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Thread: End of Month IFTs vs Beginning of Month IFTs (splice from Balance/Age thread)

  1. #1

    Join Date
    Feb 2013
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    Default End of Month IFTs vs Beginning of Month IFTs (splice from Balance/Age thread)

    I didn't want to hijack the Balance/Age thread with a response to the following post, since my response wouldn't have anything to do with Balance/Age.

    Quote Originally Posted by TangoMike View Post
    I used to trade 8-12 times a month back in the day, I was one of the few that got a letter for excessive trades. Is there a thread to discuss trading strategies--end of month trading versus the first of the month...that kind of thing? The 2x/month is so limited, it can be done but it is frustrating at times. Thanks in advance!
    This is exactly one of my biggest complaints about TSP. I would be more than willing to pay a commission to do more than 2 IFTs/month, when needed. A great example was August and September for me. I IFTd to the lily pad at the end of August to lock in gains, then went back into the S early in September. I not only deviated from my own strategy that focuses on risk vs. reward (too much risk and didn't seem to be enough potential for huge rewards at the time, and I knew it), but I also did so to an extent because of playing "follow the leader" with a lot of other people here who were largely moving toward the S Fund. I thought everybody who was doing that was out of their mind. Then I lost mine and made the same mistake.

    Here's the real problem I ran into. I didn't expect the drop to go as long or as far as it did, so I refused to use September IFT #2 on a move to 100G and get myself trapped on the lily pad until October when I had reason to believe the prices could have found support before the end of September. I ultimately stayed 100S all the way down to the bottom, because by then I knew the odds of me missing a ride back up were greater than stopping a larger loss if I'd have IFT'd away from the S. I instead rode it all the way down and all the way back up to where it is now, and just today went from 100S to 50G/50S.

    I'd rather not deal with monthly limits when the markets care only about day-to-day and long-term conditions and nothing about which particular month it is (I do not agree at all with common sayings like "Sell in May and go away", FYI). The mistake mentioned above taught me that the ideal situation with TSP is one that sees prices topping out late in the first week of a new month (with IFT #1 going to the lily pad soon before that happens), then using IFT #2 on a move to high risk once equities markets seem to start finding support.

    Unfortunately, day-to-day market conditions don't always coincide with the beginning or end of each month, so even having the ideal conditions one month will often have a lot to do with the next month's conditions not being ideal for such a strategy.

    If anybody has their own strategies regarding EOM and BOM IFTs, please share it and tell your story here.
    70C/30S as of 12/15/2014


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  3. #2

    Join Date
    Feb 2007
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    Default Re: End of Month IFTs vs Beginning of Month IFTs (splice from Balance/Age thread)

    Here's a link that broaches the subject:

    LINK

    It's free and fun to look at, but it is a straight-forward look at how this "first of the month" trend has developed with mutual funds and 401ks since they came into being. Mostly because of how they normal enter into the market on the first of the month.
    THIS IS WHERE I WOULD PUT SOMETHING TO REPRESENT MY THINKING, BUT THEN THEY SHOW UP!
    Tracker =
    Check my position

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  5. #3

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    Agreed. TOO limiting! ! I am in the same situation... i may just use my second IFT for January, to get into a possible fund for February. I dont want to waste an IFT in February to align my money as I see fit w market fluctuation or trends.
    In addition, the 12 noon cut off time is a hurdle in itself. If I decide to move funds today, I must enter it before noon today, and i must know w absolute certainty the following day(s) will show a gain.

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  7. #4

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    Interesting information! (y)

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  9. #5

    Default Re: End of Month IFTs vs Beginning of Month IFTs (splice from Balance/Age thread)

    Why does the TSP board cut us off at noon? Does it really matter to the computers if we have until the closing bell? Would it cost us more to give us that additional 4 hours to have our IFT effective on that day? It is all done by computers isn't it? Just trying to understand the rational.

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  11. #6

    Default Re: End of Month IFTs vs Beginning of Month IFTs (splice from Balance/Age thread)

    Quote Originally Posted by rlundy View Post
    Why does the TSP board cut us off at noon? Does it really matter to the computers if we have until the closing bell? Would it cost us more to give us that additional 4 hours to have our IFT effective on that day? It is all done by computers isn't it? Just trying to understand the rational.
    it's called 'the float'. remember when you used to could write a check at the local grocery store on friday afternoon and be sure it wouldn't hit the bank until monday?

    now walmart scans your check at the point of sale and it comes out of your account immediately so you might as well just use your debit card if you are not already overdrawn and spending someone else's money.

    it's like that, see? there is good money to be made with all that liquidity in the time window between order and execution, just ask any big trading algorithm.

    or, colloquially known in the financial, counterfieting, and identity theft industries as "hangin' paper". also, it appears in the old oral histories from time to time as a nursery rhyme "bah, bah black sheep, have you any wool?"
    Last edited by burrocrat; 01-19-2015 at 05:26 PM.
    100g

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