No comments tonight.....too much else going on right now. Good trading !Tuesday, November 10, 2009
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This is all about the tides...and their effect on the financial markets...actually its the effect of gravity on the markets, but who's keeping track. Besides, tides are cool. We'll go slow here....post some charts...establish the relationship between the tides, the markets and so forth. By the way, this picture? Not much in the way of tides, but the beach and the water works.
6 comments:
Larry,
I’m looking for a simple tidal trading model here and would appreciate your comments. My question would mainly be around entry/exit rules – and it should be simple.
Rules:
a) Since this is a LT bull market I only take the tidal long trades and do not go short. (Reasoning for LT bull market is beyond discussion here.)
b) Enter market at 10:30 a.m. ET on the tidal low day (reasoning: the first hour is the most bearish time on a given trading day on average)
c) Close position MOC (market on close) at the tidal high day (no reasoning, just laziness)
Joe...what are you trading? Number 2 and 3 sounds okay to me. Dont know about #1 though. There is money to made even in a bull market on the short side...granted, more difficult but....maybe you tighten stops . Nothing wrong with your approach though. Another question beyond what you are trading is: do you plan to use stops on your trading vehicle or is the plan to go in "naked". Some backtesting I have done indicates that stops reduce total return, but if trading something like the minis, an iron stomach would help during drawdowns...lol
Let me know what you decide on and how it works out.
Larry,
Thanks for your comments. I would use an ETF like SPY and no stops. Just plain old and lazy. I am not sure about the shorting part, though. On average, the market moves up way more than down and I feel pretty confident about knowing the mid-term trend... which is up right now. The only thing I can think of is shorting the tidal short trades with less capital, but for right now I'll stay put on those. Too complicated. I'll keep track of the trades and will report back.
Joe
A variation of that approach would be to hold SPY long all the time and simply hedge it with an emini on the short side during the expected downtrends. That way you are always long spy and dont pay the income taxes on gains every year. If you use eminis as a hedge in a retirement account like a IRA, then you dont pay taxes on that either. I think this is the approach that Robert Taylor uses with his xyber9 stuff.
Larry~ thanks. This is a very interesting tax strategy. I will try that as it yields LT cap gains (I understand 2/3 of futures gains are LT).
You are a smart man!
BTW I think this current tidal short trade shows that it's very hard to make money against the prevailing trend.
I continue to be amazed by sentiment #s showing near zero retail participation in this rally.
Thanks so much.
Joe
I wont disagree about the difficulty of making money on the short side here....maybe the thing to do is play that side only when we approach the end of this bull trend, which I think happens in Feb 2010.
Yep, sentiment continues to be strangely bearish in this environment. But, it is said that bears are genetically strange anyway. :)
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