TSP | Thrift Savings Plan - Talk

My TSP trading system  will typically give two signals per month to enter the TSP  equity funds, sometimes three. I will also get one signal per month to enter the F fund, sometimes none. When these signals occur, I will only be in each fund for approximately one week, on average. This means that in most months I will be sitting in the safety of the G fund half the time. Even though I'll be making about three IFT's per month between the G fund, F fund and equity funds, being in equities for only about one week per month actually lowers my risk compared to being in equities for long periods of time like a buy-and-hold strategy (L funds).

Because my system typically gives two, sometimes three, signals to buy equities per month, returns with TSP will ultimately depend on which signal  is chosen to follow and how one allocates their IFT. One can either follow the signal early in the month or wait for the one later in the month. Over 80% of my systems TSP buy signals will produce positive returns so it's a good problem to have. I will post the allocation and go with the signal that I believe gives the best opportunity to make the highest return for the month. I also usually go 100% into one fund or another, but others may chose to diversify more into each of the other funds.

My strategy for trading ETFs and/or mutual funds is to purchase long funds when my system gives me a buy signal and to purchase their corresponding inverse short fund when I get a sell signal. Staying within the same family of funds is important with mutual funds because you can just exchange one fund for the other instead of buying and selling them. If you were to sell one fund, you'd have to wait for the funds to settle before you could use that money to buy another one. Staying in the same family of funds isn't as important with ETFs, but I usually do it anyway. Even though my trading system is based on the stock market as a whole, one index or one sector may outperform another on a short term basis and if you start switching between sectors or going from a broad based index fund to a more specialized sector, you may end up buying and selling at the wrong time. Not that this can't be profitable, it just makes things a little more difficult.

With my trading system, one could also trade individual stocks. However, I do not recommend this because individual companies have much higher risk than a sector or index fund with multiple stocks. If one really wanted to go this route, I'd recommend choosing several different companies to either long or short in order to lessen some of the inherent risk of investing in only one company.

The goal of my investment strategy with TSP is to average a return of about 2% a month or 24% per year, even during prolonged bear markets. This is possible because, even during bear markets, there is at least one opportunity in most months to make a quick trade and profit in the equity funds. My trading system helps to pinpoint these opportunities.

The goal of my ETF and mutual fund strategies is to make AT LEAST 50% per year, although they'll most likely do much better. This is possible by trading both long ETFs and/or mutual funds and their corresponding inverse short fund.

With my services, you can expect to have my system signal posted between 11:00am and 11:30pm EST whenever I get a signal change.  I will also be posting a spreadsheet with my current signals and returns and provide some daily market commentary from the day's headlines and other pertinent information about investing and trading that I think may be important. I will also discuss questions that I may get in emails or PM's in case someone else may have the same question. This information will be posted between 9:30-10:30am EST M-F. At that time, I will give a preliminary “heads-up” as to rather or not I may be giving a signal change at 11am. 

Please forgive me if I am unable to answer every email or PM, but I will do my best.


Explanation and History of Intrepid_Trader's Trading System

My trading system is based on many different indicators and proprietary trading strategies that took me six years to develop. I first started trying to develop a trading system in 1995 after a couple years of studying the markets, reading newsletters and following other people's systems. During those years, I came to realize that there are a lot of “shysters” out there that don't know anything but are more than happy to take your money and give you a hand full of “you know what” in return. I also came across people who had good ideas and what seemed like good systems but they just weren't consistent.

The initial system I developed was based mainly on moving averages (MA's). I was tracking 2-day, 3-day, 5-day, 7-day, 10-day, 13-day, 20-day, 30-day, 50-day, and 63-day MA's. It had it's moments but didn't do all that great overall. It was better suited for intermediate to long term investing and not trading. When you have prolonged sideways action markets (goes up and down in a tight range), it really underperforms. In 2006 I started tracking the VIX along with the MA's but it didn't bring too much success either.

In May 2006 I started tracking the price of the dollar. As the dollar rises, the market typically drops and when the dollar falls, the market typically rises. This did show promise and I had some success with it in spots but it was inconsistent in the long term and prompted A LOT of trades. The TSP probably changed their IFT rules because of me that year................

Early in 2007, I came up with the idea of tracking copper. My thought process was that copper was a commodity that is used by pretty much all countries and all manufacturers but is cheap enough that they don't need to stockpile it, they can just buy it when they need it. If they start buying it, it will cause the price to increase because of supply and demand. This price increase would be an indication that countries and/or businesses were manufacturing autos, machinery, buildings, etc. This in turn would be an indication that business was good so profits would go up, the economy would go up and the market would go up. When the price of copper went down, this would be an indication that none of the aforementioned was happening. Again, I had some success with this also, but the inconsistency was still there.

Then came 2008. I was losing money left and right early on and had just about given up on the whole system thing. I was only posting my moves sporadically on the tracker because I wasn't doing well. In June of that year, I decided to go back to all my past data and see what I could do to try and improve things. That's when I decided to start using all my past indicators in conjunction in order to produce a buy or signal. My system started to perform better after this and it ended the year down only 5.56% according to the PIP on my yearly statement from TSP, despite the very slow start. I still wasn't satisfied with this even though the market as a whole was down around 40%.

In 2009 I was looking for ways to improve my system even more and in June I decided to add more currencies and more commodities to my data in order to stop the occasional false signals I was getting. My system started performing the way I expected after that and I ended the year up over 20%. Not quite the 24% I wanted, but with the additions I made in June, it would of easily exceeded that in a full year.

My trading system got off to a slow start in 2010 and I was close to the bottom of the autotracker after 3 months. I realized then that I was giving too much attention to the dollar and copper and not the other currencies and commodities. I also looked back over 6 years of data and noticed that there are certain times of a month that the market performs better than others. I added this newly discovered information to the rest of my indicators and gave all of them a weighted percentage of my system's buy and sell signals. Currently my trading system is up over 28% for the year and exceeding all my expectations, even though my return is down about 12% from where it should be if I had started the year with the weightings strategy.

So there you have it. My trading system is a weighted system that tracks a basket of currencies and commodities along with the VIX, MA's and time of the month. I have backtested this system through 2005 and it has passed all my tests as far as returns and ease of use. I'm not a big fan of posting backtested data because it doesn't include two very important factors, human emotion and human error, so I won't. I will say that my system would have produced a positive return in 2008 of double digits.

I  will be adjusting these weightings periodically depending on how each indicator is tracking the market as a whole in any given time period. I believe the main thing wrong with most trading systems is that the creator is unwilling or unable to make adjustments to their systems. We all know that the market is a fickle entity so what may work one year, may not work the next. You have to be willing to adjust to it, it won't adjust to you................