Frequently Asked Questions

Dr K Market Direction Model
I was looking over the history of the MDM. It seems the model has given nearly twice as many signals in the last 12 months compared to most other periods.

Q: I was looking over the history of the MDM. It seems the model has given nearly twice as many signals in the last 12 months compared to most other periods. Has the makeup of the model changed somewhat or is it just due to the extreme volatility?

 

A: That is absolutely correct. 2011 has been one of the most challenging years on record. That the model has made nearly twice as many signal switches in 2011 [as of October 27, 2011] speaks to this. The first half of 2011 was a go-nowhere, more or less trendless market environment, the most challenging of environments for position traders and trend followers. Fortunately, the model's fail-safes kept losses on false signals to a minimum during the first half, then capitalized on the drubbing the market received in August, thus the returns for 3-times ETFs using our Market Direction Model are around triple digit percentage gains so far in 2011.

Due to the trendless, volatile nature of 2011, the Trend Following Wizards have been underwater as a whole:

Trend Following Wizards Year-to-Date Performance as of September 2011

http://www.automated-trading-system.com/trend-following-wizards-in-september-11/

Published: Oct 27 2011, Modified: Nov 3 2011