That's my initial thinking after discovering this ultra simple strategy for trading SPY (and other issues). As I was tinkering with refinements to the limit stop settings I wondered how SPY would fare if the only filter placed on it was a limit stop. First I tested daily bars looking back 2 year with a .7% daily stop...that is, if the limit stop exercises on any given day you just buy SPY again at the close....no momentum filters, no auto-stop etc.....just hold SPY...no shorting, no cash. The max drawdown and linearity are stunning. But I wanted to see what happened during the crash of 08-09....how did the model fare then?...so I ran weekly bars back 7 years. In this case if SPY fell more than 1.5% during a week then the position was closed but we reentered on the Friday close of that week....and so on and so on.
Here are the results: It may be tempting to say "well, I'll just do this, it sure cuts down on the time I have to watch and track the markets, not to mention commissions.etc."
Hopefully, you'll recognize that this is a one trick pony and that, while essentially a no-brainer, the markets are fickle and a diversified risk model like M3 has distinct advantages.
And here's the weekly bars study going back 7 years:
