Applied Strategy Examples

TQQQ Core in real market regimes

The concepts are easier to understand when you can see what the rules did in different markets. These examples use TQQQ Core backtest data to show profitable trend captures, losing assumptions, choppy periods, and why the strategy stays continuously engaged with the market instead of trying to guess when nothing will happen.

The big idea

Indicators are not crystal balls. RSI, moving averages, and defensive comparisons read what has already happened. That means every signal is an assumption: trend is continuing, selling is stretched, volatility is exhausted, or defense is still needed.

Sometimes the assumption is right and the strategy catches a strong trend. Sometimes the assumption is wrong and the market reverses immediately. The goal is not to be right every day. The goal is to keep reacting to market conditions so the big winning segments can outweigh the wrong signals, chop, and long flat periods over time.

For this ruleset, staying in the market means staying allocated according to the rules: long TQQQ when conditions are favorable, inverse SQQQ when downside pressure is stronger, BSV when defense is preferred, or UVXY when an overbought fade is triggered. It does not mean every day is profitable.

Segment returns from the examples

Upside Trend Capture+60.9%

Downside Trend Capture+28.4%

Bullish Assumption Was Wrong-36.3%

Defensive Assumption Was Wrong-18.4%

Four Signal Outcomes

Profitable upside example

Upside Trend Capture

Mar 15, 2023 to Jun 2, 2023

TQQQ+60.9%

Setup

The broad SPY regime was still bearish because SPY was slightly below its 200-day moving average, but TQQQ had reclaimed its 20-day moving average.

Indicator snapshot

SPY 387.73 versus 200MA 393.08
TQQQ 11.45 versus 20MA 11.35
TQQQ RSI(10) 52.2

What happened

The strategy did not buy the exact low. It waited until TQQQ showed enough short-term strength to reclaim the 20-day average. Once the rally persisted, staying in TQQQ captured a large part of the upside trend.

Lesson

Trend-following indicators are lagging by design. They often miss the first turn, but they can still capture the middle of a sustained move.

Profitable downside example

Downside Trend Capture

Apr 28, 2022 to May 9, 2022

SQQQ+28.4%

Setup

The market was below trend, TQQQ was below its 20-day average, and the defensive comparison favored inverse Nasdaq exposure over short-duration bonds.

Indicator snapshot

SPY 427.63 versus 200MA 448.20
TQQQ 21.02 versus 20MA 24.58
SQQQ RSI(10) 55.3 versus BSV RSI(10) 39.6

What happened

The strategy moved into SQQQ while the Nasdaq selloff continued. Because SQQQ is inverse exposure, the strategy could make money during a falling market.

Lesson

A strategy can stay engaged in both directions. Staying in the market does not always mean staying bullish; it can mean rotating to the sleeve that matches the current condition.

Losing upside example

Bullish Assumption Was Wrong

Nov 9, 2021 to Feb 11, 2022

TQQQ-36.3%

Setup

The broad regime was still bullish: SPY was well above its 200-day average, and the strategy stayed long TQQQ.

Indicator snapshot

SPY 467.26 versus 200MA 423.00
TQQQ 41.57 versus 20MA 37.58
TQQQ RSI(10) 73.1

What happened

The market rolled over before the slow regime filter could fully reflect the change. TQQQ fell sharply while the strategy was still reading the backdrop as bullish.

Lesson

Lag cuts both ways. A slow trend filter avoids some noise, but it can react late when a real decline begins quickly.

Losing downside example

Defensive Assumption Was Wrong

Jun 17, 2022 to Jun 24, 2022

SQQQ-18.4%

Setup

The market was deeply below trend, TQQQ was below its 20-day average, and SQQQ had stronger RSI than BSV.

Indicator snapshot

SPY 366.92 versus 200MA 441.02
TQQQ 11.38 versus 20MA 14.46
SQQQ RSI(10) 61.8 versus BSV RSI(10) 35.2

What happened

A sharp bear-market rally arrived while the strategy was positioned defensively. SQQQ fell as TQQQ rebounded.

Lesson

A bearish setup can still lose money when the market snaps back. Indicators describe current conditions; they do not control what happens next.

Long Periods Without New Highs

Staying engaged is hardest when nothing feels like it is working

A long-term ruleset can go months without making a new equity high. These periods are where many users are tempted to abandon the process, but they are also where the next large trend is impossible to know in advance. Staying engaged means the strategy remains available for the next upside trend, downside trend, or defensive rotation.

Oct 14, 2022 to May 26, 2023

152 trading days, about 7.2 months

Max drawdown

-48.1%

Trough

Dec 23, 2022

The strategy eventually made a new equity high, but only after months of drawdown and frustration.

Jul 18, 2023 to Dec 20, 2023

107 trading days, about 5.1 months

Max drawdown

-34.7%

Trough

Oct 25, 2023

This was a long pause after a strong first-half rally. The strategy recovered only after the next sustained advance.

Nov 19, 2021 to May 10, 2022

115 trading days, about 5.5 months

Max drawdown

-48.8%

Trough

Feb 17, 2022

The strategy had to survive both the initial trend break and the messy defensive period that followed.

What users should take away

Indicators lag because they summarize history

A moving average cannot know a new trend has started until price has already moved. RSI cannot know whether an oversold drop is finished or only beginning.

Markets are unpredictable at the next-trade level

The same setup can lead to a profitable trend one time and a sharp loss another time. The strategy has to keep updating as new prices arrive.

Profitability often comes from a small number of big segments

The +60.9% TQQQ segment and +28.4% SQQQ segment mattered because the strategy stayed available for them after many ordinary or losing signals.

Staying in the market means staying with the rule set

For this strategy, the account is almost always assigned to a sleeve. The important behavior is not predicting perfectly; it is continuing to react when conditions change.