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Does LuxAlgo really work?
Can you really use LuxAlgo premium indicators to make money from trading consistently over the long term?
There are three premium LuxAlgo indicators:
- LuxAlgo Signals & Overlays
- LuxAlgo Price Action Concepts
- LuxAlgo Oscillator
LuxAlgo Signals & Overlays is the main indicator toolkit provided by LuxAlgo to help traders make trading decisions.
It displays buy and sell signals.
There are two main signals:
- Confirmation signals
- Contrarian signals
Confirmation signals are signals based on a trend-following methodology.
The problem with trend-following signals is that there is always a significant lag.
That means by the time it gives you the “uptrend” or downtrend” signal, the trend has already started.
In other words, your entry price might not be good, thus reducing your risk-to-reward ratio.
What about LuxAlgo’s contrarian signals?
Contrarian signals aim to spot potential tops and bottoms.
In a ranging market environment, contrarian signals would do well.
The problem with contrarian signals is that you would suffer huge losses in a trending (i.e. trending up or trending down) market environment.
For technical indicators that show “overbought” or “oversold” levels, they can stay “overbought”(or “oversold”) for an extended period of time while the price keeps going up (or down).
So, it’s not a wise decision to trade solely based on LuxAlgo’s buy or sell signals because it’s not going to guarantee you make profits.
Next, let’s look at the LuxAlgo Premium Price Action indicator.
It’s an indicator toolkit that automatically detects and highlights real-time “trend continuation” or ” trend reversal”.
Simply put, if the price is breaking a higher high during an uptrend (or lower low during a downtrend), the LuxAlgo Premium Price Action indicator will highlight to you it’s a trend continuation.
On the other hand, if the price breaks a prior low during an uptrend (or a prior high during a downtrend), then the LuxAlgo Premium Price Action indicator will highlight to you it’s a trend reversal.
If there is a failed higher high (or lower low) attempt previously, the indicator will also highlight it to you.
If you have studied basic price action, you should find it easy to spot these patterns yourself.
So, the LuxAlgo Premium Price Action indicator just makes it more convenient and saves you time.
Lastly, let’s look at the LuxAlgo Oscillator indicator.
There are quite a number of oscillator indicators for you to choose from:
- Ultimate Stochastic
- Ultimate MACD
- Ultimate RSI
All these oscillator indicators aim to spot the top and bottom, thus trying to give you a signal of a potential trend reversal.
Also, it can show you potential divergence with price, which a lot of traders use to trade reversals.
As I mentioned before, reversal signals could work well during ranging markets.
The risk comes when you are trying to time the top or bottom in a trending market.
You will suffer greater losses especially if it’s a strongly trending market.
So, that means if you want to use these trend reversal indicators, you need to know whether the market is trending or ranging.
There are mainly two trading strategies used by LuxAlgo:
- Reversal trading
Can these trading strategies make money?
The truth is that any trading strategy can make money on some trades.
But, can these trading strategies help you make money consistently over the long term?
To make money trading, you need not just a profitable trading strategy but also discipline and good risk management.
In short, not many people actually make a lot of money from trading consistently and over the long term.
My husband used to work in a proprietary trading firm.
There were traders who stayed there for a couple of years without making any money, but they still went to the office every day to try to make money.
These traders had no basic salary and are only entitled to profit-sharing if they can make money from trading.
In the end, most of the traders left and went on to find salaried jobs.
Trading for a living looks very easy, but it is actually very tough and the majority of day traders cannot make a living.
Can you imagine that one day you made a few thousand dollars only to lose it all and more the next day?
This is no fun at all going through the emotional roller coaster like that almost on a daily basis.
The worst part is that you might be profitable for the first 11 months of the year and lose everything in the last month of the year.
So, you have basically wasted your entire year.
If you have a family to support and bills to pay, it’s going to be very stressful.
When you are under stress, you are more prone to make fatal trading mistakes such as over-trading and over-leveraging.
If you look at Forbes’s richest list, do you see any day trader that made it to the list?
But, you can find a lot of great investors such as Warren Buffet who have made it to the list.
He is not playing in a losing game where people are trying to predict price patterns in the short term.
Instead, Warren Buffet is looking for business patterns as he knows that business patterns at some point reveal the future pattern of the stock price.
Of course, a stock price pattern will not obligingly follow every change in the business pattern, but if your time horizon is long enough, it is amazing how the price patterns eventually match up with the business patterns.
So, the key is analyzing the fundamentals and growth potential of the underlying business in the long term instead of trying to guess what the stock price will be tomorrow or next week.
For example, Warren Buffet purchased a lot of American Express shares right after its stock price crashed about 50% following the Salad Oil Scandal.
The Salad Oil Scandal did hit American Express with a huge one-time loss, but the business was still solid and the earnings potentials and growth potentials were still good.
When this type of stock mispricing opportunity appeared, Warren Buffet knew that the odds were in his favor and he bet big.
My point is that when you are risking your money in the stock market, why not adopt a proven profitable investment strategy where your odds of success are significantly greater than speculating about the short-term stock price movement?
Now, let’s look at LuxAlgo pricing.
There are three different types of pricing plans:
- Monthly $67.99
- Quarterly $143.97
- Yearly $489.99
It comes with a 30-day money-back guarantee, so you could test drive it.
Alternatives To LuxAlgo
So, I think that you would be better off investing in great companies for the long term than trying to trade for profits. using indicators such as LuxAlgo.
Here’s what I recommend if you want to get started investing.
Motley Fool Stock Advisor is focused on giving you stock recommendations that are high-quality companies with long-term growth potential.
The reason why I subscribe to Stock Advisor is to get stock ideas as Motley Fool has a proven record of finding stocks with massive upside potential.
Personally, I don’t buy every single stock recommendation.
What I do is that if I find any interesting stock pick, I will do my own research again.
Below is the performance comparison between Motley Fool Stock Advisor and S&P 500 between 2002 and 8th June 2023.
As of 8th June 2023, average Motley Fool Stock Advisor recommendations have returned over 459% since inception while S&P 500 has returned 124%.
In short, the Motley Fool Stock Advisor has outperformed the market 3 to 1.
That’s a HUGE difference in returns.
But, what about its individual stock picks?
This metric is important because you might not be buying every single stock recommendation made by Stock Advisor.
Below is a table that shows you the performance of individual stock picks over the years.
As of 28th April 2023, Motley Fool Stock Advisor has had 178 stock recommendations with 100%+ returns.
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- NVIDIA: it’s up 16,423%*
- Shopify: it is up 4,107%*
- United Health Group: it is up 2,338 %*
[*Returns as of 31st Dec 2021. Past performance is no guarantee of future results. Individual investment results may vary. All investing involves risk of loss.]
Will the Motley Fool Stock Advisor always be right about their stock recommendations?
No, because no one can be right about their stock picks 100% of the time.
Let me sidetrack a bit here.
If any stock picking service tells you that they have a close to 100% success rate on their stock picks and can guarantee you high investment returns, you should definitely stay away.
Even Warren Buffet has loss-making stocks in his portfolio, but he still achieves above-average returns because a few big gainers in the portfolio can make up for the under-performers.
What I like about the Motley Fool Stock Advisor is that they are very open and transparent about their bad investments.
As a member, I can see the performance of ALL its past and current stock recommendations (even for closed positions).
For some other stock-picking services that I’ve tried, they don’t publish the performance of all their past and current stock recommendations, so it’s not easy for you to find out their true track record.
For example, the year 2022 has not been good for high-growth stocks because of rising interest rates and high inflation.
So, you can see a lot of Motley Fool Stock Advisor’s stock recommendations are not doing very well.
The truth is that other stock-picking services are not doing well either because of the stock market crash.
Do I still think it’s worth subscribing to the Motley Fool Stock Advisor?
My answer is yes.
The stock market goes up and down all the time.
Every few years, there is a bear market.
According to Peter Lynch who is a legendary fund manager, far more money has been lost by investors trying to anticipate correction than lost in corrections themselves.
In fact, I think the bear market is the BEST time to start investing in the stock market.
During a bear market, it’s more likely to find great businesses selling at very cheap prices because people are just selling out of fear when the business is still fundamentally sound.
A market crash is a time when huge wealth transfers from irrational and emotional investors to patient and rational investors.
So, if you are thinking of getting into stock investing, I highly recommend the Motley Fool Stock Advisor because I think there are a lot of well-researched stock recommendations.
In terms of pricing, Motley Fool Stock Advisor is also much more affordable.
Usually, its annual subscription is $199.
Right now, there’s a special limited-time $79 offer* for new members for the first year when you click the link here to try it out for 30 days with a Membership-Fee-Back Guarantee. (*Billed annually. Introductory price for the first year for new members only. First-year bills at $79 and renews at $199)
So, for $79 a year- that’s just $1.52 a week – you can gain unlimited access to their library of expert stock recommendations which are carefully selected to help you grow your wealth.