Here's the NASI 3 EMA statistics now, that last long netted 34% on
QLD and was long for 40 trading days.
However here's one thing to note, if you look at the statistics,
generally after a monster trade you either get a whipsaw or a small
trade, but rarely do you get two back to back large trades.
Therefore there is a high probability that this sell signal
will either be a whipsaw losing trade or a small winning trade only
- however intra trade stats are different if you take profits at
targets. Here's an attached picture of the stats.
Basically the odds favor this current short either being a
small winning trade only or a losing trade.
Why is this the
case? think of Elliot Wave Theory; in Elliot Wave
Theory, you have trending wave, then a consolidation wave, then a
trending wave, etc. For example in a 5 wave pattern, waves 1,
3 and 5 are trending waves, where as in-between waves (waves 2 and
4) are consolidation waves. In an ABC pattern, wave's A and B
are trending waves while wave B is a consolidation wave. The
point is you never have 2 back to back trending waves, therefore I
think this is good analogy
The Yellow high-lighted areas show that in most cases after a large
% gain, generally the next signal is either a whipsaw losing trade
or a small winning trade only, you don't get two back to back large
winning trades in a row (except for intra signal). The most
recent winning trade was large winner at 33.5%, therefore the odds
of this short being a large winner is small
NASI stats and thoughts
Posted by matt on 28th of Oct 2010 at 05:55 pm
Here's the NASI 3 EMA statistics now, that last long netted 34% on QLD and was long for 40 trading days.
However here's one thing to note, if you look at the statistics, generally after a monster trade you either get a whipsaw or a small trade, but rarely do you get two back to back large trades. Therefore there is a high probability that this sell signal will either be a whipsaw losing trade or a small winning trade only - however intra trade stats are different if you take profits at targets. Here's an attached picture of the stats. Basically the odds favor this current short either being a small winning trade only or a losing trade.
Why is this the case? think of Elliot Wave Theory; in Elliot Wave Theory, you have trending wave, then a consolidation wave, then a trending wave, etc. For example in a 5 wave pattern, waves 1, 3 and 5 are trending waves, where as in-between waves (waves 2 and 4) are consolidation waves. In an ABC pattern, wave's A and B are trending waves while wave B is a consolidation wave. The point is you never have 2 back to back trending waves, therefore I think this is good analogy
The Yellow high-lighted areas show that in most cases after a large % gain, generally the next signal is either a whipsaw losing trade or a small winning trade only, you don't get two back to back large winning trades in a row (except for intra signal). The most recent winning trade was large winner at 33.5%, therefore the odds of this short being a large winner is small
This theory sounds like it
Posted by maxeaus on 29th of Oct 2010 at 07:46 am
This theory sounds like it could also be the issue with the current GDX signal which was a short short signal after 40+ days long.
Just thinking out loud here.
As you know, those profit/loss
Posted by darnelds on 28th of Oct 2010 at 06:00 pm
As you know, those profit/loss stats are for the QLD, which is for the QQQQ. Those buy-sell signals appear to work much better for the broader market.