Thursday, July 26, 2012

Market Timing

I've been in hiding for the past 6 months while I changed my trading strategy. Despite what the experts lead you to believe, the market can be timed. It's probably impossible to get in at the lowest point and out at the highest but that's not what I'm trying to do. My goal is to get in somewhere near the bottom, ride the trend up and get out somewhere near the top. This can be done! It takes much practice and determination, but it's achievable.

I once heard someone say if you ask someone if they could walk a tightrope across Niagara Falls they would tell you it's impossible. Yet, with practice and determination certain people can do it, as proven in 2012. The vast majority of the population can't but people who make it a goal of theirs can succeed. It's the same concept when trading and timing the market.

With that said, I have spent the past few months creating a market timing system. It tells me when the market is trending higher and when it will or is reversing. I trade 3x ETF's, bull and bear. This means I don't care what direction the market is going, I can trade both sides.

I've back-tested this and feel semi-comfortable with it, but back-testing has it's limits and you won't really know until you start trading it. That's what I've started doing and I will be posting my results with some commentary.

Most of my trades will last 3 - 7 days, but some may be shorter or longer. Shorter trades may mean I'm getting whipsawed and longer trades usually mean I'm making lots of moolah. As you can plainly see longer trades are better.

I'm going on vacation next week, so this is not a great time to start. I will post my current trades and will give my prediction for next week. The prediction is based more on feel which I'm gaining by punching in and reviewing the numbers of my market timing strategy.

As of today, I'm short and have been playing RUSS and GASX for the past 3 or 4 days. RUSS was extremely kind to me and I switched to GASX when I felt RUSS was overextended. I feel the market may bounce back higher sometime in the next couple of days. If it doesn't we could be headed for a big sell off over the next five days or so.

Let's see what happens. In the end, my trades will be based off of my market timing tool.