IWM Robot Entry

[brrim]

Pascal; The IWM Robot short entry for Monday at 81.69 is below the closing price of 82.10. We usually short on rallies at prices above the close. Could you explain the logic?
Thank you.
Best regards,
Robert

[Pascal]

Indeed, the IWM Robot calculates the lower shorting price that will offer a 3:1 Return/Risk ratio on the base of its multi-pivots support/Resistance levels.

What is important to understand here is that the IWM Robot tried to open a short trade on Friday and missed by a very small margin (The entry price was 83.29 and the high of the day was 0.3% lower at 83.02.) Because of this miss, the IWM Robot now has a lower entry price, simply because the price moved lower than strong close buy support levels - that now became strong resistance levels. The short entry price is now 81.69 with a tight stop at 82.95.

As I wrote in my daily comment, we have a strong chance of a bounce this week and I believe that the IWM stop could be hit... Will be hit. Of course, if we have a strong gap up today, the IWM Robot will enter at the open and will place its stop higher, but still, a Fed/Options driven bounce could be swift.

The back-test and volatility studies that we concluded yesterday has convinced us that the Robots have fallen victims to the increasingly more powerful algos, which trade far ahead of the Robots. Indeed, "before the close" trading activities have increased four times in the past few years. This means that the Robots entries of the next day following a signal are not competitive against algos that dominate the markets and the robots then struggle against their own tight stop strategies.

The 20DMF and the GDX RT systems are more reactive and have produced much better results than the robots themselves. This is the reason why, in the next few days, we will phase these two robots out and replace them with the RT trading models.

More can be found in the link below. The document that I was planning to publish yesterday is now gone to Ilona, our copywriter who nicely adapts my French-English to real English. This document will be published as soon as I get it back.

http://www.effectivevolume.com/content.php



Pascal

[pdp-brugge]

Pascal,

You write that more details are to be found at the link at the end of your post. That link is simply a link to the EV home page. Is this right?

[Pascal]

Yes. I updated the content of that main page yetserday.


Pascal

[pdp-brugge]

Pascal,

I am impatiently waiting for the document with the new RT strategy. Do you have any news?

PdP

[Pascal]

I will e-mail this research document after the close to all GDX/20DMF real-time users.


Pascal