Thread: Trader Fred's System questions

No, but Trader Fred is open to any data that will help returns. I'm sure the system, which was very successful trading Rydex funds, will be an evolving process as data comes forth.

Is there any detailed information on this system that I'm missing, or will it be forthcoming? I read the page about the 8 indicators and if any one is a buy, then the system is a buy. But what are these indicators? In other words, what do A, B, etc. represent or measure and how are they computed? Has this been posted anywhere or is there a link that I'm missing, or am I totally missing something that makes this sound like a really stupid question? (Because otherwise I'm surprised that no one else has asked this yet.)

You're not missing anything. While he has given me little tidbits of info, data, charts, and stats, the only thing we really have, or will get, is the buy or sell signal, with possible hints as to whether the signal is stable, weakening, or getting stronger. This is one reason he has insisted that I offer a lengthy free monitoring period. Back testing is not enough to warrant a winning system so he wanted it to be in live mode for several months.

As I learn more about the system I can talk more intelligently about it. Right now "Fred" and I talk to different languages (although it's all in english). He sends me those charts and stats and I say, "what the heck does all this mean?" But I'm learning.

The first fund model he wrote made "Somewhere in the double to triple digit multi-million dollar range after expenses" for a company he worked with, in just few years. It was written up in the Wall Street Journal and he was sought by many people who wanted to pick his brain - the last thing he wanted. He has broken off ties with them but he assumes they still use it.

To add, the big money was made both going long ETF type funds, and short during buy signals, something we can't do with TSP, but certainly in our our personal investment accounts.

Also, he has been experimenting with, and having success with, 4 additional submodels.

That may not be want you want to hear but I hope that answered your question. If you have any specific questions, I can always pass it along to Trader Fred and see what he has to say.

Tom

Thanks, Tom.

I can appreciate this, particularly specifics of formulas and such. Still, I'd feel more comfortable with some sort of discriptive, but not particularly revealing, names for these bars, like "moving averages indices" or "sentiment factor." Since this "system" is intended, as I understand it, as just one tool for consideration in each of our personal risk management decision processes, some way to modify the weight of (or ignore) each of these factors seems important or, perhaps, at least, what sort of risk is built into the system...

Well, I guess we'll all learn more as we go. I'm all for making money.

I'll pass along as much as I can.

Risk seems to be a major factor. All the back testing has shown that we might be in the market about 70% of the time - As oppossed to 100% with buy and hold.

Tom,

Normally we are buy and sell signal people here. Is there no "hold signal" in Fred's system? Will there be one in the future? My point is I do not what to buy at the top and his models are showing some weakness. A "buy" signal at this point in the game may be ...............

Good point. An actual buy is given when it moves from sell to buy. I have been saying it remains on a buy but I guess it would be the same, or better, to say hold. I will reference the internal buy and sell signals that go on all the time with the individual sub-models while the system is on a buy signal. It won't mean anything except to perhaps see if the signal is weakening or not.

A sell means all sub-models are in sell mode, and you'd "hold" that sell until the next buy signal.

So there is no "hold signal" at the moment in the sense that you would hear an analyst say hold a stock (rather than buy more) but that could be something to work on.

Thanks,
Tom

I read somewhere about what percentages to assign to the C, S, & I funds using the system. Will those percentages always be the same when a buy signal is given to come out of G or will they vary based on the different signals?

If they vary, will the percentages ever change during a particular buy period. For example, we come out of G and go 35 C, 25 S, and 40 I per Trader Fred's recommendation. Then the signals change and indicate that we should go 50 C, 40 S, 10 I. In other words, will we ever be recommended to reallign our percentages during a buy period or do we stay with what we have until we are told to sell?

Thanks, Lou

"The Buy signal means to go from the G Fund to some combination of the C, S, I Funds the very first day the Buy signal is listed on the TSP Talk web site. The official trade is entered only on the first day the Buy signal is listed on the web site and not on any subsequent days. After that first day, the trade enters its Hold mode until a Sell signal is given to exit that trade and return to the G Fund. The trade is always exited on the very first day the Sell signal is listed on the TSP Talk web site. Exiting the trade after the specific Sell day has passed nearly always yields completely unpredictable and possibly catastrophic results.

"Since we never really know in advance, the duration of a Buy or Sell signal, for each trade there is officially only one day to Buy into some combination of the C, S, I Funds and only one day to Sell those C, S, I Funds and return back to the G Fund. Outside of those trade dates, the results are unpredictable."
Trader Fred (from todays Market Comments)

Given our already limited trading opportunities (one trade per day at COB if posted by 1200 EST each day) how much time will we actually have to make this transaction? I presume from your (Tom) daily comments that the buy or sell signal will get to you prior to that morning's Market Comments, usually done NLT 0800 or so. That really leaves us a 4 hr window in which to respond to changes, otherwise results will be "unpredictable." That's a pretty tight window. (Not that I'm complaining.)

The system signals are determined by the end of day share prices so yes, any buy or sell signal will be in the daily comments. Because of that, the email alert should go out much earlier than our current ones, which are usually sent within the hour of the deadline. Most likely they will be out the night before the deadline.

As we know, one day does not normally make or break a trade, but that is the way Trader Fred thinks. He likes to use the analogy of a rifle shot vs. a shot gun shot. Be as precise as you can. Since the system has been in a buy signal since August, you can see this would have worked out equally as well if you were a day or so late. Of course not all trades will not work out that well.

Tom

Originally Posted by lsitter

I read somewhere about what percentages to assign to the C, S, & I funds using the system. Will those percentages always be the same when a buy signal is given to come out of G or will they vary based on the different signals?

If they vary, will the percentages ever change during a particular buy period. For example, we come out of G and go 35 C, 25 S, and 40 I per Trader Fred's recommendation. Then the signals change and indicate that we should go 50 C, 40 S, 10 I. In other words, will we ever be recommended to reallign our percentages during a buy period or do we stay with what we have until we are told to sell?

Thanks, Lou

Lou -
That is still in the works. Fred has been working on using the sub-models within each fund to determine strength which would help us allocate. Currently there is only one model which is looking at the S&P 500 to determine the overall buy/sell status. He will test that to make a determination if it is feasible or not. Until then it will be up to us to decide between the stock funds. He has given that spread recommendation on www.tsptalk.com/system.