May 13, 2009
Commodity option trading system - Using essentially the same method of shifting funds between accounts, a $10,000, 50-50 constant-ratio plan would end up with a profit of $5,839, compared with $5,773 for the constant-dollar.
Were the lest examples to be continued a few more years into the fifties, the constant-ratio plan would pull even farther ahead, due to its built-in advantage in a rising market. This would be especially significant in this case, because by the end of the test the constant-dollar formula is only about 30 percent in stocks, while the constant-ratio plan is still at 50 percent. It might be worth pointing out that, since the long-term trend of the American economy has always been irregularly upward, the constant-ratio plan promises to be able to adjust itself to this gradual rise somewhat better than the constant-dollar plan. Naturally, the uptrend is subject to frequent declines or periods of stagnation”sometimes of considerable duration”but the upward movement has always reasserted itself in time. The constant-ratio plan provides some protection during these periods of decline, while continually adapting itself automatically to changing market conditions. Lucile Tomlinson presents results of a series of five hypothetical constant ratio plans, each covering 11 years in the 55-year period 1897-1951.
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