In Episode 8 of the Better System Trader podcast, Gary Stone discusses the benefits of market timing and suggests a number of market timing techniques to explore. Here is a list of his suggestions for those looking for more ideas:
- Moving Averages – price above/below a moving average, moving average crossovers or moving average direction,
- Smoothed Index Rate of Change,
- Relative Strength (comparing one instrument/index to another)
- Historic volatility compared to short term volatility
- ATR trailing stop
- Standard Deviation
You may want to test these on Weekly or Monthly bars too, as Daily bars could be too sensitive.
In Episode 7 of the Better System Trader podcast Rob Hanna mentioned a study showing how the strength of the Nasdaq index relates to the S&P500 index. This could also be used as market timing method.
In Episode 1 of the Better System Trader podcast Jake Bernstein discusses seasonality as a market timing technique.
Keep an eye out for future blog posts where we will test some of these market timing methods and publish the results.
What are your favourite market timing techniques? Tell us in the comments section below.
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