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Can you determine the change in trend with less than 5% of error in price
and more than 80% of reliability?
I'm sure your answer is No. I have made this question to 12 professors of
Finance at the best business ranking Universities in USA, some of them
answered No and the others didn't answer. Well in the next lines I will show
you that the answer to this question is Yes.
If you study the difference in price 2 bars before and 2 bars after the
change in trend you will see that for the majority of the stocks is less
than 5%. Exceptions occurs for stocks with high volatility. Suppose you are
looking for a change in trend from down to up, you are looking for an
absolute minimum in order to enter long or by a Call. If you know the change
is limited to 5 bars you consider the lowest possible price you find as your
reference and when the price goes up 4% from your last reference you decide
the trend has changed.
You can see in this situation is very difficult to enter with more than 5%
of difference with the minimum. In stocks with high volatility you must use
5 or 6% but the determination is easier because the chart shape is very
sharp at the extreme and it is much more evident.
If you use this as your entry point , and for your exit point you consider a
fall in profit of 20% if your profit is more than 15%; a fall in profit of
50% if your profit is between 10% and 15%; or a profit 0 or -5% if your
profit is less than 10%, you will obtain an average profit of more than 75%
per month.
You don't have to believe me, you can check all this with a very
simple program in Visual Basic.
Then the only thing you need in order to apply this technique is to know in
advance when the change in trend will occur in the next 5 bars with a 80% of
reliability.
I will give you this information, I will give you every day an average of 5
predictions of maximum or minimum in a time frame of 5 days and 80%
reliable.
I know that I will receive answers saying this is Spam but I don't care
because my site is free, but think the possibilities, you can use this
technique in parallel with the technique you are using and you have nothing
to loose.
For those that are so concerned about Spam or not Spam that will not even
check if all this is true or not, don't worry. this is the last time I try
to convince you about the advantages of my model.
Good luck.
Anibal Archenti
www.stockspredic.com
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