The Incredible Strategy

The strategy is simple. On a monthly chart, calculate the 12 month Simple Moving Average. When there are 2 back-to-back green months that close above the 12 SMA, buy into a position. Then if a monthly bar closes below the 12 SMA, exit the position.

This will capture major bullish breakout moves on any asset and avoid major downturns.

This works for AAPL, This works for TSLA, This works for SPY, This works for Gold Futures, This works for USD/YEN, This works for Bitcoin and Solana. This works for anything that trends up and to the right.

And it works without you needing to know fundamentals, or read whitepapers, or wonder about the Macroeconomic outlook, or listen to an earnings call. You just set it, check in on it once a month, and cash out.

But this system is not perfect.

It takes a long time for you to profit. It uses monthly candles and can stay in a trade for years. This isn't a "double your money, overnight" trading strategy. It wins and it wins big, but it takes time.

On top of that, you also have to be ok with leaving money on the table. This strategy takes 2 full months before it's ok with jumping into the next bull run. And when the party's over and we've reached the top, it can overstay and give back some of the gains it made. This would've happened with Bitcoin in 2021. Instead of getting out at the top around $60k, it would have waited until a drop to $46k.

This is the strategy's strength as much as it is a weakness. This same strategy would have bought into Bitcoin in May 2023, stayed in during the sideways market in the first six months of 2024, and would still be in now for a gain of 336%. This strategy thrives in times that call for diamond hands.

The Incredible strategy also works really well as a long-term bullish indicator. Use it to signal when SPY or your stock of choice starts a new bull run and sell bull credit spreads on the stock instead of bear credit spreads to increase your win-rate. Then flip your spread when the strategy says so.

What are some ways that this strategy can be improved? The easiest way would be to sell Covered Calls against your long position while your waiting to exit the trade. This gives you upfront money and cashes in on any small dips. Make sure to sell covered calls with a low Delta (around 0.1), so your long position is never at risk of assignment and roll your covered call if it ever does get to close.

Thanks for reading and if you enjoyed this post you should check out Scott Welsh's original video introducing the Incredible Strategy.