Trading Signals Guide

When you use quantitative trading (whether to invest in QQQ, Apple, Tesla, Bitcoin, or other assets) it’s essential to understand how trading signals are designed and how to execute them.

We do not believe that it is prudent to follow the instructions of a «robo-advisor» without understanding its generation or having doubts about the operations to be carried out.

Wall Street professionals use a large number of algorithms to identify buy or sell signals in the markets.

Many are designed to generate profits when the market is in the trading phase. This phase is characterized by oscillating price movements in a narrow range. For this phase, techniques are used that primarily attempt to identify when an asset is «overbought» or «oversold.»

On the other hand, our design is oriented to obtain results when the market is in the «Trending» phase. At this stage, the market is in a clear upward or downward trend.

As we choose highly liquid assets, we do not believe that they can be overvalued or undervalued, but rather that the market price reflects all the information available on each trading day.

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Let’s also take into account the volatility of the assets we select. Trending phases often lead to significant jumps in returns, and we aim to identify those relevant movements.

This design can generate Trading Signals that quickly reverse if the market is in the «Trading» phase, and those Alerts can lead to losses. But they won’t be relevant. Significant gains and losses occur in «Trending» phases, and our design will identify them.

Many trading algorithms generate determinative, all-or-nothing decisions. On a sell signal, the entire position goes to cash, and the opposite is a buy signal.

Instead, we use a Tiered Decision approach.

Each of our algorithms controls only a portion of the decisions.

The investor decides on a «Maximum» amount of money to invest in an asset. Let’s look at an example with Apple.

Our algorithms will only indicate to invest that «Maximum» amount in Apple when the price of Apple indicates a clear positive trend in all timeframes: short, medium and long.

Any weakness of Apple in any of the timeframes generates a sell signal of a portion of the «Maximum» investment.

For this reason, we tell you before each trading alert what the new Mix of your «Maximum» investment is. What percentage should stay at Apple, and what percentage should be temporarily in Cash.

Every time you receive a trading alert, you’ll find the following message in your email: «Every $100,000 you have in Apple, you must buy (sell) $xx.xxx.»

If you only invested in a single asset, you wouldn’t need that instruction. You should simply look at the valuation of your portfolio, and use the percentages of the new Mix indicated in the Alert.

But more often than not, you have different assets in your account, and a single Cash position. Your broker has no way of knowing how that Cash is integrated, if you have it reserved for your «Maximum» investment in Apple or your other assets.

Our system keeps accounts individually for each asset. If you follow the instruction, when you execute the operation you will have reflected in your wallet the Mix between Apple and Cash indicated by the algorithms.

You just need to know where you stand at Apple when trading, and apply a simple rule of three with the prompts you receive.

When you receive a trading signal you have a link to the video, posted on the website. There you will find not only the new Mix for your «Maximum» investment in Apple, but also the updated information on Returns and Risks.

This allows you to control the efficiency of the algorithms to achieve good returns with controlled risks.

We always compare the chosen asset, in this case Apple, with the market (S&P 500) and the set of algorithms (in this case, AL JOBS).

The «one year» charts will show you the data for the last 252 days, updated to the date of the trading signal.

After them, you will find the relevant «three years» (252 days x 3) and «five years» (252 days x 5) charts.

The number of days (252) corresponds to the average number of trading days on Wall Street.

Many times the trading signal is sent very close and even after the markets close. Let’s look at their reasons and how you should proceed.

The last half hour of trading is very often relevant. When a trading signal is flagged in our system by «very little» margin, we wait for the close.

We can also wait when it comes to the days when the quarterly results of each asset are published, and observe the market’s reaction to these announcements.

For those reasons, you can receive trading signals after the shutdown. Ideally, you should have a broker account that allows you to trade in the «post-market», also called «after-hours trading».

If you don’t have such an account, you can simply trade at the opening of the following day. Yield differences may occur, but they will be random, sometimes by more, sometimes by less. If something very important happens the next day, it will be reflected in a new trading signal.

It depends on the behavior of the markets, we can’t predict them, but we can tell you the average number of annual trades generated by the «Backtesting»:

Nasdaq 100 (QQQ): 25 — Apple: 41 — Tesla: 56 — Bitcoin: 37.

Bitcoin trading algorithms were developed to be applied to ETFs designed to emulate the behavior of the cryptocurrency. As a result, Bitcoin prices are only computed on trading days on Wall Street.

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