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How and what to
trade? My signal is based on Nasdaq/NDZ.
QQQQ is an ETF (Exchange Traded Fund) that has the 100 largest Nasdaq companies
in it. The QQQQ is my main trading vehicle and that's why I refer to it constantly.
QLD and QID are so called ultra ETFs funds that based on QQQQ and I also trade
them simply because they match QQQQ very well. If
you are a beginner or want to keep it simple; trade QQQQ or QLD and
don't go short until you get familiar with my system. Actually as with any new
system; you should follow it on paper for a few months before jumping in to make
sure that it fits your trading style. This
is why I offer a 3 month trial period. Once
you subscribe to my letter I will provide you with a easy to follow Lazy man's portfolio. This
portfolio is great for lazy, beginners or lazy beginners. I recommended
that you follow this portfolio especially if you are beginner in trading. But
if you are more experienced trader you can still use my signals for your own
trading vehicles. My
system can feel boring, but boring is good when it comes to trading stocks. A Turtle will most of the time win a
Hare who keeps on running after unattainable results and from a system to system
or from hot tip to another hot tip. Most people lose money on trading
simply because they are greedy and impatient; don't be one of them.
***** For more
experienced traders If you are more accomplished
trader you
can create your own portfolio from the symbol list below. The list
is by
no means a comprehensive, but it has some of the best trading
vehicles for my signal. Or trade 3 x Ultra ETFs. They will give you
plenty of excitement and can also be VERY profitable. Some of them can easily move up or
down over 20% in one day. If a stock,
ETF, fund or an index follows Nasdaq and
or QQQQ closely it can be traded with my system. Below on this
page there are many ETFs and stocks that you can check whether they currently
follow QQQQ. ETFs
are great for trading because they are liquid and you get diversified basket
of stocks with one ETF. Also the ultra ETFs, like QLD and QID that duplicate shorting and margin
trading and aim to double the result of the index they track can be very
profitable.
How to start trading Universal Signal?
Back test my signal dates
against your stocks or ETFs. You can
play many different scenarios on paper. After you feel
comfortable with the system expand your investment choices and
amounts of money you want to invest. I personally prefer to trade things that I am
familiar with; QQQQ, DIA and SPY and their corresponding ultra
ETFs. They may not give me the highest returns, but
they are fairly safe and stress free trading vehicles. Also they
are very liquid, and they match my signal very well. To me it's not
worth to loose sleep over a few dollars here and there. The
greater the return, the greater the risk too.
We must be in to win,
so we must suffer through some painful whipsaw action and small losses because
we must be in; any rally could turn out to be a major rally. During bear markets take smaller
initial positions when betting on a bull rally and during bull markets you must
be more
careful when shorting. I will indicate secondary buy/sell opportunities if the
action continues to the same direction. How
to get on to a ongoing signal see here for more info...
How many
ETF/stocks to invest when 100% on the market?
There are no firm
rules when it comes to that. It depends on your experience, wealth, style,
and other factors. Some like to put all in one or two positions,
some like to diversify more. Do what feels good for you, but
it's critical that you trade a few
different sectors so that should one of them go down, the
others will cover for it and your overall portfolio will not
suffer a big loss. Here is some information about positioning
sizing, which can help you to determine how much to risk on each trade...
International members If
you trade stocks outside US; place an appropriate market order
as soon as you get a new signal. In other words, if your stock
market is open don't wait for the next day. This way you may get
ahead start. My system seem to
work the best with US ETFs. Ask your broker
if you can trade US ETFs or look for ETFs from your own country. Also see the list
below of companies that offer ETFs outside US. Some
people don't want to or can not trade US ETFs, but you can still use my signal to
support your trading in your own country. If my signal matches your main index,
then you can use it for trading many major stocks in your country. According to a
recent study the most international stock markets track each other
more closely every year. The world is becoming one big marketplace. 
This chart shows you how closely most
major indexes around the world follow each other. Only the performance varies.
FTSE/England. IXIC/Nasdaq.
AORD/Australia. N22/Japan. OMXSP/Sweden. GSPTSE/Cananda. BVSP/Brazil. Do
your own comparison; you can find the above chart here... A
list of the major indexes here... Here
you can find the best performing ETFs: Bloomberg.com
By doing the comparison you will also find out which
countries/areas of the world are hot or cold right now. As you can see above;
Brazil was hotter than hot. No wonder even Warren Buffet and many other
investors were interested in it. But even with Brazil it dips the same time with Nasdaq. With ETFs you can
invest easily and safely into many foreign lands. What time of the say one should trade? I conducted a little test:
If you
would have traded QQQQ the first 9 signals at the open you would
have made about 39%, at the close 38% and randomly placing a market
order during the day about 38%. As
you can see there is very little difference when you trade. So you might as well trade at the open, unless you are
a pro and know how to scalp some extra profits by limit
orders.
How to
trade? When I issue an sell order you can just
simply sell all your positions, or if you are experienced trader
you can take a look at your charts and if your
positions have good profit margins you could let them run a few
more days; especially if your are trading your own stock and if
the charts indicate that that they still have some
upside potential. Some hot sectors may keep going up after
I issue a sell signal, so it's a good idea to look the charts before you
sell. You can
also sell 30% or 50% and wait until there is
trend line brake before you sell the rest. Using a trailing stop
is one way to do it too. There are many ways to use my signal. Even if your stock keeps going up after a sell
signal; my signal is a
great indicator that the overall market is going to correct and
that is a time to be more vigilant. Protecting your capital is your most
important task.
Shorting: Learn to short and trade
the inverse ETFs.
Some people still think that there is something unethical about
shorting, but there is not. On the internet there is a lot of information about shorting. Google
and learn about it. We may have a some major corrections in ahead of
us, and even if there are no any major corrections, markets will always fluctuate
and it's great to get some of the downside profits
too. But shorting during a bull market can be risky, so don't do
it unless you know what you are doing.
When shorting
you can short many different ETF or stocks, but I would recommend that you go only with one or
two ETFs. Keep it simple: For example: Short QQQQ, DIA or SPY or go long on one of
these ETFs: QID, DXD or SDS which are inverse ultra short funds. Usually
I short only with the maximum of
20 to 30% of my capital. Test on paper how different scenarios would have
worked out. You
have to be careful with the inverse ETFs (QID, DXD, SDS), because they can
be confusing. When you go long on them, you actually short their
corresponding ETFs (QQQQ, DIA, SPY). You cannot short on IRA trading account,
but you can use inverse ETFs. These two charts show you that you
could have shorted DIA because it moves in nearly perfect unison with QQQQ, but with EWZ you should
have gone long only. If two ETFs move hand in hand for years it means that
it will most likely continue the same way, but they will also uncouple at some
point, because trends change.
 
Even if you trade EWZ long only, you should still go cash during every sell signal. By going cash during sell signals you
would have lost some of the profits compared to had you stayed on, but this is the hind
sight. In real life one never knows, which sell signal will turn out to
be a new long term down trend.
Also even if
your ETF or stock follows QQQQ closely, it may stop following it at
any given time as you can see on this AORD chart. It looks pretty much the same
as EWZ chart, but in November 07 it dropped like stone with QQQQ. EWZ didn't
drop. Things do change; more examples 2007 bank and financial stocks crashed
while the rest of the stocks kept going up. So stay on top of things, especially if you buy sectors or
stocks in your own country that I am not following. But the good news is that as
long as you trade according to my signal, you will never lose more than a few
percent. Some
worthy trading candidates: Symbol links below will
give you some idea how these ETFs and stocks track my signal,
but to really see and analyze the results on any of them you must go to
a charting website where you can pinpoint the actual signal dates on the charts.
Yahoo
and Bigcharts
have Java based interactive charts in which you can easily
do that. Note that the charts below are weekly; my
normal trading timeframe is daily. But on the weekly charts it's easier to
see the long term correlation to QQQQ or the lack of it. Compare
your own stock against QQQQ
weekly charts below and if they move in unison, you can trade it with my
signals. Also note that even if the charts don't seem to
correlate, they may still correlate if you go Long only as is
the case with the EWZ chart above.
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