One system, two modes
Same rules — you choose how much of the account trades them. It is one switch in the app and can be changed any time.
50/50 — this page
Half the account sizes each position, the other half stays in cash. About a third of the drawdown of a buy-and-hold ETF, and still ahead of it in every window tested. Needs about $24,900.
Full size — grow a small account
Every position is sized on the whole account: the fastest compounding the rules allow, and the largest drawdowns — far larger than an ETF's. Possible from $10,000. That is the main strategy page →
50/50 against a buy-and-hold ETF, in under three minutes
What 50/50 gives you against an ETF, and what it costs
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Full size or 50/50 — which one is yours?
The same signals in two sizes. What each asks of your account
Side by side, with the numbers: Full size vs 50/50 · Watch on YouTube
The comparison, window by window
$24,900 starting capital · MES · profits reinvested · commissions, slippage and interest on cash included
Backtester settings: Transaction Costs on · Interest on Cash on · Pos. Size 50/50 on · Annual Adjustments off · Normalize Positions on
| Window | 50/50 P&L | ETF P&L | 50/50 CAGR | ETF CAGR | 50/50 max DD | ETF max DD |
|---|---|---|---|---|---|---|
| Last 3 Years | $41,581 | $19,517 | 38.7% | 21.3% | 8.5% | 18.4% |
| Last 5 Years | $44,155 | $20,559 | 22.6% | 12.8% | 8.9% | 24.1% |
| Last 10 Years | $1,073,159 | $78,460 | 46.0% | 15.3% | 10.0% | 34.3% |
| Last 20 Years | $13,939,510 | $186,202 | 37.2% | 11.3% | 14.9% | 55.8% |
| 2000 to Date | $15,001,657 | $186,965 | 27.1% | 8.4% | 15.0% | 55.8% |
Per point of drawdown: 1.81 for 50/50 against 0.15 for the ETF. The model held a position on 3,292 of roughly 9,750 days since 2000 — about a third of the time.
What happens in a crisis
The part a buy-and-hold position cannot avoid
Same run · Transaction Costs on · Interest on Cash on · Pos. Size 50/50 on · Annual Adjustments off · Normalize Positions on
| Crisis | 50/50 P&L | 50/50 max DD | ETF P&L | ETF max DD |
|---|---|---|---|---|
| Black Monday 1987 | $6,397 | 0.0% | $-5,959 | 31.4% |
| Dot-com crash 2000–2002 | $1,003 | 2.5% | $-8,372 | 47.4% |
| Financial crisis 2007–2009 | $42,589 | 0.0% | $-11,766 | 55.8% |
| COVID crash 2020 | $51,453 | 0.0% | $-1,019 | 34.3% |
In all four crises in the test data the ETF lost money while the strategy gained — in three of them without any drawdown at all, because it simply was not in the market.
Why it works differently
Out of the market most of the time
About 2–5 signals a year, held for weeks. The rest of the time the account is in cash and earns interest. A buy-and-hold position carries every decline in full.
Half the account sizes the position
50/50 sizing puts half the account behind each trade and leaves the other half in cash. That is what keeps the drawdown near a third of the ETF's while the return stays ahead.
Compounding, not just tracking
Gains are reinvested, so the position grows with the account. That is the difference between tracking an index and letting a rule set compound on it.
What it asks of you
About $24,900 to start
One MES contract at 50/50 sizing becomes possible at $14,000, but only from $24,900 did the account survive the worst stretch in the test data — the August 2011 downgrade, which took a full-size account down 68 %. Below that, full sizing is the better choice — with a much larger drawdown.
A futures account and a few minutes a week
You need a broker with futures access. Signals are computed after the close; you place the order yourself at the next open. There is no auto-trading and no broker connection.
Leverage, and the honesty that goes with it
Futures are leveraged instruments. A stop is not a guarantee — a gap can skip it. Every figure here is a hypothetical backtest; taxes and contract rolls are not included.
Never traded a future?
The difference to an S&P 500 ETF in eleven steps — ownership, margin, point value, leverage, expiry and costs
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Questions an ETF holder asks
Is this really an alternative to an S&P 500 ETF?
For the part of a portfolio meant to track the S&P 500, yes — but it is a different kind of instrument. An ETF is a share you buy and hold; this is a rule set you follow with MES futures, roughly one signal every two to three months. In every window tested it produced more return at a smaller drawdown, but it needs a futures account, about $24,900 to start, and you place the orders yourself.
Why would a rule set beat buying and holding?
Because it is out of the market about two thirds of the time. Over 2000-today the model held a position on 3,292 of roughly 9,750 days; the rest of the time the money sat in cash and earned interest. A buy-and-hold position carries every decline in full — the crashes of 2000, 2008 and 2020 included.
How much less drawdown are we talking about?
Over 2000-today the worst peak-to-trough decline was 15.0% for 50/50 sizing against 55.8% for the ETF. Over the last 20 years it was 14.9% against 55.8%. The numbers come from the same backtest run and are hypothetical.
What is 50/50 sizing?
Each position is sized on half the account; the other half stays in cash and takes half of every gain. It is one switch in the app. Full sizing compounds faster but carries a much larger drawdown, which is why the ETF comparison on this page uses 50/50.
What does it cost me compared to an ETF?
Effort and access. You need a broker with futures access, about $24,900 to carry one MES contract at 50/50 sizing, and you have to place the orders yourself after the close. Commissions and slippage are included in every figure on this page; taxes and contract rolls are not.
What can go wrong?
Futures are leveraged. A protective stop is not a guarantee — a gap can skip it, and the fill can be worse than the price you set. The published results are hypothetical backtests; past performance, real or simulated, does not guarantee future results. Sitting out a rally is a real cost too: the model is in cash most of the time and will miss part of a strong run.
Look at the numbers yourself
The full methodology, every parameter and the complete backtest since 1963
Strategy Report The Android app runs the same backtest on your own settings — AVALONPLUS for Android, 30-day free trial.