CosmicDust

A simple trend based market timing system - revised

SP:SPX   The S&P 500 Index
Revised: now using the "MA Cross" indicator which has the actual cross drawn on the chart. Previously I was using my eyes to spot and missed 4 crossovers.

Use 3 month EMA and 5 month EMA cross over as signal to enter or exit market.

Monitoring - once every month at last trading day of the month.
Buy - when 3M             EMA crosses above 5M EMA
Sell - when 3M             EMA crosses below 5M EMA

Since 2000, this system needs only 14 trades, avoids most of losses and captures most of the gains.

According to this system, if you are a long term investor, you should keep investing now until 3M             EMA crosses below 5M EMA .
Do you enter the market at spot price when you get the signal or buy half-positions or perhaps a third option?
And what about SL's? Are they fixed or dynamic?
Reply
CosmicDust simonkjar
The signal is fixed, meaning once it is there, it would not change regardless next month price. The idea is to buy or sell at last day of the month the signal is issued. A typical portfolio is diversified, meaning that it has a mix of different assets like US stock, foreign stock, bond, etc. This method can be applied to all assets. One can do dollar average in and out, but I really have no idea if that makes any difference over long period of time.
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2use CosmicDust
I assume you have more experience in backtesting the indicator. Is it better on long term charts rather than short term?
Reply
I do not have a good back testing tool but visually way too many false signals on short term chart.
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Great stuff, really liked this, made a few small tweaks
Added inputs to adjust periods and changed the color (red for sell and green for buy)

attached the code here: http://pastebin.com/S5gB3PW2

Reply
CosmicDust kocurekc
Thanks Kocurekc! Like your new green and red crosses - much more friendly to the eyes.
Reply
2use kocurekc
Thanx for the update, it is indeed readable!
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