Thanks heaps for that!
Gis
You are welcome! That system is not very useful to investors, but it works well for me as a trader that is trying to catch the bigger moves up, and go to cash on the moves down. Some thoughts on trend trading from a Pro....
I have some pretty good tools that give me some very good odds on how to VST trade, but overall I agree with the comment below and that's how I trade my Vanguard account.
Bottom Line - Ignore the news. Ignore the daily ups and downs. You have no control over them anyway. No one knows what the next day will bring. No one!
Trading Trends; Only for Winners
Barraged With News
Market timers following trends generate great returns over time because their buy and sell decisions are based on the one piece of information that counts the most. That information is "price."
We are barraged with fundamental analysis, price earnings ratios, economic projections, news events, and a steady stream of TV and news analysts who tell us where they think the market is going.
But the simple truth is... no one knows where the market is going next.
The only absolute truth... is price. If prices are trending higher, the market is going higher. If prices are trending lower, then the market is trending lower.
Two Kinds Of Traders
News events in particular cause traders to make incorrect decisions, because they play on emotions. The urge to follow the crowd is normal. It is comforting. And in a strong bull market, it may just be correct.
But in most circumstances, letting emotions push you into making trading decisions costs traders money.
"...price... the one thing that is guaranteed to make you a successful market timer or trader."
There are two kinds of traders.
1. Those who make emotional decisions based on any of the above.
2. Those who make money off of those who make emotional decisions.
Price Is Always Right
It is hard to accept that one aspect of the markets, price, could be the one thing that is guaranteed to make you a successful market timer or trader.
There are so many indicators, so much available analysis, but "price" is always right. It is "never" wrong. At the end of every trading day, price contains the input of millions of traders, the input of all technical and fundamental analysis.
Look at the 80% decline in the Nasdaq in the 2000-2002 bear market? Or the 50% decline in the 2008-2009 bear market? The losses were all over the financial press. But were the gains on the other side of those losses mentioned. Our Bull & Bear Timer was up over 120% during those bear markets.
Losses are news, gains apparently are not.
Market timers following price trends profited during these declines. They were windfalls. But you will never read about it in the press.
Following Price
Price is objective. You can faithfully follow prices and make timing decisions based on them. You are able to determine trend changes, and most importantly, to exit those positions if the trend was a false one.
"...when the trends take off, the profits are made."
And false trends do occur. Usually at market tops and market bottoms. But the losses in "trendless" markets are kept small by those who use "price" to establish trading strategies and risk management trading rules.
And when the trends do take off, the profits are made.
Market analysis is always subjective. It can not be trusted in trading decisions. Indicators work some of the time, but also can fail miserably. The financial news media is not even worth mentioning.
Only price can be trusted. Only price is always right. Only using price to determine trends can lead you to profitable timing and a successful investing future.
Conclusion
Market timers must follow the trading strategies faithfully. Every sell signal must be followed immediately, and every buy signal as well.
Guessing how far a trend will go is useless. No one knows. Price makes the trend.
Discipline is the name of this game. Those who stand the test of time and make the trades, will over time, beat the markets, and will be investing winners.
Recent articles from the Fibtimer market timing services;
https://www.fibtimer...ommentaries.asp
Edited by robo, 03 October 2019 - 03:04 PM.
