Mouthwash Strategy Short Currently Has an Antiseptic Sting

The SP-500 gapped up Friday with the usual trader overreaction to the Jobs report. (A report that always gets modified later). I got filled right after the open -scale-in entry #2-  on the Short position I am building on SPY. The anticipated resistance at previous support
http://tradersholygrail.blogspot.com/2010/03/ideal-area-to-get-shorter-with.html
 was blown thru by a combination of eager longs and some probable short covering. Whatever you call it, there was solid buying and my current position is presently underwater.

The beauty of systematic trading is there was no reason for me to panic or watch the day unfold. The system will exit on its own via a Stop, Target, or Exit signal. Presently, I do not have a full position, and with an 80% win rate on this strategy (on the short side), I will take a Signal for the last scale-in with no hesitation. The proprietary Market Breadth indicator shown on the chart below is now at levels it rarely gets too, and jobs report moves have a tendency to reverse (at least pullback or bounce) with in a few days. Regardless of the outcome of this trade, taking proven high probability signals with a defined calculated risk keeps my emotions at bay.
Mouthwash Strategy Performance Reports

The position sizing and scale-in part of the strategy is key in taking the sting out of days like Friday. The algorithm reduces system draw downs and often gives the position a better overall entry then the original signal. The drawback is on the signals that profit quickly you only have a partial position. But for me, the holy grail of trading is a calculated risk to manage the losses. That makes it easy to take strategy signals. Even when the Mouthwash is stinging….
Good Trading,
KW

Click on Chart for Full Size