I’m expecting gold to be an important asset class in the 20’s especially if the Fed resorts to helicopter money. However, it’s so volatile that I don’t want to hold the gold stocks at all times. Is there a way to backtest only holding gold stocks when the GLD ETF is above the 100d SMA? The 100d SMA using SPY does not seem to work as a hedge timer. Tried this below, but I get an error. Maybe using an ETF series in a stock screen is no good?
Close(0,getseries(“$GLD”)) > SMA(100,getseries(“$GLD”))
Don’t know about GLD, but you can use the price of gold - ##GLD;
Close(0,##GOLD)>SMA(100,0,##GOLD)Walter
Gold is an important risk-off trade (but not gold mining stocks). I have been doing pretty well with my short term gold trading with Plus500 (where I usually allocate 1-2% of my capital).
Since I use market timing for my equities portfolio and the market was overbought last week as indicated by RSI, I also switched my whole portfolio to GLD since last Fri market opening.
Regards
James
Thank you Walter. This works well although the equity curve is still pretty rough. I’m not sure I will find something I feel confident trading.
Looks like you picked a good time to switch James.
James,
Have you considered GLD options with >80 delta. Great way to get exposure with limited downside. You could do 3mo, 6mo, or 1 year options. You want to get deep enough in the money to limit time premium. I try to limit time premium to less than 2% per year. I have gold, silver, and TLT call options for downside protection. Of course TLT will get slaughtered when and if inflation kicks in, but since it’s an option my loss is pretty limited by comparison. Not sure if options will work as well at that point since their pricing is dependent on interest rates but then you could just go straight UGLD (3x leveraged). Just have to watch the leverage you are gaining with the option.
But anyways I have never found a consistent gold strategy. Mine looked much like yours. If you find one I’d be curious how it works if you don’t mind sharing.
Jeff
Jeff,
Plus500 offers leveraged of XAU/USD upto 300 times, so you can get higher exposure than GLD options or UGLD. You can also speculate or hedge with a very small amount of capital.
I will switch to GLD under 3 conditions :
Send me your email address (jameskml@netvigator.com) and I will give you the exact market timing rules for these.
Regards
James
Does Plus500 offer futures? Or what is the instrument type? How do they offer up to 300x leverage?
Jeff,
CFD providers like Plus500/Oanda usually offers leverage upto 20 times and 300 times for professional investors. When you place a trade with them, you are effecitvely trading on margin with the broker, it is not in futures (although the concept is similar.)
Regards
James
It makes sense why I’ve never heard of CFDs. I just read up on them. I’m in the U.S. I guess they are not available in U.S. I can always do futures I suppose as well if I want high leverage. Thanks for the email. I’ll try it out tomorrow.
CFDs are not allowed in the US for retail investors, with good reasons. They are OTC instruments used by Forex brokers to do business in many countries with an expected client account lifespan about 6 months. CFD brokers have the reputation of chasing their clients stops, inciting to excessive leverage and charging overnight roll fees. There might be fair brokers in the field, but in doubt… Google ‘FXCM ban’ for a specific case.
Just like trading in futures which leverages up to 20 times, it is easy to make/lose money very quickly trading on margin especially if there is no money management and stop losses which is the problem with most retail investors. There is a reason why the majority of retail investors lose money trading on futures.
The largest CFD providers like Plus500/Oanda are heavily regulated by securities regulators in countries like UK, Europe, Australia, and in Asia. They offer tight spreads and good service and I have no problem trading with both Plus500/Oanda so far including deposit/withdrawal of funds.
Regards
James
