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The Hari Seldon Trader (HST) model operates shifting among three positions:

 

  1. Aggressive Long (AL)
  2. Moderate Long  (ML)
  3. Cash/Short (Cash)

 The original version of the model (variant 2) suggests the investors to go

  1. 100% $TQQQ
  2. 100% $UPRO
  3. 100% Cash
  • TQQQ: aggressive periods, where models tries to maximize profits
  • UPRO: bull markets in more volatile periods, a bit more conservative than previous
  • Cash: bear markets or big corrections

There are other 4 variants of the model, and most  popular are variant 2 and variant 5 (with no leverage)

The HST model has been backtested over 48 years (1971-2019), since the start of the Nasdaq market.

How many times the model shifted among the three positions during the backtest period?
An investor applying the HST model in future, how many trades can he expect to operate per year?

Here is the data 1971-2019:

 

And here a summary table, telling is how many days over the total time:

 

AL ML CASH
7767 1902 2894
61,82% 15,14% 23,04%

 

You understand the HST model stays invested for the most of the days (62%+15%=77%), and stays in cash only for 23% of days (red bars). 

Nevertheless the HST model is able to skip the worst time of the market going to cash, ignoring minor corrections.

In 48 years the model gave 978 shift signals, an average of 20 trades per year.

An investor should expect to trade twice in a month, on average. The HST model does not require constant presence at the keyboard.

 

Let's exclude from picture the days when model suggested to be Long with TQQQ and UPRO. Here you see when the HST model has been in Cash to avoid bear markets. Isn't it impressive?

 

 

 

 

Who is Hari Seldon

(from Wikipedia)

Hari Seldon is a fictional character in Isaac Asimov's Foundation series.

In his capacity as mathematics professor on the planet Trantor, Seldon develops psychohistory, an algorithmic science that allows him to predict the future in probabilistic terms. On the basis of his psychohistory he is able to predict the eventual fall of the Galactic Empire and to develop a means to shorten the millennia of chaos to follow. The significance of his discoveries lies behind his nickname "Raven" Seldon.

Our team decided to dedicate this work and this model to this amazing character, creating the even-more-fictional character of "Hari Seldon Trader".