Published: April, 2004
Charlottesville, Virginia
Frank Kollar, Editor
Successful Trading With The Sector Timer, ETF Timer & Stock Timer Strategies
The Sector Timer, ETF Timer and Stock Timer strategies are meant to be traded as a portfolio of positions. We recommend at least
8 positions. Diversity protects from downside risks,
while holding multiple positions
creates a very profitable strategy because of the tendency for industries to trend over long time frames. Long trends equal large profits.
The Sector Timer, ETF Timer and Stock Timer strategies are updated daily after the close. For the record, these strategies
use the closing price of the next trading day when changes are made. Subscribers may obtain better entry prices on their ETF and Stock trades.
Subscribers trading any of these strategies should check the reports daily for changes. Alerts are not sent because of the frequency of changes.
The reports are updated after 6PM, and before 9PM, EST.
Each report has a list of "Trading Rules" at the bottom of the page. They are basic, but important to success.
DIVERSIFY - Trade at least 6-8 issues. Single Sectors will profit over time, but diversification will keep tight control
on drawdowns, and enhance profitability from the start.
NO MID SIGNAL ENTRIES - Initial entry should be made only on new buy or sell signals (depending on strategy used). Entering mid-trade adds unnecessary risk.
STOPS - If an ETF or stock moves 10% or more against the current closing price listed, that position exits to cash immediately.
We will then await the next buy or sell signal to reenter a long or short position. This does not apply to the Sector Timer as only closing prices are
used. The trend indicators will take the Sector Fund positions to cash as needed.
Below is an imaginary account, set up to trade any of the three strategies discussed above. By reading this, we hope subscribers will
see how (we) would trade these strategies:
1. Hypothetical portfolio is started.
1 a. Capital is $24,000.
1 b. Portfolio begins 100% in cash (money market funds).
1 c. New positions are entered only on new buy or sell signals
(no mid-signal entries, no matter how certain you feel that they will be profitable).
2. $3,000 is allocated for each of 8 potential positions.
2 a. Think of "cash" as a position.
2 b. Individual stocks are usually more volatile than the Sector Funds or ETFs.
If possible, consider more than 8 positions for the Stock Timer.
Although the stock timer can be used with 8 positions,
12-15 positions would be better. The safety offered by diversity would be considerably improved.
3. These 8 positions should be in different industry sectors. For example, we would not want two of the positions to be in "Energy" and "Energy Services"
which would overweight the portfolio in that industry, thus making is vulnerable to a sudden change.
4. If this is a Sector Timer account, then the first "Buy Signal" for one of the sectors will be executed with $3,000 of the capital. If the ETFs or Stocks
are being traded, than the first long or short position change would be traded.
4 a. Dollar amounts do not have to be exact. The purpose of using specific amounts here is just to
help subscribers visualize setting up a diversified portfolio. Obviously stock positions are better
traded in multiples of 100 shares.
4 b. Subscribers should
fund a new portfolio according to which strategy they plan on trading,
as well as what size positions they plan on trading.
5. Hypothetically, several days later, a second "Buy Signal" is issued for another sector, or a long/short is issued for an ETF or stock. This new position is added before the close of the following trading day.
6. If either of these positions changes, so does the account. The Sector Fund position back to cash, the ETF or stock position would reverse.
7. In a long bullish trend, most if not all 8 positions would likely be invested for long periods of time. In bearish markets, most of the
ETF or stock positions would likely be short, and most of the Sector Timer positions would likely be in cash.
8. Check the reports daily for changes. if changes to your funds, ETFs or stocks are made, execute them before the
close of the following trading day.
9. Diversified portfolios, followed religiously, have a high profit potential over time (meaning 1 to 2 years). Industries usually
trend for considerable periods of time, and if an industry does move sideways, giving conflicting signals, you are protected
by the diversity of being in at least 8 positions.
FibTimer reports may not be redistributed without permission.
Disclaimer: The financial markets are risky. Investing is risky. Past
performance does not guarantee future performance. The foregoing
has been prepared solely for informational purposes and is not a
solicitation, or an offer to buy or sell any security. Opinions
are based on historical research and data believed reliable, but
there is no guarantee that future results will be profitable.
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