For about the past year, I have been working on finding a way to improve my trend tracking methodology by researching ways to enter the markets earlier than as per the usual trading rules. At the same time, however, I wanted to be in control of downside risk.
As a result of my research, I am pleased to announce the details in “The SimpleHedge Strategy,” which can be downloaded for free. This e-book was almost completed last June when the markets collapsed, which prompted me to delay the publication. It was too good of an opportunity to apply these adverse market conditions to the SimpleHedge to see if it could withstand the rigors of the market place.
To me, the answer is a resounding “yes,” but you’ll be the judge to see how not only this simple approach can stand on its own but also complements my trend tracking strategy, which I have advocated for over 20 years.
Certainly, this e-book will generate a lot of questions and comments. Feel free to either post them or send me an email. I may not be able to respond directly to all inquiries but will attempt to post the relevant questions along with my answers.
This is a work in progress, and I expect to make updates and revisions as new opportunities present themselves over time.
Comments 10
Wow , this “Simple Hedge Strategy” looks like anything but simple. I have to admit that I was disappointed due to it’s complicated nature. Probably to you, the creator of the strategy, it seems more easy to implement. Thanks for all your efforts.
Anon,
Hmmm, you must be the only one. After all, how difficult can it be to invest 50% in SH and the other 50% in a few mutual funds?
Maybe you are new to investing and need to get up to speed…
Ulli…
Ulli, Your “SimpleHedge” explains hedge fund in a way in which I had never thought of hedge funds. I had thought of them for people who had over a million dollars in assets and were very sophisticated investors. You have a wonderful gift of making difficult investment strategies easy to understand. Fantastic!!!
Hi Ulli,
This definitely seems simple but isn’t this like trying to accelerate your car while pushing onto your brake pedal at the same time?
My simple argument is, if it is not risky to buy into the market while your trend tracking generates a ‘buy’ signal, then why is it risky to buy SH while the trend says ‘sell’? Particularly when you have your 7% sell stop in place? I am just thinking who is taking more risk? The risk averse individuals or the aggressive investors?
Thanks so much for your investigation and analysis. I think this is very beneficial and I will certainly use it.
Thanks again!
VR,
Sure, but it’s up to each indiviual how they want to handle the long and the short side of it once the TTI signals those trend changes.
Ulli…
Ulli,
I am familiar with “Two For The Money” strategy by Al Thomas at http://www.mutualfundmagic.com where he is in FUNDX when it’s 40 week s.m.a. DMI line is turned up or in RYURX bear fund when it’s 40 week s.m.a. DMI line is turned down. That method seems so much simpler and produces a great return. Thanks for all your efforts, I just take what I can use and leave the rest with any strategy because we all feel comfortable with different things. I do however like your basic domestic TTI strategy and do impliment it into my overall investing plan.
Anon,
It does not matter what method you use as long as you protect yourself from downside riks via sell stops and at the same time get away from the mindless buy and hold proposition.
Ulli…
Ulli,
Can you explain how you set up the sell stops for when the Net Hedge falls 7% from it’s high?
Thanks for all your help,
mcr
Anon,
This is what I said the in the example in the ebook when looking at the gain of 8.8% last year: A 7%trailing sell stop would call for a sell when the gain has been reduced to 1.8%.
Ulli…