The Model

The following points describe The Alternate Trader Model:

  1. Predictions – the model does NOT pay any heed or attention to any predictions about the market by anyone [This is the most important rule and probably the hardest to follow. It is difficult for us to think of the world as unpredictable. In real life we predict all the time without paying any attention to how many of our predictions were right and how many were wrong.]
  2. Trends – the models entries and exits are based on price trends [The model does not attempt to catch the lows and highs of the market – only the trends. The model ends up catching between 50-80% of the market trend.]
  3. Instruments – the model uses general market indices to drive trades [The model manages risk by using the entire market, such as SPY or QQQ, or market sectors, such as XLF or XLK, as the indicators for trades.]
  4. Leverage – the typical leverage used is 3 times the general market index [The model trades using ETFs such as SPXU, SQQQ, UPRO and TQQQ which are leveraged 3 times to their respective markets.]
  5. Direction – the model trades whether the trend is up or down [There is no directional bias. As the trading tickers indicate, the model trades in either direction.]
  6. Behavior – the model relies on discipline and no deviations from the set rules [This is probably the second most important rule and, again, one that is hard to follow. The model relies on emotionless follow of the rules and not giving in to typical fear and greed situations.]
  7. Analysis – the model does NOT involve analyzing markets, stocks, economy, politics, technicals or anything other than price trends [The model rules are clear to not take any action based on analysis of the market, stock, charts, economy, politics or anything other than pure review of price.]
  8. Shorting – the model does NOT involve shorting
  9. Math – the model requires elementary school level math expertise