Just a reminder, if the market decides to run and make new
highs, the system will miss the move. The system will ONLY go
long again on a pullback in an uptrend, it will not chase a
trending move up, it would wait in cash until it sees a low risk
entry.
Therefore in order to minimize emotion and questions, I suggest
that those of you who haven't done so already, go and actually look
at the trade examples on the charts (really study them closely),
you will see that the system, while it is very good at buying near
bottoms and selling near tops, many times it will sell out of an
uptrend way too early early and miss a lot of the move, and other
times it may stay in cash for a month and miss an entire move.
Of course the system will catch some big trades once in a
while as well, but most of the trades are quick hit and runs like a
baseball player hitting singles vs home runs. The system is
in cash 52% of the time, it was designed to get into trades when
the odds are good and get out, it was not designed to catch every
move or ride every last movement of the market.
I'm just mentioning this so that if the market did rally for
2 - 3 weeks and the system misses that move, do not be emotional
about it asking why is the system not in this move etc.
That's just how the system is; the next system entry will
either be a long after a market pullback, or a short after a
pullback and market bounce, but if the market were to trend, the
system will do nothing, it will wait in cash.
I agree wholeheartedly. With 9:1 win ratio in backtesting, I am
thinking of devoting a significant portion of my retirement
accounts to SPY System and using a much smaller portion for my own
swing trading, which has not approached SPY System backtest
results. As long as average annual returns in SPY System remain
better than my own trading, I will hold or increase the amount
devoted to SPY System. If I never approach SPY results, that is
fine. I just have to be continuously trying to improve my own
proficiency at some level.
It is the 9:1 consistentcy that gives me the confidence to
follow the signals with minimal emotion. That reduction in emotion
frees me up to focus on improving my own trading competancy on a
smaller trading account. So it is a sort of a relief that frees my
mind up to focus on other constructive educational endeavors while
I am making serious money.
I took a few courses at one of those trading schools and they
preached that you only need a 50:50 win ratio to be a successful
trader, as long as your losses are small and you let your winners
run. At no time did any instructor imply that a 9:1 win ratio was a
realistic goal.
So thanks Matt. Your points about the possibility of missing a
larger move are clearly understood and accepted as the nature of
the logic of the system. I would never be disatisfied with anything
that has a 9:1 win ratio.
As for my self this is the perfect system. I joined on
4/29/11 and this is the first time my account is up month to month
in a year and a half. Overall over the last 4+ years trying to
catch trends I am down 70%.
So for me this system is a perfect fit. I have learned I
can't out think the market. This removes me from the
equation. I also have more time for myself and don't have to
sit in front of a computer screen all day. If it only trades
1/2 the time who cares. So long at the end of the year it makes
money. If this works I plan to be a BPT member the rest of my
life.
Posted by loraleigh on 1st of Jun 2011 at 11:06 am
Rm686-
You are not alone..I've been at this a long time with some
success, lots of agony, and I'm tired of that game. I have
already decided to be a member for life. Matt & Company are
great, the blog is great and I have more time for other important
stuff like family. I hope Matt and Company make millions and
I will gladly try to help that along!
No, you are definitely not alone. The system takes the
guesswork and emotion out of investing, which has been an
impediment to me throughout my years of trading. It adds an
element of discipline too, when you following the rules exactly as
laid out. Honestly, for me, that can be a challenge in itself
as well, especially if the system says sell at the open the next
morning when you're already sitting on a nice gain at the end of
that day.
Thanks Matt, I do like your pep talks and think it reiterates
why this is just part of one's trading arsenal. I couldn't be
happier with the latest trade and will have to admit as a person
who is more of a swing trader and tends to fall asleep at the helm,
your system is perfect for awakening me to some other trading
opportunities too.
SPY system comments
Posted by matt on 31st of May 2011 at 09:19 pm
Just a reminder, if the market decides to run and make new highs, the system will miss the move. The system will ONLY go long again on a pullback in an uptrend, it will not chase a trending move up, it would wait in cash until it sees a low risk entry.
Therefore in order to minimize emotion and questions, I suggest that those of you who haven't done so already, go and actually look at the trade examples on the charts (really study them closely), you will see that the system, while it is very good at buying near bottoms and selling near tops, many times it will sell out of an uptrend way too early early and miss a lot of the move, and other times it may stay in cash for a month and miss an entire move. Of course the system will catch some big trades once in a while as well, but most of the trades are quick hit and runs like a baseball player hitting singles vs home runs. The system is in cash 52% of the time, it was designed to get into trades when the odds are good and get out, it was not designed to catch every move or ride every last movement of the market.
I'm just mentioning this so that if the market did rally for 2 - 3 weeks and the system misses that move, do not be emotional about it asking why is the system not in this move etc. That's just how the system is; the next system entry will either be a long after a market pullback, or a short after a pullback and market bounce, but if the market were to trend, the system will do nothing, it will wait in cash.
lose the emotion, be like a robot.
I agree wholeheartedly. With 9:1
Posted by dougmil on 1st of Jun 2011 at 12:47 pm
I agree wholeheartedly. With 9:1 win ratio in backtesting, I am thinking of devoting a significant portion of my retirement accounts to SPY System and using a much smaller portion for my own swing trading, which has not approached SPY System backtest results. As long as average annual returns in SPY System remain better than my own trading, I will hold or increase the amount devoted to SPY System. If I never approach SPY results, that is fine. I just have to be continuously trying to improve my own proficiency at some level.
It is the 9:1 consistentcy that gives me the confidence to follow the signals with minimal emotion. That reduction in emotion frees me up to focus on improving my own trading competancy on a smaller trading account. So it is a sort of a relief that frees my mind up to focus on other constructive educational endeavors while I am making serious money.
I took a few courses at one of those trading schools and they preached that you only need a 50:50 win ratio to be a successful trader, as long as your losses are small and you let your winners run. At no time did any instructor imply that a 9:1 win ratio was a realistic goal.
So thanks Matt. Your points about the possibility of missing a larger move are clearly understood and accepted as the nature of the logic of the system. I would never be disatisfied with anything that has a 9:1 win ratio.
Perfect System
Posted by RM686 on 1st of Jun 2011 at 10:07 am
As for my self this is the perfect system. I joined on 4/29/11 and this is the first time my account is up month to month in a year and a half. Overall over the last 4+ years trying to catch trends I am down 70%.
So for me this system is a perfect fit. I have learned I can't out think the market. This removes me from the equation. I also have more time for myself and don't have to sit in front of a computer screen all day. If it only trades 1/2 the time who cares. So long at the end of the year it makes money. If this works I plan to be a BPT member the rest of my life.
I do not think I am alone.
You are not alone!
Posted by rikkwan on 1st of Jun 2011 at 12:19 pm
Absolutely Agree
Posted by loraleigh on 1st of Jun 2011 at 11:06 am
Rm686-
You are not alone..I've been at this a long time with some success, lots of agony, and I'm tired of that game. I have already decided to be a member for life. Matt & Company are great, the blog is great and I have more time for other important stuff like family. I hope Matt and Company make millions and I will gladly try to help that along!
Thanks Matt and All
Loraleigh
No, you are definitely not
Posted by pebs on 1st of Jun 2011 at 10:47 am
No, you are definitely not alone. The system takes the guesswork and emotion out of investing, which has been an impediment to me throughout my years of trading. It adds an element of discipline too, when you following the rules exactly as laid out. Honestly, for me, that can be a challenge in itself as well, especially if the system says sell at the open the next morning when you're already sitting on a nice gain at the end of that day.
Thanks Matt, I do like
Posted by oreo on 1st of Jun 2011 at 09:32 am
Thanks Matt, I do like your pep talks and think it reiterates why this is just part of one's trading arsenal. I couldn't be happier with the latest trade and will have to admit as a person who is more of a swing trader and tends to fall asleep at the helm, your system is perfect for awakening me to some other trading opportunities too.
Great advice Matt
Posted by sporopat on 1st of Jun 2011 at 08:03 am
I think you should send out your post in an e-mail to all SPY System members so that everyone is sure to read it.