Rich Trend Trader's Blog

Terminology

Clarrification of terminology with respect to trend model signals:

trend model BUY: All conditions required for a BUY signal have been met and the investment change from short/cash to long takes place the next day.

intraday BUY: A trend model BUY signal that occurs during the day when specific indicator positions and market action align properly. One or all of the market indices (S&P600, S&P400, S&P500, and/or RUT) fall by 3% or more during the day and then retrace 61.8% of this drop, using the previous days closing value, and maitaining this level at the close. All indices that fall more then 3% must retrace the 61.8% value and hold above this level at the close. Example is the intraday BUY signal on 3/6/09.

non-standard BUY: A signal in which 1 of the 5 indicators that are required to increase to produce a trend model BUY signal stays the same value from the previous day. A signal that is not acted upon due to the high number of failures that have and will occur but should they occur they proceed a trend model BUY signal. Example was the non-standard BUY signal on 5/26/10.

trend model SELL: All conditions required for a SELL signal have been met and the investment change from long to short/cash takes place the next day.

trend model CASH: A very rare signal as of right now that is usually produced by a failed SELL signal. Last trend model CASH signal was issued on 1/25/07.

CASH (50% Long Positions put into Cash): A signal intended to take risk off when the market is pulling back from a local top. Approximately 50% of these signals will fail in that the market will continue higher without a continuation or significant pullback that would produce a SELL signal. In general, many individual trend model BUY signals using the CASH (50% Long Positions put into Cash) will produce gains lower than not using the CASH signal but over many successive signals this would actually produce gains in excess of the straight trend model BUY/SELL. The rules for this signal are given as follows:

– Close above upper Bollinger band on at least 1 index (RUT/SML, MID, SPX, or COMPQ)

then

– 5-Day SELL on at least 2 indices (RUT/SML, MID, SPX, or COMPQ)

Failure rules are given as follows:

– 10-Day BUY on any index above the 5-Day SELL day high

and

– 5-Day BUY on all other indices

DISCLAIMER: https://richtrendtrader.wordpress.com/disclaimer-on-information-presented-in-this-blog

 

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