Best Trading Indicator To Build A Strategy Upon (100 Year Back Test!)
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- Опубликовано: 14 май 2024
- In this video we look at the 200 day and 10 month moving average. The study provides back test data going back over 100 years and essentially shows the benefit of a trend following strategy.
Staying with the trend, regardless of timeframe can improve your odds of success considerably. Whether you are a long term investor or a momentum breakout trader like myself, having a moving average indicator in your strategy can keep your drawdowns in check.
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Kindly try
Exiting below 200ma
Re-enter above 50ma
9:33 This analysis ties in with Nassim Taleb's concept of Fat Tails, i.e., remove fat tails (extreme negative drawdowns) and limit your risk. The equity curve differences also speak to Spitznagle's studies on geometric returns versus average returns, i.e., again the main factor is limiting massive drawdowns which should results in a higher return over time.
Do you have a link to the study?
@@HaploPrime Nicholas Nassim Taleb's book "The Black Swan" and Mark Spitznagle's book "Safe Haven."
It's not mentioned if it was a sma or an ema that is used? Anyone know?
Instead of trying to predict whether or not we’re going into more recession and keep losing your money, a better strategy is simply having a portfolio that’s well prepared for any eventually, that’s how some folks' been averaging 150K every quarter according to Bloomberg.
I’m just doing everything wrong with my portfolio, 25% of my portfolio is in the red and I really don’t know how long I can stomach the losses. I’m beginning to reach a breaking point.
I do feel your pain mate, I’d suggest you look into passive index fund investing and learn some more. For me,I had my share of ups and downs when I first started looking for a consistent passive income so I hired an expert advisor for aid, and following her advice, I poured $30k in value stocks and digital assets,Up 200k so far and pretty sure I'm ready for whatever comes
@@cloudyblaze7916 that's actually quite impressive, I could use some Info on your FA, I am looking to make a change on my finances this year as well.
@@adenmall7596 Having an expert is essential for portfolio diversification. My advisor is "ELEANOR ANNETTE ECKHAUS” who is easily searchable and has extensive knowledge of the financial markets.
Thank you for sharing; I will need all the help I can get because I recently sold some of my assets in order to invest in the stock market.
Absolutely love these data driven videos. The rest of your videos are great too, but these are my favorite! Thank you very much. You've got one of my absolute favorite youtube channels :)
You're very welcome!
@@FinancialWisdom Which timeframe do you use?
@@FinancialWisdom Thank you for the fantastic video but wouldn't the tax implications of buying selling constantly skew the true net returns?
And it shows again, how simple rules can perform very well as long we are consistent with it. Thank you so much or for your center, my friends and I love your easy to understand and most important... Easy to apply.. content!
New sub. Very informative video! I've been using the 12 month SMA as outlined by Bulkowski. For those of us that don't have a lot of free time this approach is the way to go.
Another banger! Thank you for your videos. Each one is highly anticipated.
I'm 54 and my wife ..and I are VERY worried about our future, gas and food prices rising daily. We have had our savings dwindle with the cost of living into the stratosphere, and we are finding it impossible to replace them. We can get by, but can't seem to get ahead. My condolences to anyone retiring in this crisis, 30 years nonstop just for a crooked system to take all you worked for.
@Christina-Gisela That's actually quite impressive, I could use some Info on your FA, I am looking to make a change on my finances this year as well
@Christina-Gisela The crazy part is that those advisors are probably outperforming the market and raising good returns but some are charging fees over fees that drain your portfolio. Is this the case with yours too?
@Christina-Gisela I will give this a look, thanks a bunch for sharing.
@@Amelia-Elizabeth Bridget Mary Turow is quite popular on Bloomberg I doubt if there is anyone who is serious about stock trading that doesn't know her. She has helped me quite a few times in growing my portfolio and it was blissful without any setbacks. she is a tough person in an industry that demands clairvoyance
Silence Boomers.
I came here to get an idea of how to trade utilizing A.I trading bot after hearing a guy on a podcast talk about the importance of A.I trading bot and how he made $660,000 in 6 months from $50,000. This video has helped to clarify a few things for me, but I'm still puzzled, I'm a rookie, and I'm open to suggestions.
@@Brilliantrans Interesting. I have a lump sum that does absolutely nothing to my bank account, I want to start something with that. You seem to be doing very well, how can i reach out to this investment-adviser if you don't mind putting me to the right direction?
@@Brilliantrans Thank you for this tip. It was easy to find your coach. Did my due diligence on her before scheduling a phone call with her. She seems proficient considering her resume.
What podcast did you listen to can you link it??
Sucker!@@carssimplified2195
@@Brilliantrans Can you share this investment advisor's contact info. thanks,
The most important thing that should be on everyone mind currently should be to invest in different sources of income that doesn't depend on the government. Especially with the current economic crisis around the word. This is still a good time to invest in various stoc,ks, Gold, silver and digital currencies.
The key to big returns is not big moving stoc,ks. It's managing risk in relationship to reward. Having the correct size on and turning your edge as many times as necessary to reach your goal. That holds true from long term investng to day trading.
Even with the right technique and assets some investrs would still make more than others, as an investr, you should’ve known that by now, nothing beats experience and that’s final, personally I had to reach out to a maket analyst for guidance which is how I was able to grow my account close to a million, withdraw my proft right before the correction and now I’m buying again
@@martinerJuhel1That's impressive! I could really use the expertise of this advisors, my portfolio has been down bad....who’s the person guiding you ?
@@EvanQuiel4 The coach I use is actually quite known, Susan Lorraine Curry. She has a wide presence on the web, so you can just search her.
Love your strategy videos. One can make a fortune out of it, if followed properly
Love your content and am particularly impressed by your humble manner.
Thanks JC 😊
Thanks 4 sharing this tested strategy. I tried to lay out a few lines of codes of the 10 Month MA and color it green (trend risig), white (flat), and magenta (trend falling). It looks awfully clear and cut. Will try this strategy with my long time frame book.
Always good to see Moving Average strategies in action.
And thanks for the continued outstanding world-class content !! 🙏💪
My pleasure!👍🙏
This was extremely informative. Even if you're a trader and not a long term investor you can use this info to know when your long trades will statistically perform better and trade accordingly.
Best statergies are always simple,again a wonderful content from you,thanks
Glad you think so!
I have a 3 fund portfolio consisting of 33% S&P, 33% Total stock, and 33% international. I feel a need to focus on complete growth so I went 100% stocks, but does the SP500 and TSM overlap too much to make sense holding both? However I’ve been in the red for a month now. I work hard for my money, so investing is making me a nervous sad wreck. I don’t know if I should sell everything, sit and just wait but watching my portfolio of $450k dwindle away is such an eye -sore.
There are many other interesting stocks in many industries that you might follow. You don't have to act on every forecast, so I'll suggest that you work with a financial advisor who can help you choose the best times to purchase and sell the shares or ETFs you want to acquire.
I agree, that's the more reason I prefer my day to day investment decisions being guided by an advisor seeing that their entire skillset is built around going long and short at the same time both employing risk for its asymmetrical upside and laying off risk as a hedge against the inevitable downward turns, coupled with the exclusive information/analysis they have, it's near impossible to not out-perform, been using my advisor for over 2years+ and I've netted over 2.8million.
@@joshbarney114 I actually subscribed for a few trading courses but it didn't help much, been getting suggestions to use a proper financial advisor, how did you go about touching base with your coach?
@@FabioOdelega876 Do your due diligence and opt for one that has tactics to help your portfolio continue consistent and steady growth. “Colleen Janie Towe” is accountable for the success of my portfolio, and I believe she has the qualifications and expertise to accomplish your objectives.
@@joshbarney114 Thank you for this tip , I must say Colleen, appears to be quite knowledgeable. After coming across her webpage, I thoroughly went through her resume, and I must say, it was quite impressive. I reached out to her, and I have booked a session with her.
Very well done video, Easily explained and easy to understand
Love the content man, I've learned much from you. Seems like there are an awful lot of bot spammers about various financial investor mentors and scams though. Be careful out there fellow viewers.
This strategy is exactly what I was looking for!! Thank you 🙏
Thanks for watching
Would be nice to see a back test 200 day / 10 month moving average but using the FTSE 100 (or FTSE 350) index.
Incredible. Thank you
I use a similar strategy for my retirement account. Mine is the weekly chart for more control and the 52 WK MA.
Using the 30 day WEEKLY moving average for the q's...works great
I appreciate the information you provide, and I find it particularly admirable that you maintain such a positive mindset.
Thanks Amit
One of the best videos on finance
excellent analysis...........simple to understand
Great info! How does dollar cost averaging compare to the 10 month MA approach? I would think the results of this would definitely depend on whether you're investing a lump some at the beginning, or investing a certain amount each month. If monthly, those huge drops in the market would be incredible times to be investing with the S&P on sale technically.
This is very simple and good stuff. Thank you.
You're welcome!
Made my day bro ... thank you very much 🙏
My pleasure 😊
Insightful video. I just want to know best how people split their pay, how much of it goes into savings, spendings or investments. I'm 27, and earn nothing less $150k per year, but nothing to show for it yet.
Currently, my primary worry is how to increase revenue during periods of quantitative easing. I cannot afford to witness my savings dwindle away.
@@sherryie2 Factos!! Since the market became extremely volatile and pressure increased (I should be retiring in 17 months), I took the decision to work closely with a financial advisor. It has already been 9 months and counting, and I have made approximately 600K net from all of my holdings.
@@tonicruger That's impressive! I could really use the expertise of this advisor.
@@Mcllwain credits to NICOLE DESIREE SIMON, one of the best portfolio manager;s out there. she;s well known, you should look her up
@@tonicruger Thanks for the info, i found her website and sent a message hopefully she replies soon.
Great content. I position long with more size once the market can hold a 10w over rising 30w..
Thank you for once again very informative and good video. But I still have one question:
In the chart of the S&P 500 you seem to use the 10 exponential MA. In the Amazon and ARK comparison it agrees with me again to the simple MA.
Thank you for the video and for the simple, but potent, idea. Could you tell me if you think (or have evidence for) this approach's efficacy using leveraged instruments, such as UPRO or TQQQ? Many thanks.
Many thanks for another great video. Any "wisdom" in expanding asset classes to include for example bonds and commodities? If the equity trend is down, why not move into something that's trending up (if available) rather than cash?
This video speaks to me. Thank you so much for putting it out there. Question: what software did you use to run the backtest?
I want to know this too - I would like to do this on the FTSE 100 being UK based to see how valid this approach is on another index
Nice breakdown 5star approach
We are already in the big crash, Inflation is a catastrophe. This CPI report is a colossal failure. To bring the housing market to a halt, the FED will have to pull all the stops. The unfortunate issue is that other markets are being decimated. If you want to stay green, you have to rely on a lot of diversification. Currently up 14% and being careful. Still a better deal than leaving it in a savings or checking account yielding 0-1 percent interest.
People believe their currency has the worth it does because they have no other option. Even in a hyper-inflationary environment, individuals must continue to use their hyperinflationary currency since they likely have minimal access to other currencies or gold/silver coins.
Inflation is gradually going to become part of us and due to that fact any money you keep in cash or in a low-interest account declines in value each year. Investing is the only way to make your money grow and unless you have an exceptionally high income, investing is the only way most people will ever have enough money to retire.
@@mohammeddumadi8323 You are right! I diversified my 450K portfolio across various market with the aid of an investment coach, I have been able to generate a little bit above 1.3m in net profit across high dividend yield stocks, ETF and bonds during this red season.
@@Brendavonrohr4 How can I reach out to this coach? because I'm seeking for a more effective investment approach How good is this person at portfolio diversification, particularly with regard to digital assets?
@@Brendavonrohr4 Please I'm very much interested. How can I get touch with this coach, i really want to give her a try.
I like it and pretty similar to what I do. I been in cash waiting patiently.
Thank you so much!
Very interesting. I trade options but want park my money in ISPY, covered call selling ETF. I will definitely add this to my radar
Thanks for sharing this amazing content
My pleasure
Excellent thanks
Some further considerations
You mentioned the s&p500 strategy divergence.
I wonder if building a strategy were you buy the divergences on the weekly and then selling/buying based in cross overs would be a good idea.
I am sure you could also sell your position when there is a weekly bearish divergence.
It would be interesting to see some short positions when shorting a weekly bear div/200dma 🤔
Very interesting video. Would you consider doing a video on the performance of the s&p500 using fed interest rate increases and decreases as the decision criteria to get out and in of the market, respectively?
I would probably add some additional criteria (thats how i roll :)). I would only buy on at least "flatening" or a better "uptrending" 200day/10month MA (or at least look at the 50 day to make sure its not declining) That would hopefully help from gettting wipsawed out.
Indeed. It really helps to have at least one other indicator (when the 200MA is flattish) to minimize whipsaws.
@@selftrue670 I recommend the 10-Mo HMA
Really great information. Would you please let me know which software do you use to create the video? I like the hand and white-board-like thing. Thanks
Excellent wisdom!
Glad you think so!
I would like to see this Re calculated with dividend payments included.
Graet info, thanks for all your videos my
My pleasure!
Thank you for the video, would you recommend using this strategy with leveraged ETF like the UPRO or TQQQ etc?
2x leverage should be fine
Very refreshing content. You always learn something here.
I appreciate that!
Brilliant vid as usual. Been a professional trader for 20 yrs and it s always such a good thing to get reminded such important and crucial concepts… 👌 you noobies are lucky to have access to this!
Thanks gf5050
Thank you
Overflow of knowledge. It's really confusing sometimes
Does this strategy still outperform the market when you factor in taxes?
Another great vid bro! So useful. Question: is there any way you can do an analysis of the CCI indicator (CCI above Overbought = buy / CCI crosses below = sell) and compare it to the 10 month ma? I think you might this indicator extremely powerful
I'll check it out
can you do a video where the top 3 sectors that do well when the SP 500 does well and go back 100 years also. thanks. good video
Thank you for the video! You've mentioned using leveraged derivatives (ETF) for this strategy. Brokerage companies posted disclosures/warnings NOT to hold/trade those for longer than a single day. Are you saying that strictly following the MA(10) strategy would act as an assurance of the contrary?
Dear Sir, thank you very much for your analysis on the above topic. I'm from Bangladesh and very often watch your video to gather the general knowledge on investment and trading as well. In the above case, would you please clarify following:
1. What will be the DMA Equivalent to 10 Month MA?
2. What time frame on the chart should I use for short term trading for 6m to 12m!
Thanks once again. Golam
1.300day ema (off by 4 days statistically insignificant)
2. No idea
Dead simple works but nobody has the discipline to execute, even if it means buying & selling something as infrequently, because they also dont have the patience to do it, even in a retirement account. Though a bit slow to execute trades off personally, 200SMA/40Week are great filters. Another cracking video Gareth!
Im assuming though that backtests didn't include dividends? If not the results would be even better, especially if holding some sort of interest bearing bond/money market fund while sitting in cash!
Don't say "nobody", I'm trying like crazy to master discipline. I agree it is the real hurdle facing investors.
Can you do some research on the Bollinger bands, MACD, and stochastic indicators and how the market compares to following when they hit highs and lows?
I came here to Learn how to trade after listening to a guy on radio talk about the importance of investing and how he made $460,000 in 4 months from $160k. Some how this video as help shield light on something’s. But I’m
Confused about the current market violatrilty I’m new and I’m open to ideas..
Investing in stocks is a good idea a good trading system is would put u many days of success
This recommendation literally came at the right time, I dipped by $11k in stocks last week alone. Its crazy! I just looked up Brenda Mildred Jones online and researched her accreditation. She seem very proficient & I wrote her detailing my Fin-market goals . Information they say, is power. Thanks for this.
Brenda Mildred Jones is an expert and a guru in describing the trade terms to the newbie, and with my portfolio growing firmly with her simple trade guide, therefore I hold no reservation in recommending her as a mentor
@@lemriknos2144 You're right, Brenda Mildred Jones is an expert, she made everything for me. A few weeks prior to this course,I had minimal knowledge environment, however, I can now happily say that I am confident with her analysis and market structure. I would strongly recommend Brenda Mildred Jones signal and strategy to anyone who would like a boost in conference when trading and analyzing the markets.
Don't do business with anyone who doesn't have a fiduciary duty
Excellent video. Subbed. I love how the simplest things can be the hardest for people to allow themselves to execute due to people’s psychology with the markets. Something as simple and objectively provable in its effectiveness so hard for people to do while selling market bottoms is the hardest for people to get themselves to stay away from.
Very nice presentation..I personally learned a new stategy
Great 👍
Outstanding Video yet again. Did you by chance check for weekly 300MA or any other time frame. If not, what in your opinion is the best back tester to do this work?
My personal approach is a 20 week MA, it depends on your style etc
This channel is the best on trading strategies 😍😍😍
Thanks Vincent
Quick 5 min view of this on India's NSE Nifty Index brings about similar observations. Of course, I have not done any data analysis yet. Cheers.
Question. What do you use to make your videos? The graphics and animations are great. Thanks in advance.
Another super video! If only inveterate holders would a least consider modifying their approach, to incorporate at least some timing element, they would save themselves from the worst damage without years of charting practice. It has been upsetting to see some of the losses people have made in 2022. As you say this is a mechanical system and only on the periphery of charting. I think the problem is that 'some' of us humans have emotions, bias, fixed opinions and make presumptions etc.🤔
Good to see the charts using log scale...very useful.
NoAxe
Thanks as always Noacks
I don't watch your videos and hit like button...
I like the video first and then watch the video, it has become a habit for me.
Thanks for your effort.
Thanks Essai 🙏
A class content. ❤️
Thanks!
Warren Buffet said we should keep buying through thick and thin especially through thin as American businesses are going to do well, I have currently set aside about $253k to put in the market. Any ideas how to go about that ?
Find quality stocks that have long term potential, and ride with those stocks. I have found it takes someone who is very familiar with the market to make such good picks.
Please can you leave the info of your investment advisor here? I’m in dire need for one.
Thank you for this tip. it was easy to find your coach. Did my due diligence on her before scheduling a phone call with her. She seems proficient considering her resume.
Buy Warren Buffett (Berkshire Hathaway), and/or an S&P 500 index
Staples and utilities drop down much less, but they grow a lot less, too. If you don't have the stomach for drops, don't be fully in stocks, especially growth stocks.
can make video about what stocks are on your watch list and why ? kind of show what is really
going on ? thanks. love your channel.!
TQ bro for good information...God bless ...i am from INDIA ...i trade mostly in index options can u pls do a video of option strategies to trade in volitile market without prediction ...pls
Thank you!
You're welcome!
Bro You're the best 💯💯💯💯
You are the best
Hi!
Thanks for the great content, as always!
If implementing this strategy instead of buy and hold on the s&p 500, what would be the time frame?
Thanks in advance.
That was based on the monthly
One way to make it even better, open long & close short at break above MA, close long & open short at break below MA
Love it!
So glad!
Excellent content again and I always learn a lot from your productions. Quick question. When you say the 10 month MA do you mean a monthly chart with a 10 MA or a monthly chart with a 210 MA.
Monthly chart in this example
Thanks Gareth. Fascinating. I usually equate the 200 day EMA with the 40 week EMA and the 10 month EMA. But I think this video demonstrates a meaningful difference. In terms of detail, I assume all trades on the 10 month EMA are ended or commenced on the first or last day of each month? Is that correct?
Hi William. That is correct end or start of the month 👍🙏
Fascinating.Would the 10 month MA apply to futures.
@@FinancialWisdom I get much better results (3x the profits) using 10sma rather than 10ema. Also, not understanding why you say moving average and not exponential moving average in the video but then it's an ema that you plot.
@@gilouch8975 10 month?
Does the differential between buy and hold, and jump in and out strategy you propose hear still hold up with the increased frictional brokerage and tax costs?
Would it be possible for you to produce a similar video evaluating the value of the 12 month SMA, applied with these two rules: 1. get out when the price of the index at the close of the month is below the 12 month SMA, 2) get back in when the price of the index at the close of the month is above the 12 month SMA for two consecutive months? Thanks.
Why don’t you test it yourself?
Hi, thanks for this very interesting vidéo. I wanted to look into it a bit further with trading view but could not find a 10 month simple moving average in the indicators. Did you find one indicator that offers it and coud you link it as an aswer ? Thanks a lot
I think what he is doing is just using a 10 MA on the monthly setting. In the previous comment, he uses personally a
20 week MA which would be a 20 MA on the weekly.
I actually talk about using a 200-day moving average on index funds in my book (the 10-month is a monthly equivalent of the 200-day). Using a 200-day MA to time indices puts up essentially the same returns as buy and hold with drawdowns less than half as big as buy and hold.
But 10m ma reduces whipsaws
@@nandakishore671 I agree.
10 months is 301 days?
@@petergalpin3147 no you are not considering weekends and holidays
@@nandakishore671 so how many days is 10 months?
Huge fan !!
Thank you for all your nice videos. I have a question about this strategy. Why when we are in cash during a big crash we wait the price to cross again the 10 month moving average while we could rebuy at a price way lower ? Even if we don't catch the bottom , i think it will be more profitable.
I agree, I wait for the indecies to drop 25% and then start to average in (my trading approach is different)
HI, understand but a bit confuse , 200 day MA , i know i use a daily chart and plot 200. right? For 10 month MA , do i use a monthly chart and plot 10 MA , is it how it work, sorry for the questions, but i am confused , Thanks
this strategy works really well with ETFs or mutual funds in IRA and 401k accounts.
This makes sense, the only question i would have is the amount of taxes you would have to pay for capital gains vs buy and holding where no tax is paid on unrealized profits.
do it in a retirement account
A crash in the stock or real estate markets has less of an immediate impact on people's standard of living than inflation or currency devaluation. That the market is so negative at the moment shouldn't be shocking. If we are to survive in this economy, we need assistance right away. The ETF and stock markets are still quite volatile, just like the property market. Now all that's left of my $370K portfolio is ruins.
I prefer to seek the advice of financial consultants when making my daily investment decisions, especially since their expertise is focused on short- and long-term holdings for profit realisation and because of their specific research, it is almost difficult for them to underperform. I've been investing with my consultant for just over two years, and during that time we have already generated sizeable net profits.
That does make a lot of sense, unlike us, you seem to have the Market figured out. Who is this consultant?
@@trazzpalmer3199 Salvatore Fortunato Sofia, a well-known expert in her field, is my financial consultant. Her website is where you may get in touch with her. She is a great resource for anyone looking to understand the financial market because of her extensive experience.
Found her webpage by looking up her name online. She seems very proficient, scheduled a call to use her services.
Hello! Would you please tell me the website where you can have a look at companies' data (the one you use in heaps of videos)? I can't remember it from the top of my head. Cheers!
Excellent video as usual, thanks! I am a Brit with an IB and HL accounts. What instruments/symbols can I trade for the SnP market as in the video? Thanks for the advice?
Its usually the SPX
@@FinancialWisdom Thanks!
@@FinancialWisdom HL has brought up SPXP and SPX5 are these the same as SPX? Thanks
Thank You Sir Ji
Welcome
Thank you for another nice video. Do you have a good strategy for trading CFD indices?
A previous video 'dollar cost averaging'
Thank you!
Curious if this should for the capital gains taxes youd be paying for selling within a year? And would this be a 300ma now? Just wondering how you set this on your chart.
How would I get that 10 month ma on am H4 chart, what number and price type? I trade pairs and xau
Great video! Is there an ETF that follows this strategy? Or another way of automating it?
Not yet but I have been approached regarding a hedge fund...
Thanks for this video. I have a question. Are month end values the only times when a trade would be triggered, or would a user monitor daily and trade whenever the closing price crosses the line?
I'm pretty ignorant, but learning fast. After thinking about this for a couple weeks and tinkering on yahoo finance, I think I would use between a 6 and 10 month SMA with a monthly interval to determine my exits and then start watching more often for getting back in. I was just looking at VOO during the '22 peak and would have exited at about $407.22 with a 10 Month SMA and a monthly interval. I would then start using a quicker SMA on the weekly chart to get back in. I like this coupled with DCA when on sale. I still work, so I could only do a good job with this if I limit myself to a couple of funds. Jarrad Morrow's channel has a video about only having a couple of funds, "Investing In 2.5 Funds Can Make You a Millionaire." Works for me I think. Thank you for the education.
Does the back test take into account of the tax consequence of the exits? What are some of the ETFs that replicate the strategy? People could just buy and hold these ETFs without suffering from the tax consequences of market timing.
Hi - How does one get the 2013 Meb Faber report you mention in this video?
Superficially that sounds good but what is the outcome if you factor in the cost of selling and buying stocks (or ETFs)? Also you don't want to have a large cash position on your bank account which in turn requires to buy and sell cash substitutes/equivalents like bonds.