June 23, 2017

Patience Pays

The ETFs  used in my High-Probability, Mean-Reversion indicator are mostly in a neutral state with XLE being the only one in an extreme state. The RSI (2) of XLE is still lower than 95, so a trade will not be considered unless the ETF pushes over that short-term level.

When short-term readings are neutral, patience is required. Overtrading is the downfall to many a trader and strategy.

As I state right on my website:

Patience is the key ingredient to the success of my strategies and forcing a trade is, in most cases, detrimental to any strategy. My strategies requires patience coupled with a disciplined approach. Waiting for the appropriate scenario to recommend trades with a high probability of success is what makes the High-Probability, Mean-Reversion strategy successful.

Losing trades are a definite. It is how they are managed over the long-term that proves the success of a strategy and I think I have shown over the past few years that I have managed the strategy appropriately. The performance speaks for itself. Capital preservation is one of the key elements of my strategies and I insist on a disciplined, risk-management approach so that the strategy will have the best chance at long-term success.

I am a realist. I realize there is no holy grail in trading. However, one thing I do know for certain is that I have found a unique, and concrete strategy that make the world of sense to me and I trade it to make serious money over the long-term. Furthermore, I realize that the less I trade, the better my strategy will perform over the long run: and the long run is what matters. This is what makes the High-Probability, Mean-Reversion strategy unique and so far, successful.

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Short-Term High-Probability, Mean-Reversion Indicator – as of close 2/02/11

Benchmark ETFs

* S&P 500 (SPY) – 64.7 (neutral)
* Dow Jones (DIA) 69.7 (neutral)
*Russell 2000 (IWM) – 59.4 (neutral)
* NASDAQ 100 (QQQQ) – 59.5 (neutral)

Sector ETFs

*Biotech (IBB) – 48.8 (neutral)
* Consumer Discretionary (XLY) – 44.5 (neutral)
* Health Care (XLV) – 55.6 (neutral)
* Financial (XLF) – 58.5 (neutral)
* Energy (XLE) – 82.9 (very overbought)
* Gold Miners (GDX) – 54.6 (neutral)
* Industrial (XLI) – 63.5 (neutral)
* Materials (XLB) – 69.7 (neutral)
*Real Estate (IYR) – 70.7 (overbought)
* Retail (RTH) – 35.4 (neutral)
* Semiconductor (SMH) – 72.0 (overbought)
* United States Oil Fund (USO) – 58.5 (neutral)
* Utilities (XLU) – 49.0 (neutral)

International ETFs

* Brazil (EWZ) – 37.9 (neutral)
* China 25 (FXI) – 44.6 (neutral)
* EAFE (EFA) – 68.4 (neutral)
* South Korea (EWY) – 61.5 (neutral)

Commodity ETFs

* Gold (GLD) – 47.4 (neutral)

Ultra Extremes

* Small Cap Bear 3x (TZA) – 37.2 (neutral)
* Small-Cap Bull 3x (TNA) – 59.0 (neutral)
*UltraLong QQQQ (QLD) – 59.0 (neutral)
* Ultra Long S&P 500 (SSO) – 63.9 (neutral)
* Ultra Short S&P 500 (SDS) – 34.7 (neutral)
* UltraShort 20+ Treasury (TBT) – 62.6 (neutral)

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Kindest,

Andy