Regardless
of what investment discipline you use, there are three main variables
to measure your success - peak-to-valley drawdown, beta, reward / risk
ratio. The first and most important factor is your measure of risk. Performance volatility is a measure of the variability of the return on an investment.
Specifically, it is the standard deviation of the sample set of monthly returns that were observed for investment during the interval are considered. A simple way to measure a good stock market timing system is the largest peak-to-valley drawdown that has or would have occurred in the past five years to calculate. This loss is your measure of risk.
Secondly, your beta on the overall market. Beta is an important variable that portfolio volatility or timing measurements compared to an index. Most of the beta are calculated on the basis of the S & P 500 index. A beta of one tells you that the system has the same volatility (ie risk) as the S & P 500 index. A beta of two tells you that the system has twice the volatility of the S & P 500 index.
By actively managing your money, your stock market timing system can reduce compared to the index you are trading and significantly improve your return over time. The beta of your portfolio
Thirdly, is your reward / risk ratio, which calculates your wages relative to your risk. To calculate this, you must know your average return. A rule of thumb is that your return should be at least twice as large as your risk. For example, if your largest peak-to-valley drawdown percentage over the past five years is 15%, the average yield at least 30%. In other words, your reward / risk ratio (30% / 15% = 2) are 2 or higher.
The best stock market timing system for you depends on your personality, specifically your tolerance for risk. You would think that a trend timing system that on average 80% is a great system, but what if I told you that system had a potential risk of 35%?
Most people can not tolerate a system of their investment capital more than 20%. Your tolerance and the ability to accept risk should help you a scholarship timing system that is suitable to identify you.
There are only a few systems available that really work. Most come and go like mayflies on a hot summer day. When evaluating a timing system, it is important to all of the above factors, plus the system has survived and thrived for at least a period of five years to consider. If they've made it through the last five to six years, you've probably found a good stock market timing system.
Copyright 2006 Equitrend, Inc.
John M. McClure is CEO and President of Equitrend Inc., a privately timing system that on average 42% profit per year. Mr. McClure is also a registered investment advisor and president of the National Association of Active Investment Managers.
Specifically, it is the standard deviation of the sample set of monthly returns that were observed for investment during the interval are considered. A simple way to measure a good stock market timing system is the largest peak-to-valley drawdown that has or would have occurred in the past five years to calculate. This loss is your measure of risk.
Secondly, your beta on the overall market. Beta is an important variable that portfolio volatility or timing measurements compared to an index. Most of the beta are calculated on the basis of the S & P 500 index. A beta of one tells you that the system has the same volatility (ie risk) as the S & P 500 index. A beta of two tells you that the system has twice the volatility of the S & P 500 index.
By actively managing your money, your stock market timing system can reduce compared to the index you are trading and significantly improve your return over time. The beta of your portfolio
Thirdly, is your reward / risk ratio, which calculates your wages relative to your risk. To calculate this, you must know your average return. A rule of thumb is that your return should be at least twice as large as your risk. For example, if your largest peak-to-valley drawdown percentage over the past five years is 15%, the average yield at least 30%. In other words, your reward / risk ratio (30% / 15% = 2) are 2 or higher.
The best stock market timing system for you depends on your personality, specifically your tolerance for risk. You would think that a trend timing system that on average 80% is a great system, but what if I told you that system had a potential risk of 35%?
Most people can not tolerate a system of their investment capital more than 20%. Your tolerance and the ability to accept risk should help you a scholarship timing system that is suitable to identify you.
There are only a few systems available that really work. Most come and go like mayflies on a hot summer day. When evaluating a timing system, it is important to all of the above factors, plus the system has survived and thrived for at least a period of five years to consider. If they've made it through the last five to six years, you've probably found a good stock market timing system.
Copyright 2006 Equitrend, Inc.
John M. McClure is CEO and President of Equitrend Inc., a privately timing system that on average 42% profit per year. Mr. McClure is also a registered investment advisor and president of the National Association of Active Investment Managers.
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