Friday, December 16, 2016

How UltimateAlgorithm signals usually pan out

The UltimateAlgorithm is quite complicated. 

It's actually pretty smart, and can adapt to past performance of a stock. It is based on Technical Analysis and combines several indicators and moving averages to reach a daily result of Buy/Hold-position or Sell position. 
It also provides me with a general market health indicator, stating whether to buy into dips and enter new Long positions or not.
Usually when a Buy signal is posted, the stock may push higher quickly within the next 5-10 trading days. I have seen some stocks make a 10% move within a month of the Buy signal.
When a Sell signal is posted, it does not necessarily mean that you need to Short the stock. It just means that the algorithm believes there is low risk-reward in the stock, and that outperformance is at a very low probability.

Usually when a stock is given a Sell signal it may go sideways for a long time (months even) before breaking out or breaking down so consider buying stocks instead of options if you can (to not lose premium on time spent)

There are exceptions of course and some stocks will push higher even after a Sell signal was posted for them, but my overall accuracy is at approximately 70% of signals.

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