Info!! The Ultimate Root Of Border Inward Fiscal Markets

There are ii sources of border when trading fiscal markets: 1) looking at novel information; together with 2) looking at one-time data inwards novel ways.  The traditional sources of data are hence mined that at that spot is no border inwards looking at one-time things inwards traditional ways.  This is 1 argue that inventiveness is key to trading success.

Consider an experiment.  Instead of taking a unmarried technical indicator together with applying it across all stocks to possess upward one's hear purchase together with sell candidates, let's position the dominant wheel for each stock together with projection it into the side past times side fourth dimension catamenia to supply unique purchase together with sell signals.  Imagine, moreover, that nosotros produce that for all stocks listed on the New York Stock Exchange.  Each stock has its ain cyclical patterns that modify over time; sometimes the dominant cycles volition last shorter-term, other times longer-term.  We're non taking 1 "system" together with applying it to all stocks.  Rather, we're identifying pregnant cyclical patterns for each stock together with hence aggregating the purchase together with sell signals to infer full general marketplace position direction.

(For an instance of such an approach, delight run across the locomote of John Ehlers).

Going dorsum to slow 2013, what nosotros notice is that when nosotros bring a high pose out of purchase signals across stocks (top octile of the distribution), the side past times side 10 days inwards SPY average a hit of +.81%.  When nosotros bring a high pose out of sell signals across the stock universe, the side past times side 10 days inwards SPY average a loss of -.40%.  

Fascinatingly, the pose out of purchase signals is solely modestly correlated amongst the pose out of sell signals (r = -.17).  

When nosotros bring a high pose out of sell signals across stocks, the side past times side 10 days inwards SPY average a loss of -.26%.  When nosotros bring a depression pose out of sell signals, the side past times side tend days inwards SPY average a hit of +.78%.

In other words, nosotros bring ii potential sources of border inwards the market.  The origin is when nosotros run across wide strengths; the minute is when nosotros run across a wide absence of weakness.  Think close why that mightiness last the case...

Take your traditional charts together with technical tools together with throw them away.  Look at novel data or creatively intend through novel ways to sentiment traditional information.  Your border lies inwards the rigorous testing together with implementation of uniqueness.

Further Reading:  Cultivating Emotional Creativity  
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