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What About Long-Short-Timing.com?

| | Posted in: Technical Trading

A reader asked and commented: “Would you please check out Long-Short-Timing.com, which is free? I’ve done really well with these guys, and they ought to be reviewed.”

Long-Short-Timing.com aims to “provide absolute gains in EVERY YEAR regardless of market direction and to outperform the S&P-500. Our trades are focued [sic] on short and intermediate trend signals and we only issue signals on a true trend change.”

The Long-Short-Timing.com methodology includes the following elements:

“Research, observation and thought fed by many false starts, dead ends, and multiple failures led to the development of long short timings [sic] trading system and methods. Our hard work goes into preparing to trade intermediate trends. We wait until the intermediate opportunity presents itself… Until then we sit in cash… In an average year our system generates approximately 4 to 6 signals to go long or short. One or two of them will fail. The average time period of an intermediate trade differs depending on whether the signal is short or long. Short signals, tend to exhaust themselves more quickly (but not always), while long signals can persist for longer than six months, but average about three and one half months.

“To reduce the risk of…drawdowns or whipsaws, we invented the double confirmation method, which gets us into the trend change a little bit latter [sic]. Our failure exit point is predetermined when entering an intermediate trend. If the trade goes against us by a small percentage over a very short period of time measured in hours and days, we exit the trade…

“Our method is naturally biased toward contrary opinion…”

This description of the methodology is too vague to test by replication. The mention of “many false starts, dead ends, and multiple failures” indicates the risk of material data snooping bias in selection of the system’s indicators and parameters, such that backtested returns would inherently tend to overstate expected returns.

The chart on the home page of Long-Short-Timing.com shows a $100,000 investment growing to about $2.3 million during 2000-2007 based on the timing signals offered, which seems too good to be true.

The detailed performance data provided at Long-Short-Timing.com indicates an average (arithmetic mean) monthly return of 2.1% over the period January 2003 through (most of) April 2010. There is no discussion of what portions, if any, of this performance period represent backtesting versus live signals. There are no assumptions about trading frictions, but trading is not frequent and the principal recommended trading vehicle (QQQQ) is liquid. There is some ambiguity about entry and exit prices, since “Our e-mail signals will state the following”:

  • “Go Long QQQQ at yesterday’s close or lower.”
  • “Go Short QQQQ at yesterday’s close or higher.”
  • “Go to Cash on either Long or Short positions.”

It is possible that long (short) entries at yesterday’s close or lower (higher) are unavailable. The exit instructions indicate no price.

The trade data provided at Long-Short-Timing.com indicates an average profitability for long (short) trades of 7.6% (2.1%) over the period 12/31/02 through 4/21/10, with 27 winning trades and 16 losing trades. Again, there is no delineation of backtesting versus live signals for this period. Based on this data, the system “sits” in cash only about 1% of the time. There appear to be calculation errors in the “Ending Value” column.

Long-Short-Timing.com does not disclose the identity or background of the offeror. The creation date for the domain name is October 28, 2007, suggesting that performance/trade data was not publicly available prior to that date. Since that date, there are 19 trades, a small sample.

There is a disclaimer available only via the site map that contains much verbiage seemingly irrelevant to the information offered on the site.

In summary, without more convincing validation of the performance/trade data offered, curious investors may want to track live trading signals at Long-Short-Timing.com for themselves over a reasonably long period to assess their economic value.

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