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Market Timing

Wednesday, May 24 2017

On our website at  we talk about and explain leverage and how to trade it, but we do not encourage it.  On the other hand, we also do not discourage using "moderate" leverage trading for "some" investors.  Of course, using leverage or not using leverage depends upon the risk tolerance of the investor.  Many investors trade leverage with a just small part of their portfolio, and trade the bulk without leverage.

At any rate, we don't advise MIPS members to trade with over 1.5x leverage.  BTW, you can trade 1.5x leverage for the SPY by trading 50% of your money in SPY (1.0x) and the other 50% in SSO (2.0x).

Below is a graph of MIPS3 trading various levels of leverage
- For myself, I mainly trade "Moderate Aggressive" below
- Of course, your choice is up to you
- MIPS3 is our original model with verified results all the way back to 11/04/2005
- And remember, the newest release of MIPS3 and MIPS4 (Blaster Series) are much better models

Trading SPY with various levels of leverage:
    SPY  with 1.5x / 1.0x (long/short) - Gold line    ---   Aggressive    
    SPY  wtih 1.5x / 0.5x (long/short) - Green line  ---   Moderate Aggressive

    SPY  with 1.0x / 1.0x (long/short) - Light Blue  ---   *** Standard ***
    SPY  with 1.0x / 0.0x (long/cash)  - Dark Blue line - Conservative (long-only)
  SPY  with Buy-and-Hold                   - Red Line    ---    Benchmark

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From the above, it can be seen that the Standard strategy (light blue line) grew from $10,000 => $54,000; while the SPY with buy/hold grew to $18,000.

During that same time frame, the Aggressive strategy (gold line) has the highest growth rate of all ($10,000 => $88,000), but comes with higher volatility. 

A happy medium for those who want to trade with some leverage would be to trade the Moderate Aggressive strategy ($10,000 => $67,000), which out-grows the Standard strategy with lower volatility (green line).        

Stay tuned...

Paul Distefano, PhD
MIPS Timing Systems, LLC
Houston, TX

Posted by: Dr. G. Paul Distefano AT 04:52 pm   |  Permalink   |  Email

MIPS Timing Systems
P.O. Box 925214
Houston, TX  77292

An affordable and efficient stock market timing tool. Contact MIPS
281-251-MIPS (6477)