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Trader Fred Tech Reports

Developed by Trader Fred


TSP Trader Technical Reports


The possibility always exists a submodel trade may not be profitable. Investing in the stock market is gambling, as past performance does not guarantee future performance. All of these charts are provided for informational purposes only and are not meant to predict future market behavior. The complete Disclaimer is below.


(Reading carefully at least once is recommended, as is the case with all small print one regularly encounters). 

There are no assurances any TSP fund will achieve its objectives and/or strategy. Historical data and back testing should not be taken as an indication or guarantee of any future performance, return on investment, future market behavior or future individual retirement account gains or losses. All TSP Funds involve investment risks, including the possible loss of the principal amount invested. There are no guarantees in the stock or bond market. TSP and Trader Fred do not imply guarantees or assurances of future market or TSP Fund performance in their daily updates.

TSP or Trader Fred will have no liability to any person or group for any damages with respect to your use or misuse of the information on the TSP or Trader Fred sites.  You agree to hold harmless TSP and Trader Fred from any and all (1) claims, (2) costs, (3) damages, (4) economic losses, (5) expenses, (6) liabilities, (7) losses,  (8) lost profits,  (9) lost revenues and (10) similar.  Further, you agree to promptly pay without further litigation 100 percent of all reasonable attorney and expert fees. You agree to defend and indemnify TSP or Trader Fred for the foregoing items (1) to (10) at your own expense whether (1) consequential, (2) direct, (3) incidental, (4) indirect, (5) punitive, (6) special, and/or if you have received (7) prior notification and/or online advisement, such as this Disclaimer, of the possibility for such damages. And finally, you shall not assist by any means any third party in order to legally avoid the foregoing items: (1) to (10) and (1) to (7). By accessing the TSP and/or Trader Fred sites, you agree not to redistribute the information found on them. Your membership payments to TSP are the automatic and voluntary monetary proof of your complete agreement with, to and for all the terms stated in this Disclaimer. 

The TSP Trade system has four design goals. The first is to stay out of the stock market and in the safety of the G Fund during periods of stock market gyrations.

The second TSP Trade system design goal is to exit each submodel system trade with at least a one percent profit. There were four system trades in the first half of this year. They averaged 1.39% per trade, which meets the second design goal.

The third TSP Trade system design goal is to be out of the stock market for least 40 percent of the trading days. That meant being in the safety of the G Fund for at least 50 of the 125 trading days experienced so far this year. The TSP Trade system was in the G Fund for 70 days during the first half of this year. This realizes the third TSP Trade system design goal.

The fourth TSP Trade system design goal is to use a –1% to –2% stop loss to exit trades no longer following the relevant submodel pattern. This happened at the end of the last system trade. This caused the –1% stop loss to execute. The system trade exited the market with a profit of +0.71 percent. This nice stock market gift satisfies the final TSP Trade system design goal.

It is hoped the TSP Trade system behaves as well in the second half of this year. However, there are no guarantees when investing in the stock market, only preparation and hope. 

To sign up to receive email alerts when the TSP Trader System's signals change, go to the email alert page. 

More on The TSP Trader System:

More on The TSP Trader System, taken from a late December Daily Market Commentary:

... "Trader Fred" will not be giving us the system.  He will be telling us when we have a buy or a sell signal.  It's kind of like taking an indicator like the ARMS index.  We don't need to know exactly how each measurement is determined.  We just need to know what the market tends to do at specific levels of the indicator.  That's what we'll be getting here.  But it is based on more than just one piece of market data.

Trader Fred will run his programs each night using that day's data, and the output will tell him whether the system is on a buy or sell signal.

A quick and simple overview shows us that there are 8 separate short-term trading models, each based on certain market criteria.  If any one of those 8 models is on a buy signal, then the system (labeled the long-term trading model below) is on a buy signal.  If all 8 go to a sell signal, then the system goes into a sell signal. 

In the example below, which is tough to see, The A, D, E, and F sub-models all had a buy signal at one point which put the entire system into buy mode (the black bars).  Those are dates on the left of those black bars.  You can see that there were a couple of points where there is a gap in the black bar and that is because none of the 8 sub-models were giving a buy signal.  That would be a time to sell.  But once one sub-model gives a buy signal, it's back to a buy for the system, and for us.

That doesn't tell you too much and I may be oversimplifying the explanation, but that is the gist of what we will be seeing. 

The system has been on a buy signal since early August of this year.  That would have equated to a 10.8% gain if you used a 100% C fund allocation during that time.  (More on allocations later.) The other day Trader Fred had told me that it looked like we would be getting a sell signal by the end of the week, but the last two days' activity set another one of the sub-models (sub-model J) into a buy mode so the system remains on a buy signal.

Oh, how I was hoping it would give that sell signal because you know I don't want to be a buyer with the market up this high.  Perhaps a sell off in the next couple of days will put us both on the same page.

What you do with the buy signal is basically up to you.  More conservative investors may never want to go to a 100% stock allocation, while aggressive investors / traders may want to move all their chips into one stock fund.  Not surprisingly, the back testing has proven that using 100% S fund on a buy signal and 100% G fund on a sell has shown the best results.  That may not always be the case and that may be where we have to use some analytical information.  Trader Fred is working on tweaking the system to generate an optimal allocation.  But to reiterate, your own situation should determine the amount of risk you wish to take.

As an example of the type of returns the system has been seeing (and again this is back testing and back tested results always seem to be a best case scenario since they are designed around past data) the system generated a return 2.5 times that of a buy and hold of the C fund since July 2003.  That is when share data was first introduced.  And, very importantly, you would have only been in the market 68% of the time.  That means about a third of the time you would have been safely in the G fund, as opposed to a 100% C fund buy and hold allocation where your account is at risk 100% of the time.

We will begin monitoring the returns of the system for tracking purposes on the first day of January 2007.  The signal will be determined by the program each evening and Trader Fred will then pass the info along to me.  I will then update the site with that information in the following morning's market comments. 

- One of our readers made an interesting point, asking if there was a "hold" signal rather than a buy or sell signal.  That is a great question.  The over-simplified answer is that the system is either on a buy (in stocks) or a sell (in the G fund).  But the buy signal, once given, really turn into a "hold" signal because you may have missed the optimal buy point.  We started offering the system signals here earlier this month, five months into a buy signal, so the buy signal is not very strong at all at that point, which we have stressed.

I posed the question to Trader Fred and here is his response:

"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." 

Read about System Stop Loss Analysis | Relative Strength Trends

The preceding information is for educational purposes only. The % allocations are broad based opinions of the TSP Trader Fred Trading System and are not specific for any individual. Risk tolerance and time horizon may vary and subscribers should consult their personal advisors to develop a plan, custom tailored for their unique situation.

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