Trading Guide

Welcome to Fundztrader.com

We’re happy to have you as one of our followers, and we want you to have this Guide to Using Fundztrader.

Getting Started with Fundztrader

Interested in taking control of your investments with Fundztrader? Here’s how you can start making your money work for you with the Fundztrader model portfolios.

1) Set up an investment account:

If you don’t have an account where you can trade Fidelity mutual funds, then you need to set one up.  More information at setting up an account is at Fidelity.com.  There are several options for using the Fundztrader systems.  (Note: we don’t manage money, and have no affiliation with Fidelity other than we like their fund offerings, so we can’t help with this directly.)

  • Fidelity IRA:  This is an ideal use for these systems.  You don’t have to worry about short term capital gains, and with an IRA you have access to Fidelity’s complete family of funds, as well as other funds offered in their brokerage accounts.
  • Fidelity Mutual Fund Account:  If you open a Taxable account, you can trade any of the Fidelity mutual funds.
  • Fidelity Brokerage Account: Taxable account, trades Fidelity mutual funds, can also trade stock and other mutual funds. The most flexible option.
  • Fidelity 401k:  Ideal from a tax standpoint, however almost every one is different in terms of the funds offered and minimum holding periods.  If enough funds are offered then the Equity fund rankings can be used to trade on your own.
  • Other brokerage firms:  Best for use with our ETF system.

2) Choose the system(s) you want to trade: 

Currently there are two systems to choose from:

  • Fidelity Select System:  This system trades more often (about 2 times a month).  Because of the shorter holding period for the Fidelity Select Funds and the occasional use of money market funds, this system offers above market returns, but in a down market can be expected to outperform the Fidelity Equity Fund system.
  • Exchange Traded Fund System: We recently started tracking this system. This system is slightly more active than the Fidelity Equity System, as it trades every 2 months instead of every 3 month. Since there are no early redemption fees on ETF’s, you can choose to trade it more often based on ETF rankings if you choose.

3) Decide how much to invest: 

You should consult with your financial advisor.  However, as a general rule of thumb you probably not be investing more than 20% of you money in any one investment approach.

4) Start investing:

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Visit the subscriber area of the web site by logging in to the user account login box with the user name and password you selected when you signed up.  Visit the trades page for the system you want to follow.  For more detail on how to use the information on the trades pages, go to the FAQ’s on each or click here for the Select system or here for the Fidelity Equity Fund system.

You are now on your way to making your money work harder for you.  Enjoy!

What do the different parts of the system printout mean?  How do I use the Fidelity Select system?

Starting at the top.

This stuff merely tells the program that runs the system every night what the parameters of the system are.  You can safely ignore it.  It does point out one significant characteristic of the Select system; that is that all positions are held for a minimum of 30 calendar days (which means it can indicate a trade on the 29th day to be executed the next day.)  So, if the current positions are not close to being held 29 days, you don’t have to check back every day.  The exception is for money market funds.  Those can be held for any amount of time, so they need to be checked daily.

We do not use sell stops or other timing signals to get out, we just take the medicine of a bad position (since our testing has shown that it really doesn’t help the system performance to stop out early).

Trading System Header

Trading System Header

Next comes the list of actual trades:

Click for Full Sized

Click for Full Sized

This listing shows the

  • position (numbered 1 or 2 under Pos),
  • the fund in that position (under Fund),
  • the date the position was purchased (under Buy Date),
  • the date it was sold (or is still being held) (under Sell Date),
  • the number of days it was held (or has been held) (under Hold Days),
  • the last it was ranked (under Last Rank, ignore this),
  • the best it was ever ranked ( under Best Rank, ignore this, this system requires that it will always be one except for money market funds) and
  • the percentage gain on the position (under Pcnt Gain)
  • the postion value when sold (yours should not be the same as this)

if a trade is indicated this is where it will show up (Next Trade)

Click for Full Size Image

Click for Full Size Image


In this example you can see that in the Position 1 row holding FDRXX (a money market fund) is to be sold tomorrow and all the money from that position is to be used to buy FSRFX.  Note that the system tracks the trades as if they were all executed at the close, but if you enter the trade the night before, Select funds trade hourly, so you would get the 10:00 am EST pricing on both the buy and sell.  If you want to track the posted system exactly you could wait til after 3:00 pm EST to enter the trade, but in practice that it’s not worth that effort (in fact there is a slight bias in favor of entering them early, but it’s probably not statistically significant.)

Note that if the fund indicated is FDRXX, SPRXX, or FSLXX then simply switch to the money market fund that you are using.  It used to be that the only one that was usable was the Select Money Market Fund FSLXX, but since Fidelity has waived the load on the Select funds that’s no longer the only choice.

Finally, over time the positions in the system aren’t always close to 50% for each, but it’s probably best that as you add or subtract from your positions that you try to keep them close to 50% each.

What if I miss a Select System Trade?

Occasionally you will miss a trade.  If that happens, don’t panic.  The best thing to do is simply go ahead and sell the position that was sold in the trade you missed, and put that money in your money market fund (e.g FSLXX).  Then simply wait for the next trade and begin again.  If you were only a day late and you wanted to go ahead and take the trade anyhow, that may work out OK, but the majority of the time a trade is only held 30 days, so there’s a good change you will pay the 0.75% penalty if you take a late trade to stay in sync with the system.

What if I miss an ETF System Trade?

Occasionally you will miss a trade.  If that happens, don’t panic.  With the ETF system, since there are no fees and minimum holding periods, just go ahead and make the trade that your missed. If you are just starting to use the system, you can buy the current holdings at almost any time.

Disclaimer: This material is for your private information. We are not soliciting any action based upon it. Opinions expressed are present opinions only. The material is based upon information considered reliable, but we do not represent that is accurate or complete, and it should not be relied upon as such. We, or persons involved in the preparation or issuance of this material may, from time to time, have long or short positions in, and buy or sell the securities or options of companies mentioned herein.
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