FAQs

Don’t forget to check under FAQs menu for answers of some big questions.

The following Q&A doesn’t require much long to answer so all are listed below. I’ll categorize them if I recorded many QAs.

It’s in buy mode means:

  1. The trend is up, so it’ll try to buy the next dip or breakout.
  2. Since it’s just a general direction guide, so if it’s in buy mode, that means you can decide to buy dip yourself instead of wait for it to buy and the most importantly, don’t short

Yes, everyone knows to short leveraged fund, better to short SPXU or TZA or SQQQ instead of long UPRO, TNA and TQQQ. The question is: since everyone knows, you think what your broker would do? Yes, when trend changes, you’re not allowed to short and your current short may be forced to cover.

So for long-term, don’t even think about shorting those stuff. Money never drops from sky. :-)

I think it’s impossible to follow my intraday comments, because it needs time to type, more often than not when I finish the typing and download the chart, it’s already too late.
However there’re a few things you can figure out:
  • Usually, you know I’m bearish or bullish for the day. It’s your direction guide although sometimes I’m biased but mostly I could recognize the trend correctly. I’d comment less when it’s a range day but if it’s a trend day, my comments are very clear.
  • Usually, when I see a pattern, I give the target. The target mostly works.
  • Usually, I see L1/H1/L2/H2 short or long, although mostly very late but sometimes the market does come back and you have the 2nd chances to consider, just be sure to have your own rule to trade. If you don’t know L1/H1/L2/H2 etc, don’t trade on it.
All in all, don’t follow me, you have to have a fixed rule to do any trade especially the day trade because a single loss of the day would affect your mood and patience, so you must have your own rule. My guide can provide you with some info, that’s all.

The Normalize means to apply MACD(10, 200, 1) on the data you want to study. In you case it’s $CPC (in StockCharts.com). The theory is to use MA200 as the base in stead of 0, so as to offset the different bases during different period therefore values in different period can be compared on the same ground.

If you don’t know why MACD, it’s actually: (10 day moving average of Put Call ratio)-(200 day moving average of Put Call ratio). The idea is use MA200 as the base so the 10 day moving average is not a must. The reason to use MACD is because in StockCharts, if you want to see differences between 2 different moving averages, you have no choice but to use MACD.

It’s MACD( 21, 55, 1 ), basically means to watch for EMA crossover.

Yes, I use: http://www.worden.com/Products/StockFinder for back test and mechanical system.
A general back test is OK and their way is very convenient. But I would not recommend it as your back test software FOR DESIGNING TRADING SYSTEM because it cannot back test exact entry and exit price. It only supports OPEN/CLOSE/MID/HIGH/LOW, so if your system goes serious, then it won’t be enough, unless you’re experienced software programmer like me who can code a lot, then there’s a solution to their problem but still not good for trading system.

You shouldn’t double.

The pyramid position will be “close at will” whenever a breakeven stop loss can be set. So when you have your first breakeven stop loss while I closed my position, you can hold as your base. The next time, I try to pyramid again, that’s your first “close at will” position. In this way, the system is designed that anyone can follow at any time, there’s no worry of being not following for awhile then you have to wait for the next round to follow.

By follow, I mean “faked follow”, the system here is not supposed to be followed, you should be clearly aware of that.

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