	3,983.00
Exp	Aug 18	Price	438.00	Lower	188.89	End BP	3,545.00

On June 27, 2016, the lower limit expected move was reached. But the SPY also crossed below the 200-day moving average which would start the five-day rule. Remember that the expected move tends to add a floor to a downward move. And a single dip below the 200-day moving average is not that significant. That is the reason for the five-day rule. Therefore it is OK to go ahead and add one unit as you normally would. The next day the SPY crossed back above the 200-day moving average.

July 1, 2016

Status	Close 1	Units		P/L	327.00	Upper	216.59
Date	07/01/16	Strike		Equity	8,563.00	Cost
SPY	209.92	Days	49	+/–	6.67	Initial BP	3,545.00
Exp	Aug 19	Price		Lower	203.25	End BP	4,310.00

The upper limit was reached within $0.75. The last one unit cover was closed and new expected moves established.

July 14, 2016

Status	Close/Buy	Units	2	P/L	394.00	Upper	222.24
Date	07/14/16	Strike	216/226	Equity	8,957.00	Cost	842.00
SPY	216.12	Days	99	+/–	6.12	Initial BP	5,000.00
Exp	Oct 21	Price	421.00	Lower	210.00	End BP	4,158.00

The upper limit expected move was reached and all positions closed. Two new units were purchased and expected moves established. Remember that the $0.75 option is just that, an option. This is a perfect time to use that option. It is only $0.47 from the actual expected move, but more importantly there are only 36 days remaining until expiration. In a few days you would have to close anyway.

September 21, 2016

Status	Close/Buy	Units	3	P/L	–268.00	Upper	222.51
Date	09/21/16	Strike	215/225	Equity	8,689.00	Cost	1,548.00
SPY	215.82	Days	100	+/–	6.69	Initial BP	4,732.00
Exp	Dec 30	Price	516.00	Lower	209.13	End BP	3,184.00

None of the expected moves has been reached, but we are now 30 days until expiration and must close all positions. One position is added. Three new positions are being established at the current level with new expected moves. Even though we should have used the 216/226 spread, there was no 226 strike price. So to keep a 10-point spread the 215/225 spread was used.

November 3, 2016

Status	Open/Buy	Units	1	P/L		Upper	218.33
Date	11/03/16	Strike	209/219	Equity	8,689.00	Cost	437.00
SPY	208.78	Days	57	+/–	9.55	Initial BP	3,184.00
Exp	Dec 30	Price	437.00	Lower	199.23	End BP	2,747.00

The presidential election is in a few days on November 8, 2016, and the SPY took a dip and caught the lower limit expected move. Because there are 57 days remaining until expiration we will use the same expiration month and purchase one unit to cover, establishing new expected moves. We now have four units working.

November 15, 2016

Status	Close/Buy	Units	2	P/L	242.00	Upper	224.69
Date	11/15/16	Strike	218/228	Equity	8,931.00	Cost	878.00
SPY	218.28	Days	94	+/–	6.41	Initial BP	4,974.00
Exp	Feb 17	Price	439.00	Lower	211.87	End BP	4,096.00

Following the presidential election the market rallied to the upper limit expected move. There are 45 days remaining. Since we have <46 days all positions are closed and two new units are established with new expected moves. Note that when you created the expected moves you had a choice between expirations that were 31 days and 29 days. Since these are the same distance from 30 you may choose either one. I prefer to choose the 29 since it will give me a lower upper limit and as such is more conservative.

How Did We Do the Third Year?

We ended the year with an equity of $8,931. This was a gain of $1,131. This is a 22.62 percent increase for the year. The three-year yearly average is now 26.21 percent. The S&P 500 had a gain of 3.75 percent for the year and a three-year average gain of only 7.51 percent per year. We achieved all of our goals.

December 8, 2016

Status	Close/Buy	Units	2	P/L	393.00	Upper	231.37
Date	12/08/16	Strike	225/235	Equity	9,324.00	Cost	842.00
SPY	225.15	Days	99	+/–	6.22	Initial BP	5,000.00
Exp	Mar 17	Price	421.00	Lower	218.93	End BP	4,158.00

The upper limit has been reached. All positions are closed. Two new units are established at the current level and the new expected moves are created.

February 10, 2017

Status	Close/Buy	Units	2	P/L	456.00	Upper	236.83
Date	02/10/17	Strike	232/242	Equity	9,780.00	Cost	796.00
SPY	231.51	Days	99	+/–	5.32	Initial BP	5,000.00
Exp	May 19	Price	398.00	Lower	226.19	End BP	4,204.00

The upper limit has been reached using the 20 percent to 25 percent or more profit option. All positions are closed. Two new units are established at the current level and the new expected moves are created.

February 21, 2017

Status	Close/Buy	Units	2	P/L	316.00	Upper	242.55
Date	02/21/17	Strike	236/246	Equity	10,096.00	Cost	890.00
SPY	236.49	Days	115	+/–	6.06	Initial BP	5,000.00
Exp	Jun 16	Price	445.00	Lower	230.43	End BP	4,110.00

The upper limit has been reached within $0.75. All positions are closed. Two new units are established at the current level and the new expected moves are created. Again I’ve chosen the 29-day expected move over the 31-day expected move.

May 17, 2017

Status	Close/Buy	Units	3	P/L	–252.00	Upper	244.63
Date	05/17/17	Strike	236/246	Equity	9,844.00	Cost	1,362.00
SPY	235.82	Days	93	+/–	8.81	Initial BP	4,748.00
Exp	Aug 18	Price	454.00	Lower	227.01	End BP	3,386.00

There are now 30 days remaining until expiration and all positions are closed. One position is added and three new positions are established and new expected moves created.

June 2, 2017

Status	Close 1	Units		P/L	248.00	Upper	249.47
Date	06/02/17	Strike		Equity	10,092.00	Cost
SPY	244.17	Days	77	+/–	5.30	Initial BP	3,386.00
Exp	Aug 18	Price		Lower	238.87	End BP	4,088.00

The upper limit has been reached within $0.75. One unit is closed. There are more than 45 days remaining until expiration. The original two units remain intact. New expected moves are created.

July 19, 2017

Status	Close/Buy	Units	3	P/L	851.00	Upper	252.56
Date	07/19/17	Strike	247/257	Equity	10,943.00	Cost	1,206.00
SPY	246.99	Days	98	+/–	5.57	Initial BP	5,000.00
Exp	Oct 20	Price	402.00	Lower	241.42	End BP	3,794.00

There are 30 days until expiration and all positions are closed. One unit is added. Three new positions are established and new upper and lower expected moves are created.

September 20, 2017

Status	Close/Buy	Units	3	P/L	114.00	Upper	255.74
Date	09/20/17	Strike	250/260	Equity	11,057.00	Cost	1,374.00
SPY	250.06	Days	100	+/–	5.68	Initial BP	5,000.00
Exp	Dec 29	Price	458.00	Lower	244.38	End BP	3,626.00

There are 30 days remaining until expiration and all positions are closed. The same three positions are created. A new position is not added since one has already been added on July 19, because of being 30 days from expiration. You do not add a unit because of being 30 days from expiration if one has already been added for that reason. You are permitted to add one unit because of being 30 days from expiration if this is the first time a unit has been added for that reason. In this case we already have a unit added because of expiration.

Even though the put bid is not greater than the call ask, you do not go up to the next higher level since it is not a $1.00 increase, but a $5.00 increase in this expiration period. Therefore it is better to stay as close to the At the Money as possible. So the 250 strike is chosen.

October 16, 2017

Status	Close 1	Units		P/L	189.00	Upper	260.83
Date	10/16/17	Strike		Equity	11,246.00	Cost
SPY	255.29	Days	74	+/–	5.54	Initial BP	3,626.00
Exp	Dec 29	Price		Lower	249.75	End BP	4,273.00

The upper limit has been reached and one unit is closed. The one that is closed is the cover unit. New expected moves are established.

How Did We Do the Fourth Year?

This was an extremely easy year. Our ending equity was $11,246.00. It seemed like nothing could go wrong. Our gain was $2,315.00. This was a 46.30 percent increase. The average yearly return for the four years is 31.23 percent. The S&P 500 gained 16.96 percent for the year and its average yearly return for the four years was only 9.87 percent.

November 24, 2017

Status	Close/Buy	Units	2	P/L	800.00	Upper	265.90
Date	11/24/17	Strike	260/270	Equity	12,046.00	Cost	910.00
SPY	260.36	Days	112	+/–	5.54	Initial BP	5,000.00
Exp	Mar 16	Price	455.00	Lower	254.82	End BP	4,090.00

The upper limit has been reached within $0.75 and all positions closed. Two new positions are created and new expected moves established.

December 8, 2017

Status	Close/Buy	Units	2	P/L	387.00	Upper	270.90
Date	12/08/17	Strike	265/275	Equity	12,433.00	Cost	916.00
SPY	265.51	Days	98	+/–	5.39	Initial BP	5,000.00
Exp	Mar 16	Price	458.00	Lower	260.12	End BP	4,084.00

The upper limit of the expected move was reached. Two new positions were created and new expected moves were established. Even though we should have had a spread from 266 to 276, there was no 276 strike available so we went with the 265 to 275 spread.

January 3, 2018

Status	Close/Buy	Units	2	P/L	401.00	Upper	275.99
Date	01/03/18	Strike	270/280	Equity	12,834.00	Cost	962.00
SPY	270.47	Days	107	+/–	5.52	Initial BP	5,000.00
Exp	Apr 20	Price	481.00	Lower	264.95	End BP	4,038.00

The upper limit of the expected move was reached. Two new positions were created and new expected moves were established. Again we should be using the 271 to 281 spread, but there is no 281 strike so we will use the 270 to 280 spread.

January 11, 2018

Status	Close/Buy	Units	2	P/L	363.00	Upper	282.06
Date	01/11/18	Strike	276/285	Equity	13,197.00	Cost	830.00
SPY	276.12	Days	99	+/–	5.97	Initial BP	5,000.00
Exp	Apr 20	Price	415.00	Lower	270.15	End BP	4,170.00

The upper limit of the expected move was reached. Two new positions were created and new expected moves were established. Another adjustment in the strikes needed to be made. There was no 287 call strike available. And using the 275 strike would have put us too far In the Money for a beginning strike. Therefore the 276 and 285 call strikes were chosen even though it is only a 9-point spread.

January 22, 2018

Status	Close/Buy	Units	2	P/L	407.00	Upper	289.76
Date	01/22/18	Strike	283/293	Equity	13,604.00	Cost	966.00
SPY	282.69	Days	116	+/–	7.07	Initial BP	5,000.00
Exp	May 18	Price	483.00	Lower	275.62	End BP	4,034.00

The upper limit of the expected move was reached. Two new positions were created and new expected moves were established.

February 2, 2018

Status	Open/Buy	Units	1	P/L		Upper	285.39
Date	02/02/18	Strike	276/286	Equity	13,604.00	Cost	508.00
SPY	275.45	Days	105	+/–	9.94	Initial BP	4,034.00
Exp	May 18	Price	508.00	Lower	264.51	End BP	3,526.00

The lower limit expected move was reached. Since there are 105 days remaining we will use the same expiration month as before. One additional unit is purchased and new expected moves are established.

February 5, 2018

Status	Open/Buy	Units	1	P/L		Upper	282.95
Date	02/05/18	Strike	264/274	Equity	13,604.00	Cost	531.00
SPY	263.93	Days	102	+/–	19.02	Initial BP	3,526.00
Exp	May 18	Price	531.00	Lower	244.91	End BP	2,995.00

This is the first major down move for quite a while. The next day the SPY dipped impressively below the 50-day moving average but is still substantially above the 200-day moving average. In addition the 50-day moving average is well above the 1 percent level of the 200-day moving average. Since we closed below our lower limit we will add one more unit to our position and establish new expected moves. We now have four units.

This is the first time in our tutorial that the lower limit has been breached twice in a row. Notice how the range of the expected move is increasing dramatically. This is because volatility is increasing. Notice also at this point how our mathematical model makes it impossible to have a third lower limit in a row breached since that would be below our 200-day moving average. As such, if we got down that far we would be forced out of the market before we would have to add another unit. This is the nature of the system to prevent you from trying to catch a falling knife.

April 18, 2018

Status	Close/Buy	Units	4	P/L	–1,175.00	Upper	280.15
Date	04/18/18	Strike	271/281	Equity	12,429.00	Cost	1,872.00
SPY	270.39	Days	93	+/–	9.76	Initial BP	3,825.00
Exp	Jul 20	Price	468.00	Lower	260.63	End BP	1,953.00

On February 9, 2018, the SPY dipped briefly below the 200-day moving average but closed above. As such our five-day count was not put in effect. On March 23, 2018, the SPY did close a little below the 200-day moving average. But you would not call that substantial so we did not begin the five-day rule. Again on April 2, 2018, there was another close below the 200-day moving average. But as before it was not substantial so we did not begin the five-day rule. The market did continue to rally until April 18, 2018, when we were forced to close all of the positions since we are now 30 days from expiration.

All positions were closed and since we already had four units open we did not add an additional unit because of expiration. Even with four units open, if the SPY had fallen to the lower limit then one additional unit would have been added. It is only for expiration that we have any rules about not adding additional units. Remember do not add an additional unit because of being 30 days from expiration when you already have four units established even if you have never added a unit because of expiration. Four units were opened. New expected moves were established.

June 20, 2018

Status	Close/Buy	Units	4	P/L	610.00	Upper	284.09
Date	06/20/18	Strike	276/286	Equity	13,039.00	Cost	2,060.00
SPY	275.97	Days	93	+/–	8.12	Initial BP	4,435.00
Exp	Sep 21	Price	515.00	Lower	267.85	End BP	2,375.00

We still have not reached the upper limit of the expected move but we are now 30 days from expiration and must close all four positions. Since we already had four units open we did not add an additional unit. Four new positions were opened at the new level and new expected moves were created.

July 25, 2018

Status	Close 2	Units		P/L	423.00	Upper	291.73
Date	07/25/18	Strike		Equity	13,462.00	Cost
SPY	284.01	Days	58	+/–	7.72	Initial BP	2,375.00
Exp	Sep 21	Price		Lower	276.29	End BP	3,828.00

The upper expected move has been reached. Since there are more than 45 days remaining until expiration we will close only two units. This will bring us back to our base of two units. All units are the same from the June 20, 2018, position. Another interesting thing to note is that you never know when a big rally will begin.

August 22, 2018

Status	Close/Buy	Units	3	P/L	614.00	Upper	294.58
Date	08/22/18	Strike	287/297	Equity	14,076.00	Cost	1,467.00
SPY	286.17	Days	121	+/–	8.41	Initial BP	5,000.00
Exp	Dec 21	Price	489.00	Lower	277.76	End BP	3,533.00

We reached 30 days prior to expiration. All positions are closed and one additional unit is added giving us three units. New expected moves are established.

September 20, 2018

Status	Close 1	Units		P/L	180.00	Upper	301.46
Date	09/20/18	Strike		Equity	14,256.00	Cost
SPY	293.58	Days	92	+/–	7.88	Initial BP	3,533.00
Exp	Dec 21	Price		Lower	285.70	End BP	4,202.00

The SPY made a high of 293.94 and as such it reached the upper limit within $0.75. The one cover unit is closed leaving the two original units. New expected moves are established.

October 10, 2018

Status	Open/Buy	Units	1	P/L		Upper	291.37
Date	10/10/18	Strike	278/288	Equity	14,256.00	Cost	526.00
SPY	278.30	Days	72	+/–	13.07	Initial BP	4,202.00
Exp	Dec 21	Price	526.00	Lower	265.23	End BP	3,676.00

On October 10, 2018, the SPY closed below the lower limit on a big move. One unit was added.

October 18, 2018

Status	Close All	Units		P/L	–616.00	Upper
Date	10/18/18	Strike		Equity	13,640.00	Cost
SPY	276.40	Days		+/–		Initial BP	5,000.00
Exp		Price		Lower		End BP	4,384.00

On October 11, 2018, there was a substantial move below the 200-day moving average. Because the 50-day moving average was more than 1 percent above the 200-day moving average the five-day rule began. On the fifth trading day, October 18, 2018, the SPY closed below the 200-day moving average and all positions were closed. This was to be the beginning of one of the largest corrections since 2007 and we are out.

On November 7, 2018, there was a substantial move above the 200-day moving average generating the five-day rule on the upside. This didn’t last long as there was another substantial pullback below the 200-day moving average so we will stay out of the market.

On December 3, 2018, the market closed again substantially above the 200-day moving average. We began the five-day rule but again there was a dramatic move to the downside in the SPY. Therefore we are still out of the market.

Notice that each time the market tries a rally above the 200-day moving average the five-day rule saves us as each rally fails. The market then had a severe correction.

On January 17, 2019, the SPY finally closed substantially above the 50-day moving average. The five-day rule on the upside is now in effect.

How Did We Do the Fifth Year?

The year 2018 looked like it was going to be a pretty good year until October 11, 2018. That was the beginning of a major correction. Fortunately our system got us out on October 18, 2018, before too much damage was done.

For our fiscal year November 2017 to November 2018 our system gained $2,394 or 47.88 percent. Our overall five-year average yearly return is 34.56 percent. The S&P 500 during this same November to November time period gained only 6 percent and its average yearly return over five years is only 12.16 percent.

But this does not tell the whole story for 2018. The worst was yet to come for the S&P 500.

We were out of the market for the remainder of the calendar year. But the S&P 500 continued to lose money. For the calendar year 2018 the S&P 500 lost 7.6 percent while at the same time our gain for the calendar year was a very impressive 21.74 percent. Even for this really tough year we reached our goal of at least a 20 percent return for the year whether you measure from our fiscal year or calendar year. And of course it was a much better performance than the loss that the S&P 500 suffered.

What Happened after the Major Correction of 2018?

January 25, 2019

Status	Open/Buy	Units	3	P/L		Upper	275.94
Date	01/25/19	Strike	266/276	Equity	13,640.00	Cost	1,560.00
SPY	265.78	Days	112	+/–	10.16	Initial BP	4,384.00
Exp	May 17	Price	520.00	Lower	255.62	End BP	2,824.00

We were out of the market during most of the severe correction at the end of 2018. That is why we were able to post a gain of more than 20 percent for the calendar year while the S&P 500 posted a loss.

The market finally reached its bottom on December 26, 2018. The low point for the SPY was 234.27. From there the market made a steady climb over the next three weeks and the price of the SPY decisively crossed the 50-day moving average on January 17, 2019.

At this point our procedure is to wait five trading days to see if the SPY is above the top of the candle body of the trigger day which was January 17. On January 25, 2019, the SPY closed above the top of the body of the trigger day and as such we reentered the market.

February 15, 2019

Status	Close All	Units		P/L	619.00	Upper
Date	02/15/19	Strike		Equity	14,259.00	Cost
SPY	277.39	Days		+/–		Initial BP	4,384.00
Exp		Price		Lower		End BP	5,000.00

The upper limit expected move was reached on February 15, 2019. We exited the position with a $619 profit.

Our trading is now suspended until such time as the 50-day moving average moves above the 200-day moving average by 1 percent.

The 50-day moving average moved above the 200-day moving average by 1 percent on April 10, 2019. At that point we reentered the market. Our total gain for calendar year 2019 was $2,417 which was a gain of 48.34 percent. The S&P 500 also had a good year. In 2019 virtually nothing could go wrong. The S&P 500 gained 22.27 percent.

As you can see these five years of trading have provided virtually every scenario that you can imagine, both good and bad, and The Non-Timing Trading System performed as it was designed. With a rules-based system you are not trying to time the market. You are letting the market tell you what to do. Emotions are removed from the equation. That is why The Non-Timing Trading System will consistently give you 20 percent to 30 percent returns year after year.

What Happened in 2020 with the Covid-19 Crash?

The year 2020 began as a very good year continuing the way 2019 ended. Then on February 20, 2020, everything went horribly wrong. In a matter of a one-month period the SPY went from a high of 339.08 on February 19 to a low of 218.26 on March 23. We exited the market on March 5, 2020, with the SPY at 302.

We were out of the market until the SPY crossed the 50-day moving average and satisfied the five-day rule on April 27, 2020. We reentered the market and exited when the upper limit was reached. The loss incurred from the forced exit on March 5th was almost completely recovered with this one trade.

As of December 9, 2020, our total gain for the calendar year 2020 is $1,824.00. That is a 36.48 percent gain for the year so far. The S&P 500 has gained 14.34 percent for the calendar year as of December 9, 2020.