The “GBPJPY ETF” Daily System

July 29, 2022

This week we’re talking about trading ETFs.

Why? Because trading a stock ETF like SPY or VOO is the best-and-only way to invest for the long-term–according to the experts.

But I’m making the case that a “GBPJPY ETF” (trading the GBPJPY Fx currency pair only) is at least as diversified as an S&P 500 conglomerate. Maybe more diversified.

And trading the “GBPJPY ETF” is potentially a lot more lucrative because it trends much harder and uses the leverage found in Forex. We’re trying to go for diversification and high return at the same time.

In our last Newsletter, we showed how a Daily system trading only the GBPJPY destroyed the returns of SPY in 2022. Let’s take a deeper look.

First, here are the details of this system once again (we talked about this system in the 3/21/21 Newsletter):

BB + RSI Daily GBPJPY 
Long Entry: When price closes above a Bollinger Band™ (20 Length, std dev 1.4) or when RSI closes into Overbought (5 Length, 70 Overbought)
Short Entry: The opposite of the Long entry (below Band and/or into Oversold)
Long Profit: 400 pips
Short Profit: 275 pips
Stop: 190 pips
Time Exit: 21 bars
Break-Even: At 150 pips of profit

It’s been very easy for financial advisors to say that index funds and market ETFs are the best way to go in a relentless bull market. But as 2022 has shown, these ETFs do terribly in a Bear Market. So let’s go back to another Bear Market and see how our ETF has done against the SPY.

From 2007-2022 SPY has returned 276%. A hypothetical $10k has turned into $37,600. Woohoo.

In the same time, our “GBPJPY ETF” hypothetically produced $94,914 on the same hypothetical $10k account. That’s a 949% return and $10k has turned into $104,914.

Hmm. More diversification and 4x the return if we use a simple system.

And that doesn’t include compounding. If we compound the system, our hypothetical profit would triple.

Granted, I would not trade this system on a $10k account. I think $20k or higher would be more appropriate. But those are the numbers if we keep it on an apples-to-apples comparison.

In our next Newsletter, we’ll look at another way to trade our new “ETF”.

Talk to you soon.

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Disclaimer:
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.