264 starting months; the fund's record repeats in order when needed
- SPY-guarded QQQ with dip stocks
- 264 funded
- Always QQQ
- 264 funded
Stock dip trading rules / Strategy family
Can trading S&P 500 dips fund early retirement?
The rule in short: each day, find S&P 500 stocks that fell 3% or more but are still above their 200-day average. Next morning, place an order to buy 2–4% lower. Sell on the bounce, or after ten days. Between trades the money waits in T-bills, in QQQ, or in SMH, with or without the SPY guard. That waiting place is what decides the result.
Retirement answer: with T-bills between trades, the rule is safe but slow. It funded 30 years of spending starting at 6.5% a year, against 5.7% for holding SPY. Inside QQQ or SMH it funded 10–12%, the top of the range we test. But the record only starts in 2004 and misses the 2000–2002 crash, so compare each version with its own holding below, not with the site's century-long strategies.
What the trades earned: about 1.0% each after costs, over 2,134 trades from 2004 to 2026. But the money was in a trade only 9% of the time.
Three things to know first. You cannot run this by hand: a program must place the orders. The record starts in July 2004, so it skips the 2000–2002 crash that the site's longer strategies had to survive. And every order is assumed to fill when the day's low touched the limit price. If the price had to go 0.2% through it, the T-bills version grew 8.4% a year instead of 11.6%. The same rule on Nasdaq-100 stocks is tested against holding QQQ in Does buying 3% dips beat holding QQQ?.
01 / Choose a version
Two switches, five tested versions.
Choose where the money waits between trades, and whether the SPY guard is on. The answer, the chart and the calculator follow your choice. The T-bills version is already out of the market between trades, so it was not tested with the guard.
SPY-guarded QQQ with dip stocks · July 2004 to June 2026
Spending it funded: starting at 12% of the portfolio a year, the highest rate we test, this version paid 30 years of spending in at least 95% of the tested histories. Always QQQ on its own managed 8.2% of the portfolio a year. The record starts in 2004 and misses the 2000–2002 crash, which flatters every version on this page.
Growth: $10,000 became $1,060,890, or 23.6% a year, with a worst fall of 30%. Always QQQ: $230,957, 15.3% a year, worst fall 50%.
Confidence: about 35% that the edge would hold up in a new long market period. The trades beat the holding by about half a percent each, and that small edge did not pass our pre-set statistical test.
Your chosen version is in full colour; the others are faded. Log scale, so equal percentage moves take equal height. Every line starts at $10,000 in July 2004, after 0.10% per side on every trade, with dividends reinvested and idle cash earning T-bill interest. Untick a line to hide it; the scale stays the same.
| Version | Per year | Worst fall | $10,000 became | Starting withdrawal that lasted 30 years |
|---|---|---|---|---|
| T-bills between trades | 11.7% | -7.3% | $114,100 | 6.5% · $2,708 a month from $500,000 |
| QQQ between trades | 22.4% | -41.0% | $848,700 | 12% (highest tested) · $5,000 a month from $500,000 |
| QQQ between trades, SPY guard | 23.6% | -30.1% | $1,060,900 | 12% (highest tested) · $5,000 a month from $500,000 |
| SMH between trades | 23.8% | -48.6% | $1,091,700 | 10.3% · $4,292 a month from $500,000 |
| SMH between trades, SPY guard | 25.2% | -37.0% | $1,403,500 | 12% (highest tested) · $5,000 a month from $500,000 |
| Holding QQQ | 15.3% | -49.7% | $231,000 | 8% · $3,333 a month from $500,000 |
| Holding SMH | 19.3% | -54.3% | $483,400 | 5.7% · $2,375 a month from $500,000 |
| Holding SPY | 10.9% | -50.8% | $97,700 | 5.7% · $2,375 a month from $500,000 |
Can SPY-guarded QQQ with dip stocks fund your retirement?
Enter your portfolio, your monthly spending and how long the money must last. Change the switches above to test another version.
$2,500 a month for 30 years starts at 6.0% of the portfolio each year.
In these backtests, yes. Both strategies funded this early retirement in every history tested.
5,000 histories built from 8–12-year pieces
- SPY-guarded QQQ with dip stocks
- 5,000 funded
- Always QQQ
- 5,000 funded
A path funded the goal only if it paid every inflation-adjusted monthly withdrawal for 30 years. Results use the nearest 0.1 percentage-point starting withdrawal rate. They reuse one 22-year market record and are not a probability about your future.
How the FIRE calculator works
The calculator applies the portfolio value, monthly withdrawal, and number of years you enter. The first withdrawal occurs before the first month's return, and later withdrawals rise with U.S. inflation. A history counts as funded only if it pays every monthly withdrawal for the full period and finishes above zero.
One result begins at each of the 264 months in the fund record and follows that record forward in order, returning to its first month when more months are needed. The other builds 5,000 longer histories from linked 8-, 10-, and 12-year pieces of the same record. The calculation charges 0.10% whenever QQQ and S&P 500 dip stocks, or T-bills is bought or sold and excludes personal tax.
At every repeated or rearranged join, market signals use the real observations that preceded the incoming historical month. Portfolio value, withdrawals, inflation and strategy state continue without resetting.
02 / Why the versions differ
The trades add about half a percent each. The holding underneath does the rest.
With T-bills between trades, the account earned only the trades plus bill interest: 11.6% a year, with a worst fall of 11%. QQQ alone made 15.1% a year with a worst fall of 53%.
Inside a QQQ holding, each trade sells a tenth of the QQQ for two or three days and buys it back. So the account keeps QQQ's growth and adds whatever the dip stock did better than QQQ over those days: 0.60% per trade after costs, with 61% of trades ahead of QQQ. Inside SMH the extra was 0.37% per trade.
Half a percent, a hundred times a year, is why QQQ with dip trades grew about 7 points a year faster than plain QQQ here. It is also why confidence is low. That small edge did not pass our pre-set statistical test, and it would disappear with costs much above 0.10% per side or with worse fills.
The SPY guard holds T-bills after weak months for SPY. Here it cut the worst falls by about ten points for the QQQ and SMH versions, because it stepped aside for parts of 2008–2009 and 2022.
Costs, fills and the per-trade evidence
Every stock trade is charged 0.10% per side. The QQQ and SMH versions also pay 0.10% on the slice of the holding sold and bought back around each trade. With no costs the T-bills version grew 13.8% a year; at 0.25% per side, 8.4%; when fills needed the price to go 0.2% through the limit, 8.4%. Buying the same dips at the next open without a limit order grew 2.3% a year, so the limit order carries the edge.
The trades averaged 1.09% after costs in 2014–2019 and 0.78% in 2020–2026, two periods set aside before any result was calculated. The retirement numbers on this page use FIRE's own engine on the account's month-end values: spending is taken monthly, sales to fund it cost 0.10%, and the guard versions apply the site's SPY signal to the whole account.
03 / What this means for you
A comparison row, not a recommendation.
If you already hold an index fund, this page shows what a dip-trading program might add and what it costs to run. It sits in the strategy library so you can compare it, but it is never one of the planner's three recommendations. It needs daily automation and its record is short.
If you do not run trading programs, the lesson is simpler. The edge is real but small. Where the money waits matters far more than the trades.
Published 17 September 2026. Market history ends June 2026 for the retirement tests and July 2026 for the trade statistics. Returns are historical simulations, not a forecast.
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