long term savings ftse tracker... Need help please

[gonnamakeit]

Hi,

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Really hoping you guys can help with this….

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Ive been thinking about this for a long time and now am braindead and wanted some advice from you guys.

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Future saving using money made from forex and other savings – i feel a good place to invest it is an index tracker – in the UK we have something like the 401K

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My strategy would simply be to

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1)****invest monthly in tracker – Lets take the FTSE 100 ( fxpro FFIM )

2)****most people don’t make good returns due to large dips – so I wanted to just pull the money out when the market dips

3)****possibly inject more money near the bottom of the dip

4)****re-enter on the upmove

5)****needs to be simple and not take too much time so it can appeal to many people

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But how to know when we are going to dip.

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So ive placed a simple MA50 of the graph and the plan is whenever the bar closes below the MA then I would park the money out of the tracker and go back in when the price moves above.

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Now what I really really need some advice on is

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1)****im using daily charts with MA50 as shown – does anyone have any other better MA that would be better to use – need to keep the idea very simple so 3 crosses etc would get complicated – I feel a simple strategy like this could be life changing for a lot of people

2)****the 50 day MA works ok but any other items I can use to try and get back in sooner. The main startergy is to get out as soon as possible and the MA works well for that – but would also be great if we can get in a lot sooner then the MA picks it up.

3)****Other problem is when market is choppy you get lots of false signals – there is no buy/sell price and no cost to move in and out so it wont loose money but just hsassle to be chopped around – does anyone have any suggestion on this ?

4)****Also more money can be pumped in after a big fall

5)****I feel that if strict guidelines are adhered to – a tracter which would normally make 2-5% per year could easily make 15% a year as you are stepping out when market falls- do you guys agree ?

6)****I am really excited about this coz if it works it could change a lot of lives.

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Would really really appreciate some quality feeback and with your help I can make this work

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[Financegeek]

Hi,

*

Really hoping you guys can help with this….

*

Ive been thinking about this for a long time and now am braindead and wanted some advice from you guys.

*

Future saving using money made from forex and other savings – i feel a good place to invest it is an index tracker – in the UK we have something like the 401K

*

My strategy would simply be to

*

1)****invest monthly in tracker – Lets take the FTSE 100 ( fxpro FFIM )

2)****most people don’t make good returns due to large dips – so I wanted to just pull the money out when the market dips

3)****possibly inject more money near the bottom of the dip

4)****re-enter on the upmove

5)****needs to be simple and not take too much time so it can appeal to many people

*

*

But how to know when we are going to dip.

*

So ive placed a simple MA50 of the graph and the plan is whenever the bar closes below the MA then I would park the money out of the tracker and go back in when the price moves above.

*

*

Now what I really really need some advice on is

*

*

1)****im using daily charts with MA50 as shown – does anyone have any other better MA that would be better to use – need to keep the idea very simple so 3 crosses etc would get complicated – I feel a simple strategy like this could be life changing for a lot of people

2)****the 50 day MA works ok but any other items I can use to try and get back in sooner. The main startergy is to get out as soon as possible and the MA works well for that – but would also be great if we can get in a lot sooner then the MA picks it up.

3)****Other problem is when market is choppy you get lots of false signals – there is no buy/sell price and no cost to move in and out so it wont loose money but just hsassle to be chopped around – does anyone have any suggestion on this ?

4)****Also more money can be pumped in after a big fall

5)****I feel that if strict guidelines are adhered to – a tracter which would normally make 2-5% per year could easily make 15% a year as you are stepping out when market falls- do you guys agree ?

6)****I am really excited about this coz if it works it could change a lot of lives.

*

*

Would really really appreciate some quality feeback and with your help I can make this work

*

*

*

Personally, I'm not yet convinced by the method you propose to time the market. As you mention yourself, you will be confronted with false signals in periods when no clear trends are present. So backtest the idea first!

Alternatively, you could opt for a strategy like value averaging. It's a variation to dollar cost averaging that was suggested by Mendleson and tries to help investors to buy low and sell high. Basically, you set out a 'value path' and buy or sell when your portfolio deviates. Has worked for me!

 

[gonnamakeit]

Thanks Finance Geek - i don't understand the value averaging - can you explain ?

Also you say it has worked for you - how and in what %

Also about my strategy here is my update

Ive been looking into this a lot and yes just using MA is great in trending but will not work with choppy markets.

Again this plan is for the long term – a plan where money made form fx etc can be channeled into to grow and aim to achieve high percentages consistently and without risk.

Without risk because when the money is not in the market you are not losing – just not making. The loosing will come from false signals in choppy markets and so I have come up with the following – again please let me know your thoughts.

Long term use of the EMA will keep you out from major market falls and collapses.

Rather than just using the 50 MA – in above and out underneath – I feel it would be better to divide the investment pot into three parts to – each part would be suitable for a certain market type – so overall the growth would be very positive – but I have questions on each part so please let me know your thoughts.

POT 1 ( 50 day EMA rule )

Use 50 day MA – When market goes below the line – 1/3 of your money would be pulled out.
This 1/3 would go back in EITHER when

a) price goes above 50 EMA – but this could cause losses in choppy markets
b) this could go back in after a fixed % drop from EMA cross
c) or drip fed for every set % increment – and worse case the rest would go back in if price reverses and the drop isn’t that great.


POT 2 ( 200 day EMA rule )


200 EMA would show a serious down turn in the market and at the point the other 1/3 would be pulled out and put back in at a lower price.
I am looking into drops in the market – and find an average % to go back in and get a better price – say example – would re-enter 10% lower.
Problem with this is if there was a major downturn say 20% - I would go in after 10% - not the best
Or if downturn is only 7% and I wait for 10% - then I would not be in
Or do I drop feed as it drops?


Pot 3 ( % rule )


This pot would look at recent highs and lows in the market.
On average when the market has gone up 10% from recent low then the 1.3 pot would be pulled out to wait for a correction.
After a 10% correction this would go back in.
Point here is that not trying to pick highs and lows but we know markets will always go up and down.
Again problem here is that the 10% may not be hit etc etc



Would really appreciate your views – I really feel this will work !!!

 

[timsk]

. . . Would really really appreciate some quality feeback and with your help I can make this work

Hi gonnamakeit,
I can't promise you "quality feeback" I'm afraid, nonetheless, you might be interested in my take on what I think you're wanting to achieve - which I posted to another thread a few days ago: This is Why I prefer Index Funds

The most striking thing (to me) is that there's only been one false signal (which would have resulted in a loss) in the last 20 years.
Tim.

 

[Abeer Saba]

hello gonnamakeit,

as much as i am fan of index trading as much as i wont recommend any trader not even a professional trader to go on and trade long term investing at this time of economy, an option i would say " not to put your eggs in one basket " if you really into it and you have the feeling that you must try it then do with reasonable amount but avoid holding too long like 3 years or 5 years its unfortunate but its always better not to risk much in " a correction statement " in the world economy nowadays .

 

[gonnamakeit]

Hi - this thread which I originally started got expanded on the following thread - so the original ideas from above have been changed and updates are on :

http://www.trade2win.com/boards/indices/205498-why-i-prefer-index-funds-2.html

please have a look on here as i would value your feedback