Long Term Trading System (aka IRA System)

In this post I'd like to present a basic mechanical trading system for Long Term positions suitable for EOD or weekend traders: "Trend_LT". This particular system is intended for daily or weekly time frames and is based on PPO (or MACD). The system uses the inclination or declination of the PPO-/MACD-signal line as a proxy for the LT direction of the trend. The system also has a build in filter to prevent going short during counter trend corrections in a LT uptrend.

The "Trend_LT" system encompasses three possible positions:
- long, i.e. a position in the eft SPY;
- short, i.e. a position in the eft SH or perhaps even better: HDGE;
- neutral, because cash is position too!

The rules of this system are short and simple:
1. Long when EMA5 of (EMA13 - EMA55) is rising.
2. Short when EMA5 of (EMA13 - EMA55) is falling and price(=close) < SMA89.
    So no shorts when price >= SMA89.
3. Use the extreme point rule for entry/exit stops to minimize whipsawing.

A chart of the system showing some 1,000 trading days on the SPX:

A chart of the system with 1,000 weeks of SPX depicted:

Thrill Rides by PayPal

[Updates at end of post]

Last summer my two sons and I were having "fun" in some of the roller coasters of Six Flags/Magic Mountain near LA. Think of telling names like "Viper", "Scream", "X2" and of course the 26 stories high "Goliath". We were looking for thrills and we sure found them. Oh yeah.

You know what beats a roller coaster thrill ride? Ask any blogger. Nothing in the world is so thrilling, let alone encouraging, as that “Notification of Donation Received” e-mail from PayPal. 

Last X-mas my youngest son (14) managed to turn his pc into a private server for MineCraft. Finally he and his internet friends now were able to play the game on a fairly fast server in a safely moderated environment. So I decided to set up a little blog on his behalf for this particular MineCraft server. Guess what? Kids from around the globe started donating! Kids! A boy from Australia who was living in Thailand with his father was first with $40 (made available by his dad). A youngster from Norway followed suit with $30. Next was a kid from New York with another $40. You had to see my kids face when I showed him those “Notification of Donation Received” e-mails from PayPal. His X-mas just couldn't be better! 

With these newly earned funds I convinced my son into renting an external 24/7 game server. So the kid from Thailand could built his stuff in MineCraft on more decent times of the day, while my son was sleeping (and his pc was offline). And so we did.

Over to my blog. Since its inception by the start of 2012 it registered well above 10,000 page views. Site statistics show how popular some indicators are. People are especially over the moon on the Hurst Channels: "Awesome!", "The best indicator I ever came accross", to mention a few reactions I got. Of course for a blogger like me it's great to receive such tributes. But at times I wonder how nice it would be when people would share some piece of the benefit they rape from these indicators I make available for free. Try to realize the amount of dedication, effort and time I invest in them. Moreover I supplied customized charts on request and even did a screencast video or two on how to set up indicators in TOS. All to hardly any effect.

Did nobody show his generosity then? Until now exactly three (yes, 3!) commendable persons did (hat tip to: Daniel, Martin and Jeff). So after some 12,000 views and a staggering donation ratio of 1:4,000 I just felt the urge to rattle of the tip jar on my behalf. Once.

Notably for these two reasons I started my blog:
- I believe strongly in the concept of sharing so we all may benefit.
- I want to help my readers to gear up their trading results.

Let's focus on the "benefit" aspect. On many sites "Holy Grail" indicators are offered for outrageous prices and you even can't test drive them before buying. Or with respect to the the Hurst Channels: to see only some EOD-charts of a limited set of indexes, you would have to take a monthly subscription elsewhere. Inversely I made the Hurst study code available for any and all, so people are able to use it on the instruments and for time frames they can pick themselves and that suit their needs best. For use EOD or even during RTH. All for free and no strings whatsoever.

Once in a blue moon a visitor shares ideas on improving the code (thanks again Martin, Larry to name some of you). That's the other side of the "benefit" aspect I anticipated and hoped for by starting this blog. I want you to know how much I appreciate those rare, precious moments when my ideas are picked up and new insights or possibilities are shared in return. That's how progress is achieved and we may benefit together even more.

Don't get me wrong. By rattling my tip jar, I don't intend to offend anyone, that's just so not me. Every single visitor to my pages is as welcome as can be and stays so, whether my tip jar gets a fill or not. I just wanted to force an open door, to let y'all know I'd be much obliged if now and then some of you would make this blog worth my while by hitting the tip jar for $10, $20 or whatever amount you find suitable.  Au revoir!

[Update 11/13/12: Charles, thanks for raising the ratio to 1:3,000 ;) and of course for the thrill! ]
[Update 11/14/12: Matthew, I appreciate your support.]