Systematic Trading Archives

What are Mean Reversion Systems?

The following article is an excerpt from the Trading System Mentor Course. Warren Buffett Unbeknownst to most, the world’s greatest investor, Warren Buffett, is actually a mean reversion investor. He buys companies well below their respective ‘fair value’ then waits for them to return to that valuation or higher. He will tend to only sell […]

The 10-Month Timing Model

What is the 10-month timing model? In late 2008, early 2009, I was approached by various financial planning firms and some stock brokers. Their ‘buy and hold / can’t time the market’ business model was crashing and burning alongside global stock markets. It’s a hard sell to tell a client to ‘stay the course’ when […]

The Key Idea

The strategy you intend to trade will usually be determined by your beliefs about the market and the objectives you’re trying to achieve. Therefore, your beliefs and objectives will determine your Key Idea. Your Key Idea is your working hypothesis; the foundations of your strategy and how it will work. One of the most famous Key […]

The Bear Watchlist

The momentum anomaly can be found in both bull and bear markets. Whilst I personally focus on trading the long side with momentum, it’s a popular choice for discretionary traders on the short side during times of negative sentiment. Considering global markets are at risk of a more sustained correction, or possibly even a bear […]

What to do during major pullbacks

What can we do during major pullbacks? Bull markets make us complacent. Be it property, stocks or commodities, investors and traders get so used to the markets going up, that they panic when things start reversing and some of their profits disappear. Yet pullbacks are inevitable. If pullbacks are not in your thinking then your […]

Current Research Project

With almost complete automation in my trading, and when not fishing, I spend considerable time researching the myriad of ideas that constantly pop into my head. The latest is trend following with options as a part of the Trade Long Term Premium Portfolio. Leverage aside, in theory options would allow lower capitalised traders to access higher […]

Why It Pays To Diversify your Portfolio

The prevailing wisdom is to ensure you diversify your portfolio. Buy a selection of shares. Buy some REITs (Real Estate Investment Trust). A few bonds perhaps. And a little cash for a rainy day. But that’s not what I do. Rather than invest in a portfolio of shares, I invest in a portfolio of strategies. […]

Too Many Opportunities. Not Enough Capital.

Trading Equities Trading equities with a large universe of stocks presents a variety of challenges for system traders. Regardless of whether you trade breakouts with a trend strategy or pullbacks with a mean reversion strategy, there will be times when opportunities exceed available cash. Too many signals to choose from means the variance of returns will […]

Are you a Ruthless Trader?

Could I be a ruthless trader? Ruthless adjective: having or showing no pity or compassion So what do you think, are you a ruthless trader? Or do you nurture your stocks? Give them a second chance to perform? Maybe even a third. After all, everyone deserves a second chance, don’t they? Perhaps you cheer your […]

Making Watchlists Work For You

How can you use our free watchlist service, Trade Long Term, to spot opportunities? It’s important to state that these watchlists are not signals. Instead they provide a short list of high momentum stocks that are potentially continuing with strong trends or pulling out of basing patterns and beginning new trends higher. Here’s a few […]