ETFalpha provides you with the essential ingredient for successful investing: SYSTEMATIC TRADING.
ETFalpha is built on a system developed over many years which will give you the consistency, method, and the uniform plan you need in order to succeed in making money on money for a long time and harness the explosive power of compounding.
We call it Investing on Schedule.
You invest every month,
month in and month out,
on the same day each month,
according to the ETFalpha system,
and keep doing so.
Like farming and construction, any idea in investing must be practical and must get results, otherwise it is useless – worse, it will lose you money!
So, what is the principal idea behind ETFalpha, what is our philosophy?
It is this:
When we’re not invested, we’re avoiding losses.
ETFalpha therefore both builds and protects wealth.
How do we do this?
It sounds simple but the method used to be able to do this is very sophisticated and took several years to develop. It is built on aspects of modern financial theory (the practical kind of theory!). You can learn more about this here.
Why do we need a sophisticated system?
This actual recommendation made by ETFalpha* when it went live on the internet will show you why.
The figure shows the Open-High-Low-Close (OHLC) price bars for a whole year for the ETF we use to invest in US stocks. Each OHLC represents one calendar month.
The website went live in May 2011 and the portfolio had been invested in this ETF for a number of months but suddenly ETFalpha issued a Sell Signal for August 2nd. This is shown by the red arrow.
The transaction was made somewhere around the Open of the following price bar, of course, the one for August, and the exact price one obtained depended on the time of the transaction.
Prior to this, although prices had fallen during various months, including in March, May and June 2011, our system judged only the July fall as being of real significance, and thus warranting a sale.
One reason why ETFalpha is important is because if an investor had sold after each fall, and bought after each rise, s/he would have incurred heavy losses because, as we can see, prices reverse all the time. ETFalpha avoids most of these whipsaws.
During the rest of August, and in September 2011, there were sharp falls which followers of ETFalpha avoided. Thus, the August opening price was $53 but the closing price in September was $49, a loss of 8% in two months.
ETFalpha followers, on the other hand, were out of the market and protected.
The trade closed in August yielded around 10.7% **.
The next signal was a Buy Signal and it came in the newsletter for Wednesday, November 30th, 2011. We stated:
“Although far from being in its best shape, the US seems to currently be the best of the rest. Our portfolio system reflects this. A position will be taken in the US stocks ETF, recorded at tomorrow’s closing price.”
This Buy Signal is shown by the green arrow.
Attentive readers would have noticed that our re-entry price early in December was lower than the exit price early in August. This cannot be guaranteed by ETFalpha, nor can consistent trading profits, since it depends on how prices move and how quickly they do so.
The investment was then closed a few months later at a profit of approximately 2.45%.
These actual examples are mentioned to give you an idea of the type of calls we make and how it would help your investment results if you follow the Buy and Sell signals consistently.
At ETFalpha, we input prices and statistics into our computers and the system tells us whether a market move is strong and likely to persist or whether it is weak and likely to turn.
Our focus is on gauging the direction and significance of moves using mathematics, statistics, economics and behavioral finance.
Our algorithmic system and models are unemotional and consistent, like robots. Cold and logical but effective.
Our strategy is not Buy & Hold, nor is it as short and speculative as Day Trading. We try and capture intermediate moves which take anywhere from a couple of months to approximately a year. We found these moves to be very profitable if timed correctly.
We do not have a perfect system – there is none we know of in investments – but we have a system which works, as you can see on the Performance page.
Invest like an institution, not a tip peddler!
Invest consistently according to the ETFalpha system.
*The service then was provided under ETF-Online-Investing.com.
** The Original Buy Signal in September 2010 was generated while the final tests on ETFalpha system were being concluded and prior to the website going public in May 2011.