This is a continuation of yesterday’s study of the IWM using the Lazy Man template as a trading signal. One of the unique features of this approach is that the indicators embedded in the Prognosticator have little value in triggering a trade signal. The important factor is the momentum of IWM relative to the aggregated momentum of the 5 Lazy Man components. For the IWM study we recalculate that relative momentum each week and adapt the signal accordingly. This adaptive tactic means that sometimes a position may be closed premature to the projected mean excursion of 13 days. During the 16 month lookback there were 2 such instances. However, using this adaptive tactic also means a new signal is triggered once IWM momentum does mean revert back into sync with Lazy Man momentum. Tomorrow we’ll look at a position pyramiding approach to trading this model.
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