Rule-Based Trading Systems

[flatted3rd]

I just got back in and got caught up on posts. I'm a Rydex Merlin trader, and don't know whether I have much to add over the other fine answers, but here's my perspective.

Rydex funds are available to trade either directly through Rydex or through another broker-dealer. If you trade through another broker dealer, then there's no contest about whether to trade the preliminary signal or the next day, because to my knowledge you can't get the 10:45 morning pricing unless you trade directly with Rydex. In that case, if you trade the next day, the trade will be executed at the end of the day, 1 full trading day later than the signal (sort of like "Next Day Close"). That's just too late, so you have to go with the preliminary signal. As was said elsewhere, wait as long as you can to get as close as possible to the 3:55 cutoff since the prelim sometimes changes (be careful about cutting things too close!), then place it based on the preliminary signal.

If you trade directly with Rydex, then you have a bigger decision to make - go with the preliminary signal and trade End Of Day, or go with the 10:45 pricing the next day. As was already pointed out, so far, the EOD based on the preliminary signal has been an overwhelmingly better choice, but when it wasn't it wasn't in a big way, and the morning pricing was much better. Still overall, I agree with the contention that End Of Day based on the preliminary signal is better. That's because the market will much more likely be "aligned" with the market conditions that generated the signal at 3:55 the day of the signal than it will be 1 hour and 15 minutes into the next trading day. That's why I go with the End Of Day trade based on the preliminary signal.

Besides, if you're trading directly with Rydex, and the preliminary signal is not correct, you can decide to "get aligned" with it at the 10:45 pricing the next day.

Just for completeness, I'll say that the cutoff for the Rydex pricings for the Dynamic funds (2x) are 10:30 to get the 10:45 pricing and 3:55 to get the 4:00 pricing, unless the exchange closes early.

I'll also take this time to let anyone who's lurking and not yet a subscriber know that although I suspect the track record won't quite continue its torrid pace, I suspect excellent performance and have nothing but confidence in TMG's work, and the professionalism of the team, and am glad I'm a subscriber.

flatted3rd