Summary
What is “Lazy Trading”?
My Lazy Trading System #1
Conclusions
//12-Month Simple Moving Average Strategy
DEFPARAM CumulateOrders = False // Do not cumulate orders
// Long entry conditions:
indicator1 = Average[12](close)
c1 = (close[1] CROSSES OVER indicator1)
IF c1 THEN
BUY 1 SHARES AT MARKET
ENDIF
// Long exit conditions:
indicator2 = Average[12](close)
c2 = (close[1] CROSSES UNDER indicator2)
IF c2 THEN
SELL AT MARKET
ENDIF
This is the equity curve:
There are no doubts about its profitability!
A sincere wish of good work to all!
What is “Lazy Trading”?
You know that lazy investing exists (Lazy investing with a lazy portfolio) and it’s a profitable form of investing.
So, is it possible to trade in the same way? Sure, and will publish some posts about this beautiful style of trading.
I intend lazy trading like trading on very long time-frames like weekly or monthly, so you can look at your trades only one time per week/month, spending a very little amount of your precious time.
My Lazy Trading System #1
My lazy trading system #1 is extremely simple but profitable over time.
For these reasons, it’s often used by hedge funds.
The rules of this strategy are the simplest in the world:
- buy the S&P 500 index when it rises above the 12-month simple moving average (SMA) of closing prices;
- sell when the index drops below the 12-month simple moving average of closing prices and stay out of the market.
Therefore, this strategy goes LONG only.
I decided to use the ProRealTime platform for the backtest (it’s free, for end-of-day data).
This is the code of the trading system (written in ProBuilder programming language):
DEFPARAM CumulateOrders = False // Do not cumulate orders
// Long entry conditions:
indicator1 = Average[12](close)
c1 = (close[1] CROSSES OVER indicator1)
IF c1 THEN
BUY 1 SHARES AT MARKET
ENDIF
// Long exit conditions:
indicator2 = Average[12](close)
c2 = (close[1] CROSSES UNDER indicator2)
IF c2 THEN
SELL AT MARKET
ENDIF
Below you can see an image of the dashboard of the report (from 1 Jan. 1950 to 1 Sep. 2022):
Graphic report of the backtest from 1950 to 2022(source: ProRealTime platform v11.1- Screenshot by Author).
This is the equity curve:
The equity curve of the backtest from 1950 to 2022 (source: ProRealTime platform v11.1 - Screenshot by Author).
There are no doubts about its profitability!
Conclusions
Takeaways:- Incredibly, it’s possible to build a very simple trading system based on one moving average that is profitable through many, many years.
- This trading system is suitable for hedge funds and long-term traders, too. It’s easy to add it to any portfolio.
- It’s so slow (monthly timeframe) that it can be traded manually, without any problem on any platform.
Suggestions:
- If you are a newbie in the world of trading, this strategy could be your first one!
A sincere wish of good work to all!
Written by F. GRAMOLA (*).
(*) Member of S.I.A.T., the Italian Society of Technical Analysis (member society of I.F.T.A. – International Federation of Technical Analysts).
Warning
We merely cite our personal opinions for educational purposes only.
All trademarks are the property of their respective owners.
Investing and trading are risky. Don't invest or trade money that you cannot afford to lose.
Initial photo by Jason Briscoe on Unsplash.
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