Sniper Market Timing – FAQ

Our investment models are proprietary computer-based systems that detect changes in the direction of stock and bond markets.
Each trading model consists of different subsystems. These subsystems incorporate mainly pattern-recognition techniques based on the prices of the underlying markets (e.g., US stock market trading model for the S&P 500 index) and some risk ratings-based indicators. During investment strategy development, the main emphasis has been on robust patterns, which should work in different market phases (backtests to 1871) and on their edge against random investment-strategies. The trading systems are 100% mechanical and are based on mathematical algorithms. The formulas are proprietary and are therefore not disclosed.

Each week we scan bond and stock markets to generate entries and exits. Based on the current and historical market conditions, our investment models will generate a BUY- or a CASH-signal. These signals are based on proprietary quantitative models. Once a market timing signal has been issued, it remains in effect until a new signal invalidates it. When our model issues a BUY-signal, it means it is time to buy the underlying market. When the trading signal becomes a CASH-signal, it is time to sell (but not short selling) the underlying market and to move the money in cash until our system determines a clear direction.

Market timing could sometimes be very dangerous. Many investment models and strategies are not rigorously tested, are over-optimized and curve-fitted to historical data. But there are investment strategies that work across various financial markets and market types (i.e., bull markets, bear markets, and sideways markets).

We think that we have developed a unique and promising approach to market timing. So, if you are looking for a sound and sophisticated trading model, this website is for you.

But we are not a “get rich quick”-scheme, and we do not offer any bogus “magic”-“mumbo jumbo”-“holy grail”-“dreamland”-“master of the universe”-system.

Our investment strategies are switching only between full investment (100% allocation) and no investment (0% allocation).

It varies. In a typical year, only 2-6 signals per trading system will be issued.

During the development of our market timing strategies, it was not our objective to find the parameter values which generated the maximum profit on historical data (=back testing) because there is a tradeoff between the maximum profit and the robustness of a trading model. Generally, the less a trading strategy has been optimized, the more robust it will be in the future because every optimization includes the risk of equity curve fitting. The robustness of a trading model is determined by the ability to generate trading results in the future close to the results of the backtest.

So, our objective was to design robust and stable investment models. Therefore, we searched for a specific range of parameter values, within which the profits and other criteria (e.g., drawdowns) would be acceptable. These parameter values are settled in the center of the flattest parameter space. So, a minor market shift will not result in dramatic and negative equity shifts.

No investment strategy can ensure results better than buy-and-hold, nor guarantee an investment against loss in declining markets.

Market timing is not a crystal ball, and it certainly will not make you a successful trader. Even if your investment models are well constructed, they have been and will be incorrect in many cases because markets are social systems and are not physical systems, where input A and input B always gives you output C. There is no holy grail and no perfection – only percentages of perfection.

So, most of you are familiar with the concept of buying stocks and bonds and prefer a “Buy and Hold”-approach. We think that buying and holding works for many people because of the long-term positive stock market bias. But sometimes this concept gets dangerous:

– Emotions (fear and greed) will undermine the required discipline.
– A “Buy and Hold”-strategy can underperform for extended periods (e.g., US stock market: 1929-1954 (no inflation-adjustment); Japanese stock market: 1989-?).
– The financial markets are mirroring the battle between fear and greed, and therefore they are NOT following a random walk.

Consequently, we decided:
– To discipline our self by using a computerized and unbiased approach for investing.
– To “time” the market to avoid long periods of under-performance.
To use sophisticated computer-based models to discover trends in the fat-tailed distributions of financial markets’ returns.

The key to successful market timing is to use a 100% mechanical trading strategy and model that completely removes emotions and subjectivity from the investing process. Objectively applying the rules and strategies of your trading models most times will keep you out of trouble. But you also must have a money management system and the trader’s self-discipline.

We are issuing our trading signals based on local stock benchmark indices “priced” in local currencies (e.g., US markets “priced” in US dollars, Canadian markets in Canadian dollars, UK markets in British pounds, and so on).

Our newsletter is sent to our subscribers via email every week.

For our newsletter, our investment models are run weekly (every weekend). If a new trading signal is generated, we send out an email to our email newsletter’s active subscribers.

Our website and newsletter have been prepared solely for informational purposes. They are not an offer to buy or sell or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular trading or market timing strategy. The investments and the trading signals discussed on our website and in our newsletter may be unsuitable for investors depending on their specific investment objectives and financial position. So, it is not our intention to provide individual investment advice. There are Registered Investment Advisors providing professional investment management services.

We do not sell our market timing systems and algorithms.

Maybe you are right. We do not have the ultimate answer to your comment. And yes, a passive strategy like a “Buy and Hold”-approach works for many people. But we think that human beings are producing tradeable patterns and traces in the markets – and we do not think that the market is a random walk. So, our goal is to detect these patterns and to trade them. But we are only dealing with probabilities, and once again: maybe you are right, and we will miss the boat completely.

We have normalized all bond systems internally for system development purposes with “continuous” 10-year government bonds with a par yield of 6%. For our trading, we are using mainly respective bond ETFs for 10+ year government bonds.

At the moment, we do not issue trading signals for Central European bond markets because of missing benchmark indices and trading instruments.

Currently, we are tracking these bond markets: