For Better Market Timing, Rely on Systems, Not Emotions
The S&P 500 hit an all-time high Thursday, and year-to-date the index is up
10.2%. The bull market just keeps on rolling despite negative sentiment about
subprime lending, the housing slowdown, the plunging dollar, high oil prices,
and weak retail sales data on Friday.
While buy and hold investors are clearly making money, discretionary traders
may not be faring quite so well. Just last week, a report showed that the number
of bearish forecasts among newsletter writers was at the highest levels seen in
a number of years.
This apparent dichotomy is usually due to the fact that most traders are
influenced more by emotions, and therefore opinions, rather than taking a
quantified, systematic approach to the markets.
At TradingMarkets, we follow a different path. We keep an open mind but we
quantify everything. This systematic approach allows us to remove emotions from
trading, so we can capitalize on market inefficiencies whenever they appear.
Over the years, this philosophy has allowed us to produce many successful
trading systems, primarily focused on trading individual stocks. Earlier this
year, we released the
TradingMarkets S&P Market Timing Course.
The course is ideal for E-mini, options, and SPY traders. It’s based upon our
latest market timing research and designed to capture strong directional moves
(long and short), that last between one to five days. The system uses 32 market
timing indicators. These indicators include VIX, TRIN, RSI, End-of-Month, DMI,
and other strategies.
We trade this system with our own money, and the account has gained 28% since
we opened it at the end of February. That is almost three times the returns of
the S&P 500 year-to-date, and the out-performance is even greater based on our
starting date in February.
The system generated its most recent trade this past week after signaling 3
buy signals; 1 VIX, 1 TRIN, and 1 DMI.*
We entered a long position at the close on Monday, after the S&P 500 had lost
more than 21 points. The position was exited yesterday, after a two-day gain of
more than 38 points (the exact entry and exit points are shown in the E-mini
chart below).
- Entry: 1519.50 (07/10/07)
- Exit: 1558.25 (07/12/07)
- Profit/Loss: +38.75 points
Obviously, not all trades work out as well as this one, but the performance
of the system clearly shows the advantages of using a quantified approach to
trading.
Please feel free to send me
any questions or comments you may have.
Ashton Dorkins is Editor-in-Chief of TradingMarkets.com.
Click here to learn more about the TradingMarkets S&P Market Timing Course.
TradingMarkets CEO and Founder, Larry Connors for a free
45-minute market timing presentation.
* If you are interested in better understanding these strategies, please
call one of our sales specialists at (888) 484-8220 ext. 1, or (213) 955-5858
ext. 1.