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Managed Risk Investing
Long/Short Strategy using TangoETF Signals
A Long/Short strategy has not been developed at this time using the TangoETF Buy/Sell signals. The example below is just to indicate how it might work, but this is not a recommendation.
The chart below demonstrates trading IWM Russell2000 with the inverse of the Russell2000. The symbol RU10s is a surrogate for Profunds SHPIX (mutual fund) or Proshares RWM (ETF) which are both 1 beta inverse (short) of the Russell2000. This inverse symbol RU10s will not be an exact match, but will be very close. There is no cost for slippage or commission in the chart, we estimate this cost to be between 1/2% to 1%.
The Orange and Green line shows the trading on the TangoETF signal (Tango5x) going Long IWM (Orange) and Short (Green). The Purple line is exactly the result of the Orange and Green line. The Orange line is buy and hold of IWM. The Light Blue line is the NASDQ Composite. The chart is from 06/09/2000 to 02/01/07, 6.62 years.
The Orange/Green or Purple line show a Total Return of 486.63%, Annualized Return of 30.62%, Max Drawdown (MDD) of 15.01%, and a Standard Deviation of 5.98% during the chart period. The Standard Deviation for the NASDQ Composite was 8.91% for that same period. The Max Drawdown (MDD) for buy and hold of IWM was 38.56% for that same period.
Chart by www.FastTrack.net
There are other trading systems that can be developed around the TangoETF signal. Please contact us for more information.