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We have compiled below a listing of the most popular
questions we've been asked. If you have a question, chances are it
is listed in our FAQ's. And of course, you can always
Contact Us via email if
you don't find the answer you are looking for in these pages.
What does your stop-loss signal
mean?
Our stop-loss signals are designed to protect
our members against losses if the signals generated by our
system do not go with the general market trend.
How do you calculate your
stop-loss price?
It is based on the market close on the day
when the signal is issued. This may vary depending on the
security chosen, the signal type, and the strength of the
defined trend.
If a trader follows your system,
does he/she need to place a close order based on your stop-loss
price?
Several options may be considered:
- Do not place stop-loss order, but simply
wait for our email-alert.
- Do not place stop-loss order, but place
it when the index begins to get close to that price.
- To avoid collecting stop-losses at the
same point, put your stop-loss in a range of -0.5% / +0.5%
around our stop-loss.
- Place a stop-loss order according to your
own risk tolerance.
We do not generally recommend setting
stop-loss or limit orders based on our stop-loss price
because the market has a habit of hitting stop-loss orders
simply because they exist. Market makers (the large
institutions) have access to a great deal of market data,
including where the majority of stop-loss orders are set. If
there are enough stop-loss orders set for a specific price,
the market will not hesitate to take the stop. You can see
evidence of this on 7/21/2003 where the market only passed
our QQQQ stop-loss by a few points and then changed
directions again. We know from experience that when you set
a stop-loss order, the market will not hesitate to take it
if there are enough orders set near that price.
What should be done when the
stop-loss price is hit?
It depends on a trader's level of
risk tolerance. It is up to each individual trader to
decide whether to follow our signals and/or our
stop-loss system.
If during the market hours the price hits a stop-loss
threshold, the "cash" signal may be generated by the
system on the same day. Many of our customers do not put
a stop-loss order at all, they simply wait for a cash
signal to close their position on the market . This is
one of the reasons why we calculate our returns at
market close for the same day.
Can a new signal be issued when a
stop-loss is hit, or do you always remain in cash for at least one
day?
Yes, in some cases a new "Long" or
"Short" signal with a new stop-loss price could be
published on the same day when the price hits our
stop-loss. It can be the same signal as the closed one
or opposite, however, it depends what our system
indicates at this point of time. The situation where a
new "Long" signal is issued on the same day when the old
"Long" signal was closed or if a new "Short" signal is
issued on the same day as when the old "Short" signal
was closed may be considered as there were no changes in
our signals simply because we still remain in the same
position (extra commissions are not paid). This is one
of the reasons we do not follow stop-loss, but wait for
a signal issued by the system.
Why is it that during market hours
when the price hits a stop-loss threshold and you published a cash signal, your return differs from your stop-loss value?
Our system is not designed for intraday trading. We publish new signals before the market closes;
therefore, new signals are supposed
to be executed by market close for the same day. As a result, returns
are based on the closing price of the market for the same day
the signal was issued. When we publish a cash signal generated by a stop-loss, our returns may differ somewhat from the
actual value of the stop-loss.
Because of this, returns are dependent
on the movements of the market immediately after a stop-loss
order is executed. A trader has the choice to leave
the market at the moment when the stop-loss is hit or when our
official "cash" signal is issued.
You didn't change the signals at
3:15 PM,
but after that time the stop-loss order was hit. What should I
do?
According to our system, we would issue a "cash" signal for this
case, but it would not be issued until the next day. This means
that you could either close your position during the last
half-hour of the market, or you could close it the next trading
day.
There several reasons why our system works this way:
- Many of our customers invest in index funds and
mutual funds that are only traded during specific hours of the
day.
- Many of our
customers do not have access to real-time quotes and charts, so they rely
solely on our email alerts.
- Also, the likelihood of such a situation occurring is very
small.
P.S. It is totally your
decision, what to do when you see our stop-loss signal,
depending on your risk tolerance and your type of trading. |
