Trading Techniques  |  JUN 2003

A Mutual Fund Trading Method by Norman J. Brown

A Mutual Fund Trading Method by Norman J. Brown Get better profits and reduce your risks by using the one-rank method to select mutual funds to trade. There are many techniques and tools you can use to define turning points that generate trading signals. In this article I will discuss an approach that uses only very short-term persistence — that is, from one day to the next. I refer to this one-day principle as “one rank” (OR). The trading rules are simple, and historical evidence from the last 13-plus years clearly shows that using OR to select mutual funds can help you gain substantial profits and reduce your risks. BACKGROUND The OR technique is critically dependent on the short-term persistence of the mutual fund you are trading. There are several mutual fund trading schemes that make use of the concept of “persistence of price” or “momentum.” But what does “persistence” mean in this use?

by Norman J. Brown