Seasons Greetings from Trader Edge

Seasons greetings from Trader Edge.

I hope that you have found some of the Trader Edge articles to be useful this year. I have enjoyed corresponding with many of you throughout 2014 and I appreciate all of the feedback on my first book:

Option Strategy Risk / Return Ratios: A Revolutionary New Approach to Optimizing, Adjusting, and Trading Any Option Income Strategy

I am currently writing my second book on options. The new book will introduce an innovative framework and interactive tool set for designing and optimizing option strategies to profit from earnings announcements. The interactive spreadsheets that will accompany the upcoming book will allow the reader to correctly value the entire option matrix (including earnings effects) and to design optimal strategies to profit from price and earnings volatility anomalies.

I continue to trade full-time and writing the first book took a tremendous amount of time; the second book is proving to be equally demanding. Once the new book is published, I will be able to devote even more time to new research projects for my proprietary trading and for Trader Edge.

I look forward to exploring new tools, concepts, and insights with you when posts resume in January. Best wishes for a happy 2014 holiday season and for a prosperous 2015.

Brian Johnson

Copyright 2014 – Trading Insights, LLC – All Rights Reserved.

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Recession Model Forecast 12-01-2014

The following article updates the diffusion index, recession slack index, aggregate recession model, and aggregate peak-trough model through November 2014. Please note that two new explanatory variables were added to the Trader Edge Recession Models in July and one explanatory variable was replaced in August. The swapped variables measured similar economic data, but the new series had more predictive power and was more forward-looking. For more information on the two new variables, please see “Two New Improvements to Trader Edge Recession Models.”

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Non-Farm Payroll (NFP) Model Forecast – November 2014

This article presents the Trader Edge aggregate neural network model forecast for the November 2014 non-farm payroll data, which is scheduled to be released tomorrow morning at 8:30 AM EST.

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11-28-2014 AAR Strategy Update Posted

The November 28, 2014 AAR Strategy update is now available on the AAR Subscribers page.  If you are not currently a subscriber and would like to learn more about the strategy, there is a detailed description on the AAR Strategy page.

The AAR strategy is a conservative, long-only, asset allocation strategy that rotates monthly among five large asset classes: large-cap U.S. stocks, developed country stocks in Europe and Asia, emerging market stocks, U.S. Treasury Notes, and commodities. The strategy was inspired by the Ivy League portfolio and uses trend and technical filters to reduce downside risk.

If none of the five candidates pass their respective trade filters, the AAR strategy remains in cash for the month.   Stop-loss orders are used on every trade to control losses and to facilitate position sizing and risk management.

Brian Johnson

Copyright 2014 – Trading Insights, LLC – All Rights Reserved.

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OptionSlam.com Discount for Trader Edge Readers

I am currently writing my second book on options. The new book will introduce an innovative framework and interactive tool set for designing and optimizing option strategies to profit from earnings announcements. The interactive spreadsheets that will accompany the upcoming book require filtering tools to identify prospective candidates and historical earnings data to evaluate directional and volatility characteristics related to earnings.

After researching several vendors, I subscribed to OptionSlam.com to provide the required earnings data and filtering tools for the book and for my proprietary earnings-related trading strategies. During the course of my research for the upcoming book, I collaborated with the owners of OptionSlam.com on several site enhancements that will help all traders who use option strategies to trade earnings announcements. Given the strong synergies between OptionSlam.com and my upcoming book, OptionSlam.com is graciously offering an exclusive 15% discount on annual INSIDER Memberships to Trader Edge readers and to readers who purchase my new book.

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Unexpected Probability Parallels

A few weeks ago I wrote an article on Trader Edge titled “Political Diversions”, which introduced two sites with different but effective methodologies for determining probabilistic election forecasts. One of those sites was Nate Silver’s FiveThirtyEight.com, which is arguably the leading and most respected election modeling site on the Internet.  Silver is also the bestselling author of The Signal and the Noise: Why So Many Predictions Fail – but Some Don’t.

About a month before the mid-term elections, I read one of Silver’s articles in which he made a statement that forever changed my understanding of election probabilities and allowed me to see surprising parallels to option probabilities.

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Recession Model Forecast 11-01-2014

The following article updates the diffusion index, recession slack index, aggregate recession model, and aggregate peak-trough model through October 2014. Please note that two new explanatory variables were added to the Trader Edge Recession Models in July and one explanatory variable was replaced in August. The swapped variables measured similar economic data, but the new series had more predictive power and was more forward-looking. For more information on the two new variables, please see “Two New Improvements to Trader Edge Recession Models.”

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Posted in Economic Indicators, Fundamental Analysis, Market Timing, Recession Forecasting Model | Tagged , , , , , , , , | Leave a comment

Non-Farm Payroll (NFP) Model Forecast – October 2014

This article presents the Trader Edge aggregate neural network model forecast for the October 2014 non-farm payroll data, which is scheduled to be released tomorrow morning at 8:30 AM EST.

Continue reading

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Posted in Economic Indicators, Fundamental Analysis, Market Commentary, Market Timing, NFP Forecasting Model | Tagged , , , , , , | Leave a comment