Quote Originally Posted by adam ali View Post
Billy, I'm stuck on something and perhaps you can help. The 20DMF is currently characterized as neutral, and when neutral, the Robot will look for the best r/r trade, be it short or go long. However, in reviewing the action of the 20DMF it appears that buying continues to come into the market, so it's somewhat counterintuitive to me why it should be considered neutral.

Perhaps it's a statistical fact that when the 20DMF gets above the 0 line, odds are that the market is exhausted and will shortly experience a downturn. If not, on what basis then can we be confident that neutrality is the correct posture to take?
Adam,


Thanks for the question.

The "neutral" position on the 20DMF is set when a cover your short signal has been issued.
This is the definition. Simply back-tests have shown that in such a condition it is better to stay in cash. Nobody is forced to follow it. If you want to be short or long, please feel free.

The IWM Robot is also free to take its own decision and based on its own past statistics calculated on five different indicators, it decided to go short.

But you are right: trading has a lot to do with confidence.
If you are not confident, why don't you stay in cash?


Pascal