Pendulum Trading System

Many readers have found the pendulum methodology "intriguing" and look forward to the results of our work.

Today, I thought a little additional background information on our system trading methods and focus might be in order. This will allow the reader to see the basis for our trading techniques, understand how trends and cycles work and perhaps assist them their own trading techniques and outlook.

Background 

My focus is on the marketplace math along with a heavy reliance on science and nature as well as trends and cycles.

You can see the source of some of these references in our writings. Some of the articles are metaphors from nature while many deal with the math and equilibrium issues of the marketplace. 

For biographical background information, see sidebar. 

Primary Focus

The primary areas of interest have been in the gold/silver market since December 2000 plus the S&P500.

In the gold/silver area, the XAU index is used as a proxy for trading purposes since it includes the leading gold and silver producers. Gold/Silver stocks selected are largely producers or have large well defined resources in the ground as in "vaults". They are generally located in perceived safe political jurisdictions with a focus in Canada (Ontario, Quebec) and the US (Nevada, Alaska).

As a professional trader, I primarily trade stocks which match or exceed the S&P500 or XAU's performance in concert with the Trend Directional Indicator (TDI) and Gravity Center (GC) trend indicators, both of which must confirm.  

Studies have shown that 60% of a typical stock price change can be directly attributed to the movement of the overall market. Therefore, it just makes common sense to be on the right side of a market trend.  

 

Signature Trend Indicators

The system also includes a set of proprietary Signature Trend and  indicators for fine tuning and confirmation along with a healthy dose of due diligence, attention to detail and determination. While I may go down to a 60 minute chart to extract a short term profit, the primary focus on this website is weekly and above for our readers because that is where the larger potential profits and most reliable trends are located. Please also review the longer term Bonanza Gold.

Core Positions

You will note on the Pendulum Portfolio page there are a number of "core" positions that have been completed. To be elevated to a core position, a stock must have achieved at least a 100% net gain. At that point, 50% is sold for a complete return of initial risk capital and the rest rides for free. A few were sold with less then a 100% gain by calculating the number of shares needed to return the initial risk capital. No core position is sold unless a substantial and material adverse change occurs or the company is bought out.

This is not an implied recommendation for this kind of trading strategy since everyone has a different risk tolerance.

Trading Goals

Our goal is to add to premiere long term positions in any portfolio when low risk entry points occur as defined by our leading metrics. As mentioned above, both the TDI and GC must confirm before any entry is considered. In addition, we have Market Pendulum's very powerful SRA Cycle Indicator to provide cyclical guidance within a trend.

Trading Context and Setting

As a trader, I actively use the techniques and primary trading platforms you have seen on this website.

In addition, trading occurs within the context and setting of the next higher time frame to determine the duration of the current trade. For example, if I have a signal in the daily charts and the price is at chart support, the weekly charts are also reviewed to see if they are also in a bullish posture. This allows for a longer duration in the trade and a larger potential profit.

These comments also apply to the gold/silver market as well, since their structure, cycles and trends are quite similar.

Money Management

All stocks are purchased for cash and no margin or leverage has ever been employed.

As a trader, no position is more than 5% of any portfolio. No matter how good a system is "All In" all the time or even some of the time will affect you at some point, with a probability bordering on certainty. One needs only an unfavorable news release, a hedge fund dump or one black swan event to ruin a position. I have seen it happen too many times to count.

Success is always measured in small steps. A reasonable profit or percentage return, based on the time frame we are currently trading in, is the standard I use and employ.

Results to Date

The results since 2000 in this area have been truly outstanding. However, there is no point in publishing those results since I am only in competition with myself to improve on the last record or performance. We have nothing to offer or sell except the benefit of our experience. In other words, the primary purpose of the website is to simply assist investors, based on our experience, in a certain investment area or direction so they can properly conduct their own due diligence.

In Summary

The presentation describes our methodology, trading information and techniques that may be helpful in your own work. Our readership is blessed with many professionals including well informed investors who understand these issues and methods.

This website, along with the recommended readings, are totally free and will remain that way for the benefit of all. The best things in life are indeed free.

Enjoy and have a good day.

Trader Garrett

----------------------------------------------- 

Our Pendulum Trader website includes the complete Pendulum Trading System plus step-by-step guides, premier trading plans and winning strategies. 

The Market Pendulum Model includes definitions of the trend indicators and a chart example.

-----------------------------------------------

We invite you to browse this site. Should you have further questions or comments, don't hesitate to contact us.