We suggest trading SPY for accounts with a balance of up to $10,000 and SPX for accounts above $10,000.

The reason for this is that accounts are charged lower trade commissions on SPX since most positions will expire and do not need to be closed, as SPX is cash settled at expiration.

However, there is a trade-off, as compounding with a $10,000 account will not be as effective on SPX as with SPY.

To select your preferred option, please go to the allocation page in either Global AutoTrading or AutoShares and choose either “SPY Weekly Trend” or “SPX Weekly Trend”.

The tables show live results from our autotraders.

We are not able to include commission costs in the table, as they depend on the brokerage you use. 

To view our interactive broker’s statement for January to March 2024, click here.

The S&P 500 index, which represents the performance of 500 large companies listed on stock exchanges in the United States, tends to go higher over time for several reasons. A main factor is the dynamic nature of its composition. Here is a more detailed explanation:

1. Economic Growth

Over long periods, the economy tends to grow, reflecting increases in productivity, population, and innovation. As the economy expands, corporate earnings generally increase, which can drive stock prices higher. Since the S&P 500 is a market-capitalization-weighted index, it benefits from this overall growth in the economy and corporate earnings.

2. Inflation

Over time, inflation leads to higher nominal prices for goods and services, which can translate into higher nominal sales and earnings for companies. This inflationary effect can contribute to the nominal increase in stock prices and, consequently, the S&P 500 index.

3. Reinvestment of Dividends

Many companies in the S&P 500 pay dividends to shareholders. When investors reinvest these dividends in buying more stocks, it can have a compounding effect, contributing to the long-term growth of the index.

4. Technological Advancements and Innovation

The S&P 500 includes companies at the forefront of innovation and technological advancements. These companies can grow at a faster rate than the overall economy, contributing significantly to the index’s performance. As older technologies and business models become obsolete, they are replaced by newer, more efficient ones, driving economic progress and stock performance.

5. Survivorship Bias and Adaptation

As mentioned earlier, the composition of the S&P 500 is not static. Companies that underperform or fall behind in market capitalization can be removed from the index, while those showing strong growth and market relevance are added. This process means the index tends to reflect the performance of the current leading companies in the economy. The continuous adaptation ensures the S&P 500 remains relevant and tends to grow over time, as it represents the more successful and adaptive segments of the economy.

6. Market Sentiment and Investor Behavior

Over long periods, investor optimism and the willingness to invest in equities can drive prices higher. While market sentiment can fluctuate dramatically in the short term, leading to volatility, the long-term trend has been upward due to the factors mentioned above, along with a consensus that investing in the stock market is a good long-term investment strategy.

Together, these factors contribute to the long-term upward trend of the S&P 500, despite periods of volatility and market corrections. It’s the combination of economic growth, innovation, and the dynamic, self-refreshing nature of the index itself that underpins its growth over time

In the SPX and SPY live results tables, we risk ~5% per trade. With a starting account balance of $10.000, a winner would make $500, and a loser would lose $500.

If you plan to compound, what we recommend, you have to select “% account value” in your Global AutoTrading allocation or “percentage of account value” for AutoShares.

Important: Global AutoTrading and AutoShares calculate account value based on margin rather than risk per trade. (Risk per trade refers to the maximum amount you can lose.)

In this strategy, the margin used per trade is twice the size of your risk amount per trade.

Here’s an example:

If we sell a credit spread on SPX at the open for $2.50 and trade one contract, we collect $250. If we lose and the spread price goes up to $5.00 or $500, we lose $500. However, we collected $250 at entry, resulting in a maximum loss per trade of $250.

The risk per trade is $250, while the margin used to open this trade is $500.

Therefore, you have to select a 5% account value to have a risk per trade of 2.5%.

The brokerage adds the commission to the margin. Therefore, it’s possible that you may need to select 6% to ensure you get filled, depending on the brokerage commission. Try using 5% for the first trade and, if you do not get filled, then change to 6% the next day.

Yes, we highly recommend to scale in. If your desired risk is 5% per trade, then start the first week with 2.5% and increase only after your account grows by 20%. This will reduce your drawdown if you are starting with a losing campaign. 

Another way is to enter the market just after a losing campaign of 5 trades. This will put the probability in your favor to start with some winners. 

The maximum number of trades open simultaneously is 6.

If you trade SPX, you can trade in a cash account, if you trade SPY you would need a margin account.

SPY: No. We always enter every trade with a target order that exits winning trades before expiration. In-the-money options are exited before expiration.

SPX: There are no assignments on SPX. All options are cash-settled at expiration.