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Long-term conservative traders who prefers smaller returns in exchange for less risk can make use of our service by trading index shares (stocks). We suggest trading either QQQQ shares for the NASDAQ 100 or SPY shares for the S&P 500, but there are many more other options. Even if you do not invest in ETFs (QQQ, SPY, DIA...), but invest your pension funds in stocks, we still strongly believe that an index analysis is the first thing that you need to have in your hands.

The trading system for long-term traders is very simple. Not many traders use their pension funds for active trading. As a rule, it is in long-term investments where you need not buy at the very bottom and sell at the very top. All you need to know is when the institutional long-term traders begin to pull money out of the stock market in order for you to sell and when the institutional investors begin to inject money back into the stock market in order for you to buy.

"Follow the money flow"
is the main motto of the long-term traders.

The easiest way to follow the money flow and see whether money is going into or out of the stock market is to monitor volume based on technical indicators. Only volume-based technical analysis can provide you with a complete picture of where the money is going.

Selling/Buying Volume Oscillator (SBV Oscillator) was developed to tie trading volume activity (number of shares changing hands) to price trend to reveal stock market sentiment and to show negative money flow (investors taking money out of the market) and positive money flow (investors inject money into the stock market).

By applying SBV Oscillator to the 10-year (1 bar = 2 weeks) charts of indexes and exchanges, you can receive a clear picture of when to buy and when to sell. In the case of pension funds, you can see clearly the point at which it would be prudent to secure your profit by converting your investments into cash or bonds and the point at which it is safe to go back into the market by buying stocks and funds.

Chart 1: Simple Trading System using the SBV Oscillator for long-term trading. S&P 500
10-year chart (1 bar = 2 weeks), SBV Oscillator bar period = 20 with signal line at 20%
2000 - 2007

Chart 2: Simple Trading System using the SBV Oscillator for long-term trading. S&P 500
10-year chart (1 bar = 2 weeks), SBV Oscillator bar period = 20 with signal line at 20%
2007 - 2009

In the charts above you can see that SBV Oscillator allows you to follow the money flow and successfully invest in the stock market. The Simple Trading System has been applied to the 10-year SBV(20) chart:

1. Once the SBV indicator declines below a negative signal level (the indicator will now show red), we will enter a short position (if we are not already short);
2.  Once the SBV indicator advances above a negative signal level (after having been below that level), we will enter a long position (the indicator still shows red);
3.  Once the SBV indicator rallies above a positive signal level (the indicator will now show green), we will enter a long position (if we are not already long);
4.  Once the SBV indicator declines below a positive signal level (after having been above that level), we will enter a short position (the indicator still shows green).

By following these simple four rules above a conservative long-term trader knows when to buy and when to sell.

Follow the index in your long-term investments

Remember, stock analysis cannot show if the economy is in a recession or in a recovery up-trend. Only an index analysis can indicate when the market and economy are in a down- or up-trend. If the index analysis reveals that we are in a recession, crash, or down-trend (especially long-term), your stock will follow the general market decline, no matter how good it is. On the other hand, when the long-term index analysis indicates an up-trend, even bad stocks do well in the majority of cases.

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