GDX Next Buy signal

[Pascal]

Pascal,

According to what I read in the new Trading Models section, a confidence level of 80% is needed to trade a signal intraday.
Yesterday, the intraday Bought Protected signal had a confidence of 78.0%.
What do we do now:
- go long at the open today ?
- stay short and wait until the bought signal gets a confidence level above 80% ?

Please advice

Good question! I was going to post a message regarding yesterday's Confidence level evolution.

We are issuing reversed signals simply because the GDX Model is whipsawing around the 0 level.

I attach below two screen shots taken at different time, but very close to the EOD.
You can see that the confidence level varied much.
The reason is simple: All instruments experience and end of day spike, which correspond to "at the close" orders.

For GDX, the average spike is 0.0582%. However, 20% of the end of day spikes are above 0.085%
Since the distance between the signal and the Buy level was always lower than 0.085% in the last minute of trading, then an intraday confirmed buy signal could NOT be issued.

I myself however closed the short when the confidence level was around 55% and took a long position at a confidence level of 70%, but the system is programmed for 80% (I "gambled" that the spike at the end of the day would not be strongly negative.)

Since the signal is issued at the close, for our track record, we will note a change to a buy signal at the price of the open of the day.

Please understand that the confidence level is only a guide that uses past trade statistics. I advise everyone to take trading decisions as they see fit. When the confidence level is 70%, it means that in 7 cases out of 10, the signal did not reverse by the close.

What you might do is close a previous position when a new signal reaches 50% and then open a new position afterward when you see it fit, depending on you judgement of the probability.

The GDX Model is now in a BUY PROTECTED mode.

We will most probably also add in a new information box the probability that a new "NON-CONFIRMED" signal is issued during the day. Once such a signal is issued, then the system will turn on the confidence level.


Pascal