Introducing MLPX Elite Traders Index
Last updated
Last updated
In the 1980s, Richard Dennis and William Eckhardt conducted a groundbreaking social experiment known as "The Turtle Traders." They recruited a group of novices from diverse backgrounds, none of whom had prior trading experience. These individuals were trained in trend-following and technical analysis strategies, learning detailed rules for when to enter and exit the markets, how to implement stop-loss strategies, and manage their capital. Over the course of four years, these trading novices generated profits exceeding $100 million. This experiment not only changed the lives of its participants but also demonstrated the profound importance of systematic trading strategies, reshaping subsequent market participants' views and practices regarding strategy trading.
The financial trading world is rich with strategies developed and perfected by some of the greatest minds in the industry. Notable examples include Ralph Nelson Elliott’s Wave Theory, J. Welles Wilder’s Relative Strength Index, Gerald Appel’s MACD Crossovers, and John Bollinger’s Bollinger Bands. These strategies have not only stood the test of time but have also been adopted and refined by countless traders thereafter. They offer a glimpse into the rational assessment of the markets by some of the most intelligent investors, contrasting sharply with the often misleading statements made by social media influencers chasing viral fame.
The Elite Traders Index is a measure based on thousands of strategy experts’ “vote” on market trends. This index gathers and analyzes over 4000 strategies from nearly 2000 strategy professionals. These strategies are routinely tested via simulated trading and backtesting to track their trading positions. By statistically analyzing these results, the Elite Traders Index captures and quantifies the technical perspectives of savvy investors regarding the market sentiment and trading activity across various time intervals.
The MLPX Elite Traders Index currently supports the five largest cryptocurrencies by market capitalization: BTC, ETH, BNB, SOL, and XRP. Additionally, it includes five stocks: AAPL, AMZN, TSLA, MSFT, and NVDA.
2000 Strategy Experts: Sourced from popular strategists on the platforms such as TradingView and GitHub.
Over 4000 Strategies: Only strategies with a historical return greater than 30% are considered.
These strategies are uniformly backtested to determine the position direction. In order to objectively reflect market trends, we generally avoid making subjective judgments or selections regarding the quality of the strategies. Instead, our aim is to give each strategy an equal opportunity. However, we have still put in significant effort to align these strategies to ensure the overall stability of the index calculation.
The strategies are used with their default parameters, but with a uniform initial investment amount and a consistent position allocation percentage for each buy/sell signal generated.
Strategies that may look ahead into future data or have the potential issue of 'history calculation may change,' which could lead to misleading performance, are excluded.
long/short ratio: The Long/Short Ratio represents the percentage of elite trader-developed strategies that currently hold long positions.
open position rate: The Open Position Rate represents the percentage of positions in an open state, rather than being in a closed state, among all strategies developed by elite traders at the current time.
The MLPX Elite Traders Index is updated once daily, with the daily segmentation based on UTC time at 00:00. The provided index values only represent traders' predictive assessment of the market trend for the day and are re-evaluated daily based on new prices.
In the near future, we will consider introducing hourly updates of the index values to capture shorter-term market trends.
The MLPX Elite Traders Index is rooted in the real-world strategies used by seasoned trading professionals, providing a highly reliable tool for predicting market trends. This index incorporates both the Long/Short Ratio and Open Position Rate, each reflecting different aspects of market dynamics:
Long/Short Ratio: This metric offers a direct measure of market sentiment, showing the balance between bullish and bearish positions. The Long/Short Ratio is a percentage value ranging from 0 to 100. Crossing the 50% threshold indicates a majority of strategies being bullish, while falling below 50% suggests a majority of strategies being bearish. Typically, when the value exceeds 90%, it often indicates a highly certain bullish market sentiment, but one should also be cautious of the potential for a rapid market pullback. As for the bearish market scenario, it is recommended to set the cautionary threshold at 20%.
Open Position Rate: Indicates the level of trading activity, giving insights into market liquidity and trader engagement, which are crucial for timing market entries and exits.
Visual trend graphs from the Long/Short Ratio and Open Position Rate can highlight emerging patterns and potential reversals, and provide nuanced insights that help gauge investor confidence and anticipate market movements.
A good practice is to consider using the Long/Short Ratio in a manner similar to the MACD indicator. Using the 50% line as a reference point, crossing above the 50% line from below can be considered a buy signal, while crossing below the 50% line from above can be considered a sell signal.
Strategy Development:
This index enables investors to design more effective trading strategies by analyzing daily index fluctuations alongside other market indicators and price trends.
Risk Management:
The index’s insights into market sentiment can be instrumental in managing risk, allowing traders to adjust their strategies based on current and forecasted market conditions.
The Elite Traders Index is more than just a tool; it's a comprehensive solution that enhances understanding, improves strategic planning, and ultimately leads to more informed and profitable trading decisions.
