EdgeWare FastBreak Standard Version 5 - Manual (Page 74)

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12.0 Suggestions on Improving Trading Strategies
See the Resources Chapter for a list of resources that may help you in developing your
trading strategies.
Precious metal funds do not normally work very well with ranking strategies. This has
been noted by other studies, and you may want to consider removing these funds from
your trading strategy.
Some funds have similar objectives - energy vs. energy services, energy vs. natural gas,
technology vs. electronics. Rather than using the maximum correlation option, you may
consider removing one of the similar funds from a trading family. This may help with
diversification. There is little benefit holding several different funds to diversify if they
all trade the same. If a similar fund is removed, try to remove the fund that is the weaker
fund. As an example, energy services tends to outperform energy when the energy sector
of the market is moving up. You can use the individual fund performance information in
the Detail file to help make this determination.
If you use a market timing signal file, consider adding a stop function for additional pro-
tection.
Develop different trading strategies for different types of markets. In a strong bull mar-
ket high beta funds tend to out perform; in bear or flat markets lower beta funds should
be considered. Look at developing different ranking periods for different markets. Use a
poor market such as 2000-2001 to test bear market strategies.
Any fund can be used for the money market. Some of the bear market funds, i.e., Rydex
Ursa, could be used to short the market during major down turns. The fund would rank
high and be purchased in a down market, or if using a market timing signal, the fund
would be purchased as money market when a sell signal is given. Note: Be aware of the
account balancing feature if holding more than one fund. See Calculation Details
chapter.
Join a FastTrack users group. See the FastTrack commentary for a listing of groups
throughout the country. If there is not a user group in your area, consider starting one.