Newbie Needing Help Developing Strategies

[Wishin2Retire]

Hello,

Day one on TSP Talk and thought I would get right to it. I have about 7 years of service, 31 years old and am 100% into L2050. I have been thinking more about actively managing my TSP portfolio and want to get some advice on what others do strategically with their IFTs. To start and to clear the air about how the IFT works - When I make a trade before 12pm, the trade is completed at COB that day at the closing price - do I have that correct?

I don't want to over-analyze the market and the insane amount of data that exists in the world so I want to keep my strategy simple: Hold in the C, I, F, etc. until market conditions show that a downturn is in the near future (i.e. when the market dropped 1000 points after opening....the Friday before multiple news outlets warned of a rough week starting that Monday) and move funds to G and see/hope the market turns downward. Then once the market dips, re-buy at a lower price and hope the price rises above my "basis" pre-IFT. Easier said than done I know. Is that a cliff notes version of the strategy others employ or am I just hoping an dreaming here? I'll start with this post and get into more details if anyone is interested in replying. Thanks for reading!

 

[JTH]

Hello,

Day one on TSP Talk and thought I would get right to it. I have about 7 years of service, 31 years old and am 100% into L2050. I have been thinking more about actively managing my TSP portfolio and want to get some advice on what others do strategically with their IFTs. To start and to clear the air about how the IFT works - When I make a trade before 12pm, the trade is completed at COB that day at the closing price - do I have that correct?

Yes, this is correct, also keep in mind there will be days where the markets are open, but TSP is not. On those days, you will get the next day's price.

I don't want to over-analyze the market and the insane amount of data that exists in the world so I want to keep my strategy simple: Hold in the C, I, F, etc. until market conditions show that a downturn is in the near future (i.e. when the market dropped 1000 points after opening....the Friday before multiple news outlets warned of a rough week starting that Monday) and move funds to G and see/hope the market turns downward. Then once the market dips, re-buy at a lower price and hope the price rises above my "basis" pre-IFT. Easier said than done I know. Is that a cliff notes version of the strategy others employ or am I just hoping an dreaming here? I'll start with this post and get into more details if anyone is interested in replying. Thanks for reading!

I wrote this a few years back, when someone had asked me for advise, here's what I do, everyone has their own answer...

Researching, reading, watching, creating, back-testing and concluding the results. Sometimes I'll spend 20-40 hours a week doing just this.

1) Read anything and everything you can get your hands on, also look for, and filter out bias when you find it.

• Watch about 3-4 hours of videos a week, mostly on YouTube, if you find something you like, subscribe to it.
• Create systems based on any idea you come across, the more reading and watching you do the more ideas you'll create.
• Back-testing is very important and often time consuming, understand how it's very easy to skew the results by changing the variables.
• Make a conclusion of the system, either trash it, or add it as 1 tool (IMHO there is no 1 system which works for all situations.)

2) Make a plan, if it's too ridged it will snap or too flexible and you'll get bent over.

• The Long-game, map out your IFTs a full year in advance, with broad seasonal zones.
• The Mid-game gets mapped out about 30 days in advance, this falls in line with the 2 IFT limit. I've found many folks don't think about the mid game, this is the most important timeframe for TSPers. Hence, it is typically better to start off the month already invested, then jumping to G/F while still having 1 IFT to jump into the markets with. This is where many folks get left behind, there is nothing worse then watching the markets take off without you and being unable to deploy an IFT.
• The Short-game gets mapped out 3-7 days in advance, I scout potential entries and exits based on what the markets are doing now and how it fits into the Mid & Long term plans. I don't know what I'm going to do the next day, but I do know how I'm going to react to what happens.

3) Perspective, watch price and volume over multiple indexes over multiple timeframes, get a feel for the action

• Nothing substitutes time spent watching the price action, get into the pocket and stay there. If you take a break, you'll lose the feel.
• Every night I'll review the major indexes on the 15-minute, hourly, and daily timeframes. Sometimes (if I have a question) I'll dig into the 5-minute charts to see the interaction with trendlines. Weekly, I review the Weekly & Monthly Charts (stepping back to view the forest.)
• The Futures play an important role on determining the personality of the markets. I watch the futures at least every hour until I go to bed, then any time I wake up (usually 2am & 4am.) Think of the markets as a bi-polar patient, sometimes they are happy, or vice versa. It's important to understand and correlate the futures vs. that day's price action, sometimes those relationships change. Just like with the markets, if you have a good night's sleep, then you may have a great day at work. But if you tossed and turned all night long, then the next day you might have some volatility.
• The most important thing for us to understand is that we cannot impose our will on these markets, we can only choose to accept the outcome and find the proper reaction. "Being wrong and moving on" is an important part of not getting stuck in a bad position for too long.
• Being in the pocket. Every night, you should ask yourself at least 3 questions about how you think the price action will go. Ask yourself about the upside, downside, and middle, look at every possibility without bias. Then wait for the markets to reveal the answers with the price action. If you had guessed the price action correctly, then you are in the pocket and reacting correctly. If you are out of the pocket, don't try to force it, just try to figure out either what you missed or what you didn't accept (meaning your bias.)

4) Confidence gained from experience and planning. As an example, if you look at Intrepid Timer, he is usually confident to the point where he can come off as being cocky, yet he also understands the markets are not going to bend to his will, he has the flexibility to adapt, yet stay within the confines of his plan. You can't buy that sort of confidence but you can rent it through his Premium Service

 

[Dinicti]

You can also learn a lot from the heavy hitters here, I have. As you start I would very much advise on modest goals and being wary of greed. Good luck!

 

[kb9nvh]

Getting out is always easy, getting back in is the problem. also, take your risk while you're young and don't have much on the line....When you get close to retirement it's difficult to risk it all when a big move can add a few years to your projected retirement date.

 

[nasa1974]

Hello,

Day one on TSP Talk and thought I would get right to it. I have about 7 years of service, 31 years old and am 100% into L2050. I have been thinking more about actively managing my TSP portfolio and want to get some advice on what others do strategically with their IFTs. To start and to clear the air about how the IFT works - When I make a trade before 12pm, the trade is completed at COB that day at the closing price - do I have that correct?

I don't want to over-analyze the market and the insane amount of data that exists in the world so I want to keep my strategy simple: Hold in the C, I, F, etc. until market conditions show that a downturn is in the near future (i.e. when the market dropped 1000 points after opening....the Friday before multiple news outlets warned of a rough week starting that Monday) and move funds to G and see/hope the market turns downward. Then once the market dips, re-buy at a lower price and hope the price rises above my "basis" pre-IFT. Easier said than done I know. Is that a cliff notes version of the strategy others employ or am I just hoping an dreaming here? I'll start with this post and get into more details if anyone is interested in replying. Thanks for reading!

You want to take advantage of the TSP matching funds. If you can afford it invest the maximum into your TSP.

 

[anthony]

Welcome to the boards. If your "seven years of service" is military and you're still active: go see a certified financial planner. Professional advice from a trained CFP can cost hundreds in the civilian sector, but they are free for active duty at the base financial services office. Do that about once a year as if you're getting a dental check up and cleaning. I'm not a government employee but they may have something comparable too.

Point is, you have to do what JTH said about doing your own homework. It's your money and no one's going to manage it for you. BUT ... you also should to get some expert advice and get it from more than one source (kind of like going to a doctor, then getting other opinions). This is a great board for ideas, but it's not real advice. It's just people sharing ideas, sharing stuff they read, learning through shared experience. The adage goes, 'good advice is worth what you paid for it.' That especially applies here. If you start approaching this site like you're coming here for investing advice, then you're in trouble. Few (if any of us) have shown you any form of credentials, not just for financial knowledge, but also just basic identity. Being realistic, you have no idea who you're talking too (or getting advice from) on a web forum. If you approach this site like it's idea sharing and you keep a critical mindset, you'll be fine.

All that said, if I were you, in the near term I'd just hang out and watch the markets for a bit and do a lot of research before you really start actively trading your account. We're in the good part of the year where it's really hard to screw things up if you just hold an invested position. This time of year people are more likely to miss gains by not being invested than they are to lose value by being invested. During that time you should keep a spread sheet or join the autotracker and just make "imaginary" moves in real time at first to see if they would work out or not, all while just holding long term positions in your "real" money. When you're more confident, then start working more actively with real money.

Good luck!