Trend Following System Q&A View Select Entries from Our Mailbag. Also See Our Q&A Page.Q: Hi. I've heard good things about your service.
I've been successfully trading major indice, and sector ETFs, but have been avoiding branching out into individual stocks (with exception of a few favorite trading stocks).
I've always felt you need extra "edge" to give that escape velocity or forget it. Your site may be exactly what I've been searching for.
Your proprietary approach may be of great service to me.
I have a few questions:
Can you send me performance data on your trend following system? That alone may be worth the price of subscription. How often does it trade? How well has it performed in years like 2004-05.
Your proprietary system seems to be modeled along the lines of William O'Neill, Navellier kind of momentum approach. In general, I've found these approaches to get aboard when trends are well on there way according to my trending approaches. However, you did mention somewhere on your website that you do encourage entries after pull-backs.
When approaching individual stocks, I think SECTOR (and industry group within that sector) play a large role in a stocks performance. If sector in favor, it really aids a stocks performance.
I want to gain an edge in this aspect.
How would subscribing to your service give me edge in this area compared to subscribing to XXX (with proprietary industry groups etc.) or something like XXX.NET ?
Thank you
A: Hi,
Hope these answers help:
1. The trend following system has returned +30% since November 2006. It trades leveraged ETF's on the three main indices (Dow, NASDAQ, S&P). It needs a margin account (no IRA), since it goes SHORT. About 10 trades since November 2006. These instruments weren't available in 2004 and 2005, so there is no performance data before that. However, we simulated back to 1985 and here are the results: Dow (+21%), S&P (+27%), NASDAQ (+40%). As you know, Trend Following system require:
* Long Term Horizon: Many Years
* Potential for Significant Drawdowns
* System Performs Worse in Non-Trending Markets
* Absolutely No Performance Guarantees
2. We buy breakouts from flat basing structures, so trend may be just starting. We also watch for stocks pulling back to their moving averages and finding support there, to initiate positions.
3. Cannot comment on XXX or XXX.NET, but questions to be asked of any service:
* How long in business? We have been doing this since 1996. Yes, 13
years.
* Do they give specific buy-sell signals, or is it some hypothetical
returns of the Top 100 stocks, which you could never trade in
practice? We provide specific entry and exit points.
* Do they manage real money using their strategy? Yes, we put our
money where our mouth is.
* Do they save you time and effort? I hope we do.
* Do they provide timely support? We do.
Remember, you have a free 2-week trial to see if our service is for you. Although, 2 weeks is a miniscule amount of time in the investing world.
Best regards,
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