A Very Simple Trading Rule That Can Make You Money
Most traders think profitable trading needs complexity. Paul Tudor Jones built one of his most famous trades around a very simple rule: the 200-day moving average.
If price is above the 200-day moving average, stay in the market. If price is below it, get out.
That single filter helped traders avoid major crashes like the dot-com collapse and the 2008 financial crisis while keeping long-term returns similar to buy and hold with smaller drawdowns.
Even more interesting, the MLM Index uses this same concept across 25 futures markets including commodities, currencies, metals, and bonds. The strategy has delivered stock-like returns with lower risk and low correlation to stocks.
Sometimes the best trading rules are the simplest ones.