Zach, the FAS/FAZ systems use MA crossovers and/or pivots, which
essentially is momentum/breakout trading. In times of low
volatility, breakouts and breakdowns become fakeouts and fakedowns
because there is not enough momentum to create a sustained trend
(which is required to yield a profitable trade).
On the other hand, the SPY system primarily buys dips during an
overarching uptrend and shorts rips during an overarching downtrend
i.e. reversion to the mean rather than momentum.
You never know, the coding behind the SPY system *might* work
just fine for the financial sector, real estate, consumer
discretionary, Nasdaq, Russell, gold, etc, etc!
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Title: FAS/FAZ systems Zach, the FAS/FAZ
Be careful all.....
Posted by philosoraptor on 1st of May 2011 at 03:54 pm
Zach, the FAS/FAZ systems use MA crossovers and/or pivots, which essentially is momentum/breakout trading. In times of low volatility, breakouts and breakdowns become fakeouts and fakedowns because there is not enough momentum to create a sustained trend (which is required to yield a profitable trade).
On the other hand, the SPY system primarily buys dips during an overarching uptrend and shorts rips during an overarching downtrend i.e. reversion to the mean rather than momentum.
You never know, the coding behind the SPY system *might* work just fine for the financial sector, real estate, consumer discretionary, Nasdaq, Russell, gold, etc, etc!