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The Bible of Trend Following

How to Protect Your Account From a Stock Market Pull Back or Stock Market Crash

Well Everyone, there ya go. I have been warning you for a while that the market has been on a very risky stance due to numerous reasons ( read all recent blog posts). I exited all of my long positions and scaled out in the beginning of July. For all the pundits there will be probably a dead-cat bounce tomorrow and/or Monday. If the market does not overcome the recent damage we can be heading much lower. Yesterday was the first day of some fear as exhibited by the VIX ( The VIX blasted past its ceiling at 13.2 and reached a new multi-month high of 17.11).

There will be many that attempt to buy the dip. Come on, it always works ( until it doesn’t). My suggestion in order to

Protect Your Account From a Stock Market Pull Back or Stock Market Crash

Is have a complete plan. Look at distribution days which now are at 6 on the SPY. Use simple moving averages that signify strength and weakness as well as a time tested Marty Zweig indicator called the 4% rule. Using these methods you can Protect Your Account From a Stock Market Pull Back or Stock Market Crash. There will be losses however they should be small when using a plan. If you sell out when the market is down 4% you avoid a 20% or 50% loss. I suggest using overlapping indicators due to the fact you will mitigate to some degree whipsaws and draw downs. Bare in mind, there is nothing perfect. Yes you will have losses and probably many, however the goal is to avoid the BIG draw downs we saw in 2008, 2002 and so many other periods.

If you would like to learn more, I offer one on one private hourly mentoring. Email me Andrew@Trendfollowingmentor.com

Past performance is not indicative of future performance. Trading is risky.

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Turtle Trader William Eckhardt on Optimization with Mechanical Trading Systems

William Eckhardt is a legendary commodity trader. He had a bet with Richard Dennis if trading could be taught. This was the start of the turtle program. Some of these traders succeeded and some did not. The irony was they all learned the same system. The difference is how they approached risk and dealt with their fears and greed.

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If you want to better your trading, I offer hourly one on one mentoring. I do this via skype and we delve on the areas in which you are struggling. In many of the cases it is the trading psychology & overcoming fears & greed.
If I can help you…please email me @ Andrew@TrendFollowingmentor.com

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$10 Billion Hedge Fund Investor Ramius Opens a Managed Futures Fund

$10.6 billion hedge fund investment platform and the global investment arm of Cowen Group, Inc., Ramius LLC is in the process of opening a managed futures fund. The new fund gives investors exposure to a high-conviction portfolio of managed futures managers. Putting things into perspective, managed futures have had one of the worst periods over the last several years.

Personally I have been investing in managed futures since 1994 and this has been one of the longest draw downs I have ever experienced. However as much as past performance is not indicative of future performance, believe this could be one of the best times ever to invest in managed futures. Everywhere where one looks…there has been said…

DEATH OF TRENDFOLLOWING!!!

I personally believe buying draw downs has been one of the strongest and smartest strategies. I actually wrote a book
The Bible of Compounding Money which deals with this. It is not just my good thinking…but also Marc Faber wrote the forward of the book.

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deathofequities

Past performance is not indicative of future performance

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Longest Bull Market Run in Years #SPY #QQQ

This is where we are headed currently. Think of all your friends how have new houses and cars from this bull market. Did you make the money like them? Then there are all the pundits who bring out the issues of the housing bubble, dot com bubble and claim this is the mother of all bubbles. The fact is no one knows…however when it will end, I promise you it will end VERY BADLY for many who do not have a plan. A trading plan knowing when to buy and when to exit is imperative to success or better said financial security.

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I take the market day by day using very simple tools to stay on the correct side. I do not predict. I do not guess. I use moving averages and time tested concepts that have held up over decades. I will always have small losses and small profits and rare big profits. I strive however to avoid the debilitating big losses. This formula I have which is below I can teach you. It can take you only 5 minutes a day and it will put you in the position to profit and more importantly to avoid a devastating bear market. Email at Andrew@Trendfollowingmentor.com for a one on one private mentoring session. I run these by the hour and sure I can assist you in your trading.

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Turtle Trader Richard Dennis Quote

richard dennis

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Are High Yield Bond Funds Worth the Risk HYG?

With record low interest rates, it seems some are starting to question the risk attributed to High yield funds such as HYG. Currently I am on a sell on this which is interesting as I still have a buy on various bond funds.
The key is to have a plan and not chase returns. High Yield bond funds can be very risky as shown in the below pictures.

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If you need private help and mentoring with your trading. I offer one on one hourly mentoring.

Past performance is not indicative of future performance

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Potential Buy able Gap UP Stocks $FB $UA

Due to earning season Facebook and Under Armour had a buy able gap yesterday. What is favorable of both of these leading stocks was that this move was on high volume. However, there are questions as to the strength of the market currently. Yes, the stock market is moving to new highs, however there are divergences showing internal weakness, high number of distribution days as well as yesterday can be considered a stalling day.

More so, this is an old bull market any way you look at it. The big profits in the stock market are the first 18 months of a new bull market after a strong selloff of a bear market. Caution is advised in this market…Maybe it will repair itself…and on the positive side, the indexes such as the QQQ and SPY are holding above key moving averages…

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uarmour

Past performance is not indicative of future performance

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Having Patience When Trend Following

You do not need to be in the market all the time. You do need to be prepared at all times. However there are times like now in the stock market that the direction is not totally clear. The stock market is a game of odds. The greatest returns are coming out of bear markets. We are in the one of the longest bull markets. So many are celebrating however there are divergences showing weakness in the market, a high number of distribution days and a lack of meaningful breakouts of leaders.

I will look to go long when the Russell turns up. However according to my model the Russell is on a sell..You would think if the market is so healthy the Russell would be celebrating as well. The fact is…it is not…

If you would like to learn how to improve your trading I offer one on one private hourly mentoring. You can email me at
Andrew@Trendfollowingmentor.com

russell leveraged

Past performance is not indicative of future performance.

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Listening to Opinions When Trend Following

I just received an email telling me why this trader was so bullish. I am sure all of you have received emails that are bullish as well as bearish. The key to your success is to follow your own plan and do not listen to others. Build a trading plan. Accept the fact there will be trades that do not work and trades that do. The key is keeping losses small.

This trader tried to give me every reason he was bullish. Maybe he is right or maybe he isn’t however. I am myself and no one else is responsible for my trading success or failures.

I tried not to have an opinion either to be long or short the stock market. Try to take it day by day and read the market. On a positive level volume was higher across the board so it was an accumulation day on all the major averages. Again, I am concerned on the high number of distribution days ( institutional selling), age of the bull market, MACD divergences as well as some other issues….We are still above key moving averages also on the positive side. Until the market proves more concretely, I am still on the sidelines ( and willing to go long)…

If you need assistance in your trading, I offer one one one private mentoring by the hour.
Andrew@TrendFollowingmentor.com

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Large Negative Divergence MACD in SP 500 $SPY

A pictures worth a thousand words or in this case thousands of dollars. You do not want to see new highs and a negative divergence on the index. Combine this also with 5 distribution days. Not the most positive at this point.

spy

If you would like to learn about MACD Divergences and how to better invest your money, I offer private one on one hourly mentoring.
Email me at Andrew@TrendFollowingMentor.com

Past performance is not indicative of future performance

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