As you can see below, I still have three long positions, including two that I bought before the close, when the 20DMF was still in a buy mode. I will keep the stops as indicated and let the market take me out if necessary. However, new trades will only be short trades. Please note that the Stock Selection Systems advises to be 50% long SDS.
The first column now states the trade's entry date.
Below are the new set of short ideas with their respective lower and upper limits.
These limits will be added to the Stocks Selection page.
Below are three figures that explain how to use these limits.
The first figure indicates the probability that one of the short trade ideas will reach a certain distance above the 5MA. As you can see, the short zone lies between 1% below the 5MA and 2.5% above the 5MA. For the first short candidate, JCI, that would be 40.45 and 41.88. What the figure below tells us is that for JCI, the probability of bouncing 2.5% above the 5MA is only about 3%. However, the probability of reaching the 5MA (0%) is about 20%.
Since we have 9 short candidates, this means that if we only need one short position, we can wait for a 1% bounce to the 5MA, because we have 10% chance times 9 that we will be able to enter such a trade.
The figure below shows the potential 5D return on the short (the more negative, the better.)
We can see that shorting bounces higher than 2.5% above the 5MA is not a good idea, as the potential profit diminishes.
The final figure shows the Win Ratio. You might think that a 57% win ratio is weak, but it is not, and since we have a stop loss management, this means that winning trades will do much better than losing trades.
We will soon add a price table for each trade idea that shows the different price levels depending on the distance to the 5MA.
