Thread: Trader Fred, I am a little confused about a few things.

Buddy it's your money and you can do what you want. It's not necessary to follow any particular system - if you have a bird that talks the advice would be just as effective. Simply read and learn - but no one can predict the future - unless you own a Ferdinand seismograph. Take care.

Welcome GuilRL! Thanks for joining us. Let's see if I can help answer some of your questions...

Originally Posted by GuilRL

1.) I just do not get it, as to why one should not trade into any recommendation that Trader Fred signals when he enters the market after a few days. Why would one have to follow it day by day, and what are the risks if not?

Trader Fred is just doing a little CYA saying if you follow the system and make the trades on any other day than the date specified by the system, then all the back testing results, and stop loss data can be tossed out of the window. You are on your own. If the system is on a buy signal, and has been for two weeks, but someone sees it late and buys - and the next day the market drops 1% and the system hits a stop loss - We will hear about it. "You said the market was on a buy, etc..."

2.) Likewise, I just do not get some of the comments made on TSPTalk, that unless one follows the trade recommendations as given by the indicator signals, that one should not follow the Trader Fred system.

Same reason. You do so at your own risk because the system is based on particular buy and sell dates.

3.) It would be good to know the basis of the input signals into the market strength charts. I do think that the blue line chart is a good one, but it would be grand if we understood that inputs into it. I do not want the system, but knowing the input reasons would make it more reasonably palatable, and the basis for me to know whether to follow suit or not. (PS: for example, as of 7/6/07 Trader Fred is out of the market, but I anticipate that the markets will be going up Monday for the C, S, and I based on his market strength chart which I think indicates so. So why would I reasonably believe that his choice of selling this morning, and going into G is a good decision for me too?) If I knew what reasons that caused him to make his sell decision into the G Fund, I guess I would be wiser in making up my own decision, even if his own indicators still say to stay in based on the market strenght chart (blue line).

I agree... in the end, make your own decisions and use the available information as tools. But most of us have found that we would have done better following the sentiment survey system, ebbchart, or Trader Fred verbatim.

1.) TSPTalk would be a better use to me, if the board updated late at night, at the end of the day, instead of early morning. I do not have time in the morning to see what is being projected by the different systems here, nor am capable of changing my TSP allocations so early in the morning, but i have plenty of time at night.

The site is usually completely updated each night by midnight - 1 AM ET. It could be earlier but my day job and my son's baseball team take up most of my day.

2.) I wish the Ebbchart system would provide a better look ahead. Cover a whole month instead of week by week.

I'll have to let Ebb answer that. I assume the data is presented as it is available.

I hope that helps some.

I went ahead and posed the question (#3 above) to Trader Fred about the charts on his system page, and the submodels being on a buy or sell signal. here's his response:

As a born optimist, sometimes my positive view of
things gets ahead of itself. I do not know what the
future of the stock market is going to be anymore than
the next person.

The blue line in the second image in the nightly
update is currently in the region of market strength,
but not by much. As a leading indicator chart that
makes no claim to infallibility being at only +1 out
of a possible +4 is a positive sign, but not by much.

The second image is the only place that might provide
a quantitative indicator of what the upcoming short
term market performance might be like, but not by much
as nobody really knows. That is why investing in the
stock market is gambling. You put your money down,
spin the wheel and then grin or groan. Very
straightforward casino behavior.

The TSP trader system looks for twenty-six
historically profitable market patterns to see if at
least one of them is present in tonight's data.
Unfortunately, there are thousands of market patterns,
some profitable, most not. If a specific TSP Trader
submodel successfully identifies a historically
profitable market pattern out of the thousands of
patterns that are out there, then the casino returns
some of your money. If someone continues the TSP
Trader system for another five decades the number of
submodels might reach a hundred. That would still
leave thousands of profitable market patterns not
converted into TSP Trader submodels.

Originally Posted by GuilRL

2.) I wish the Ebbchart system would provide a better look ahead. Cover a whole month instead of week by week.

I don't exactly know what you mean, GuilRL. If you mean filling up the ebbchart for a whole month, it's a no can do. I need a different set up for that and I don't even know if that'll work. Have you considered the old Wall Street saying, "sell in May and go away (come back in November)."

I have heard of the saying.... however, if so, then why are you not in G until November?

Yes, I meant to ask why not for a longer period than just a few days ahead. Why not for a longer period?

Trader Fred, I think I understand your system, but can you provide a longer period on your blue line chart? How far back does it go? I would be curiously interested in seeing it go for a few years, so I can evaluate patterns on it for my own decisions. Just so you know, it looks curiously like an Elliot Wave pattern, but am not sure based on the short terms you provide.

Thanks for your response, and be aware that I appreciate what you and Tsptalk, and what Ebbnflow provide here. Over the last couple of days you both have been very good in your predictions. Keep up the good work. I am very interested in what you all have to say here.

Originally Posted by GuilRL

I have heard of the saying.... however, if so, then why are you not in G until November?

Hi GuilRL -
Ebb doesn't go away until November because he follows his system. I think his response was based on you looking for a system that tells you what to do a month or more in advance.

Originally Posted by GuilRL

Trader Fred, I think I understand your system, but can you provide a longer period on your blue line chart? How far back does it go? I would be curiously interested in seeing it go for a few years, so I can evaluate patterns on it for my own decisions. Just so you know, it looks curiously like an Elliot Wave pattern, but am not sure based on the short terms you provide.

I'm pretty sure that Trader Fred doesn't read the board, but I'll ask if has a longer term chart to share. I have not been keeping an archive of his old comments while the system is in free mode but that will probably change once the system is only accessible through a subscription. It's a time issue for me.

I don't know myself how the system works and this is one reason "Fred" wants to remain annonymous. When he ran this system (the version he used on Rydex funds) for fund managers in the 90's he said he was constantly being harrassed (although sometimes wined and dined) by people wanting to know how the system worked - including the likes of Wall Street Journal journalists. It was the reason he backed out of it. His one request to me was for me to be the middle man so that he will not be contacted by anyone, and I don't know anything.

While we're on the subject, I realize the real test of this system, or any system, will be how it reacts during a serious downturn or very volatile markets. That's when a buy and hold strategy falls apart.

"I'm pretty sure that Trader Fred doesn't read the board, but I'll ask if has a longer term chart to share. I have not been keeping an archive of his old comments while the system is in free mode but that will probably change once the system is only accessible through a subscription. It's a time issue for me."

If Trader Fred does not read the board, then please ask him to provide the track record archive for as long a period as he can. It would be the determining factor for me to even subscribe to his system. Related to this, when is he planning on going private, and what will his subscription rate be? What exactly is the time issue?

Thanks, no more questions.

You have to understand that this system was just developed ofr TSP within the last 18 months. It was an existing system working on Rydex funds but many changes were made. The only live data used is 2007 and actually part of 2006. All other data was backtesting, and of course it did well as you base your parameters on what worked best with test data. That said, I'll see if I have any old charts from him going back into 2006.

We don't have any set date or price in mind.

Originally Posted by tsptalk

I'll see if I have any old charts from him going back into 2006.

This is a chart he posted back in January...

Originally Posted by GuilRL

why not for a longer period than just a few days ahead?

Clearly his sytem is not designed to do this. But, GOLLY GEEPERS, its good at that for which it was designed!

Just as with the weather PREDICTIONs, you can find a model that will give you some idea of what the weather is possibly likely to be, maybe, one month from today. But the accuracy/clarity will not be as good as tomorrow's forecast--and even that can be wrong. I recently saw a forecast for number and most likely locations for all the hurricanes and forrest fires across the US for the rest of the year. I'm not betting on any of it.

In addition to such market forecasts with various lengths of foresight, there is the seasonal data. This has its limitations, of course, but can allow you to get SOME idea of market conditions at any point in the future based upon the season, just like you know it's likely to be warmer in the summer than in the winter. This, in a very broad sense, is what is meant by going away in May and coming back in November. Tom posts seasonality data pretty regularly based around the month, particular holidays, and even presidential election years.

These sort of things can be pretty valuable, particularly if you have to make a decision before the data necessary to produce results from the Ebbtracker and Trader Fred System is available. Many of us recently did rather well playing the seasonality data surrounding the July 4 holiday despite the fact that it went contrary to Trader Fred, Ebb, and/or Sentiment on many of those days.

The bottom line is that you've got to understand the strengths and limitations of whatever models you choose to use, and if you aren't happy with the accuracy, length of foresight, level of risk or any other aspect of those systems, then work on developing your own. Many of us would be willing to pay good money for access to a system that could accurately and consistently predict the best performing TSP fund every day a month from now.

Good luck