In this blog, we will look at a great example of how studying the charts help fine-tune and improve the performance we can extract out of the automated alerts.

In the figure below, we can see that a buy alert of type 6 was issued for Atmel Corporation (ATML) yesterday (9/1) at 1:45 pm.
The alert number is 62909168611. So the average profit from the 86 trades used to compile the statistics for this strategy on ATML is 1.6%. The average trade duration is 1.1 trading days. With a Trade Ratio of 2.9 and a profit ratio of 0.9, the odds (TR times PR) is pretty good. Actually, for strategy for which we find PR values less than 1, like in this case, it means than early exit cut-offs are being used.
Learn all about alerts from our manual.

From the figure we can see what has triggered the automated alert. Keep in mind that the automated alerts have only very little intelligence for safety built into them. That is why it is easily possible to improve their performance using the charts. In the figure below, it is clear that the fast oscillators have some downside and they'll have an immediate impact on the price. So waiting for a couple of hours till they come down makes sense.

In terms of the slower oscillators and the Daily Model (golden in left bottom panel),  this trade looks safe to take. Let us double check the safety by considering the End-of-Day charts for ATML for 8/31. Since we are going to delay the entry, we do have time to check out the End-of-day charts for safety :-) Our end-of-day charts consider only the daily closing prices as input to generate the oscillators while the Intraday charts have 15-min price data as input.

The buy trade looks very safe from the end-of-day chart perspective.

By 3:45pm yesterday (9/1) as we see below, the fast oscillators have indeed come down and brought the price to a slightly better entry point. Our oscillators can be trusted to move consistently. Their impact on the price depends on how dominant they are and how other oscillators are poised.

So lets say we take the trade before market close at this price.
As expected, ATML moved up after market open today (9/2). In the chart below at 10:30am, we see that fast oscillators are poised to go down. So it is a good time to take our profits and exit.

The automated exit alert came in 15 minutes later when the oscillator that triggered it in the first place had turned. But the fast oscillators have already dragged down the price over 1%.

So if we had blindly followed the automated alerts with entry at $5.98 and exit at $6.08, the profit would have been 1.7%.

But by consulting the charts and fine-tuning the entry to $5.95 and exit to $6.14, the profit would have been 3.2% for just 45 minutes in the market! Almost double the profits!

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The markets have opened September with a bang and NASDAQ was trading over 2.5% up in the morning session just as our Composite Index charts had indicated yesterday!

Before we get to today's NASDAQ charts, here are 6 round trip trades our automated alerts(entry and exit) delivered since yesterday (8/31). There are three buys as seen from the positive alert numbers and three shorts. To learn more about alert numbers, visit this blog or check out our manual.

No.  Ticker          Alert                Entry Price        Entry Time      Exit Price       Exit Time      Profit %

1.     STMP     56508184513        $11.05              11:40               $11.25           15.53            1.8%

2.     AMKR     62316314911        $5.23                10:28               $5.29            12:00(9/1)      1.1%

3.     CRNT      79912142204       $8.55                12:58              $8.75            10:25(9/1)       2.3%

4.     RFMD     -54008206007        $4.9                  14:07               $4.85            15:07            1.0%
 
5.     ATML      -72811164206        $5.87                14:09               $5.79            15:39            1.3%

6.     BBY      -54507074404         $31.65                14:10              $31.38           14:57            0.8%

This performance is from blindly following the alert. As we have seen in an earlier blog entry, the performance can be improved by fine tuning the automated alert entries and exits by consulting the charts. You will notice that the alerts listed above have odds (i.e. TR*PR) above 3.

Now let us look at the NASDAQ Composite charts. In the Intraday chart below, we can see that the Pink oscillator has surged and its magnitude has been redistributed into two components: Violet and Green. Remember that Green had disappeared yesterday because of lack of magnitude.

And here is the End-of-Day chart from yesterday. The top left panel has been zoomed in to show the upward crossing point.

From the charts above, you can access the movement of the market for the future. Keep in mind that the faster oscillators have immediate impact but the Price/Index is always the sum of the oscillators and the indicators.

In a month, our service delivers well over 200 round trip alerts.
By using the Promo Code: FALL2010 you can subscribe for just $49.99 per month.
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