In 100 Years What Trading System Will Still Work

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The other day a friend asked me if they time-traveled 100 years into the future what trading system for stocks would still be working?

I thought I would go ahead and share what I came up with.


There's a Better Way

The reason markets exist at all is because prices move over time.

If prices did not move, you would not need a market.

Money likes to chase performance (or run from bad performance!)

When you have something that is going up, it tends to keep going up.

If it is going down, it tends to keep going down.

Remember the NASDAQ in the late 90s when performance attracted more and more money?

Then it was bonds, then stocks again; money keeps rotating from one asset to another.

Focus on Many Liquid Assets

Let me give you some simple tips that I think you can use in your trading right now.

You do not actually have to go to the future to start doing this.

One simple filter for success would be to focus on many asset classes.

This is one that is really important and luckily, these days we have ETFs.

One thing about stocks is they are mostly correlated to each other.

They are all doing the same damn thing at the same time.

Even great stocks like apple can crater and lose 50% of their value or more.

We don't want that.

So, let's go ahead and say we only want to trade ETFs and stocks that are really liquid.

Focus on Bull Markets

The best-performing assets are above their 200-day moving average.

When you see an asset drop below its 200-day moving average you want to get the hell out of that market.

That way you're not going to experience one of those 70% drops like in 2008-2009

A lot of times, the best-performing assets, continue to outperform until they go bust.

There is no paradigm out there that says something has to go up forever.

By the way, if you lose 70% of your portfolio, it takes a 330% gain to recover.

That is no joke.

There are a lot of other ways you can figure this whole thing out, but I think this is going to work.

Keep things simple; it usually works pretty well.

So What Will Work in the Future?

Because money chases performance you want to be in bull markets.

You can determine if a market is in a bullish configuration if it is above its 200-day moving average.

You also want to hold different types of assets that are extremely liquid.

ETFs make this super easy and they are here to stay.

Combining these two parts into a rotational strategy is the key.

Once a month you want to analyze your holding, making sure they are still bullish.

If they aren't, sell them and buy the next best stuff out there!

etf ranking engine flow chart

If you are sent to the future bring this flow chart with you!

If You Are Sent to the Future Use This

I hope this helps you out with your trading.

You should be looking at multiple markets and make sure they are very liquid.

You don't want to go through all that baloney that happened back in 2008.

Suddenly everyone realized that there were tons of markets that were totally illiquid.

You also want to concentrate only on bull markets.

There is always going to be a bull market in something, you just need a system to find bull markets automatically for you, like this one.

Happy Trading!

About the Author

Hello! I'm Kurt, the "Relaxed Trader" writing the stuff on this website. Shoot me an email at or leave a comment below. Cheers!

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