As members are aware I spent a number of years managing other peoples money in the futures markets via a trading limited partnership along with a few highly qualified individual accounts. The monies were managed utilizing a “Trend Following” swing system that was well diversified in the futures arena. Suffice it to say the trading was very successful, however, now that I am retired, and for quite some time actually, I no longer have an interest in the high leverage of futures. The purpose of this new section is to attempt to replicate some of those accomplishments in futures, utilizing Exchange Traded Funds.
It has been a personal goal to put together trading systems that can be applied to Exchange Traded Funds (ETFs). ETF’s provide access to well diversified portfolio’s and excellent asset allocation models. The system work being undertaken is a never ending proposition from the Prudent Trader’s perspective. Systems are being researched and back tested against ETFs from the likes of the “Turtles” as well as other formidable trend followers like Ed Seykota, as an example.
After the debacles of this decade in the equity markets, in all markets actually, trend following systems should be of interest to everyone, if for no other reason than a reason to exit. While you’ve read about all the devastation Trend followers either avoided the debacles or profited handsomely from them. When they exited and/or shorted they didn’t ask “why” prices were going down, they observed that things were deflating and followed. What makes matters worse is that perhaps now, because of the market debacles of 2008/2009 you may need a 100% gain just to get back to where you were a decade ago.
System Trading and Trend Following is not for everyone. The biggest drawback is often not the system itself; it’s the individual trader. Trading systems all go through periods of draw down, periods of whipsaws. During such drawdown periods it becomes harder and harder for the individual to pull the trigger on a trade. It’s easier to just walk away and forget about it. In fact if you look at the performance of many trend followers during 2008 you will find performance figures that were barely up, perhaps down on the year. That is until that infamous October! Then the trend followers shined.
It is said that in order to affectively trade a system it must be one that you designed. There is a certain amount of truth to that. However we hope to give you ahead start on any such project you might undertake. I’ve been providing for some time now signals based on a few systematic approaches across a broad spectrum of ETFs. You can follow on paper or for real, find out what you like and dislike about each then move on to a compromise (we may even do the back test work for you) share it with members or keep it proprietary to your thinking. Our purpose is to help you!
- PrudentTrader’s ETF Trading Systems A work in progress!
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE SUCCESS
Link to MARKET TIMING pages.