This is a “reversion to mean” strategy – as
opposed to a “trend following” or “momentum
breakout” approach. When a market or sector
is trending Up, we scan for pullbacks to make
Long trades. When a market or sector is trending Down, we scan for Short trades –
which we trade by BUYING inverse ETFs. We only trade ETFs – because they automatically diversify across companies, and act much more predictably than individual stocks. A critical feature of this approach is that we BUILD our trades – so our timing does not have to be perfect. [See “Sample Trade”]. The basis of the ETFSwingTrader approach is a highly backtested system which we reference under “Resources”. HOWEVER, “theoretical” systems and actual trading is very different. After 4 years we know how to trade this system with over 90% winning trades. And we know how to balance the trades, to minimize portfolio risk. I trade my own retirement fund this way, using 10% slots for my trades. I could only do this if we truly win over 9 out of 10 trades.
WE PERSONALLY TAKE EVERY TRADE WE POST.
We took this trade using SSO, the 2x leveraged version of SPY – to make 2.6% profit in 2 days.
We systematically scan for these situations using an approach that backtests at over 80% wins – and select actual trades based on our proprietary algorithms that have enabled us to consistently trade at over 90% wins. [See PERFORMANCE for our 100 actual trades posted in real time at Twitter and StockTwits.]
The 2-period RSI (seen above) gave us the actual “trigger” for precisely entering and exiting this trade, once our scan had identified it.
See Sample Trade for an extended example HERE.