FAQ Category: Strategy
Are you attempting to time the Market?
No! In fact, we are not even trying to “predict” a trend. A trend has to become a reality before the stock is even considered for further analysis. As a result, in trend following you never get in at the very beginning/bottom of a trend. And you never get out at the very top.
Do you give any consideration to Fundamentals in your selection criteria?
Stock Trend Spotter™ is focused on “Trending Stocks”. If it identifies a trending stock that you feel has good fundamentals that makes your buy decision even easier! Stock Trend Spotter™ is a Technical Analysis System focused on trending stocks. Remember: A company and its stock are not the same...."
Why is there a maximum of only 5 buy signals on a given day?
On any given day there could be hundreds of stocks that are trending. Stock Trend Spotter™ uses propriety algorithms to identify potential Buys. Each trend is graded on several variables and the grades are ranked. Those with the highest grades are selected for the top 5 stocks and are signaled for potential Buys. Each stock is assigned a Trend Strength from 1 to 5, with 1 being the strongest and 5 the weakest. Some days there are NO stocks with a Trend Strength of 1. Our hypothetical robo Model only buys stocks that have a Trend Strength of 1. The 5 limit is designed to prevent an over-reaction to a spike in the market. Also, our research indicates that people will do additional research on 5 stocks but become overwhelmed (or disinterested) with larger numbers. Be aware that it is also possible that there may be no Buy Signals on some days.
Is it possible to outperform the hypothetical Model?
Yes, and we would love you to do just that! It means that Stock Trend Spotter™ is really working for you and that you are putting in the extra time to further enhance your investment outcome. There are two main reasons why this is possible. First, at the time you join Stock Trend Spotter™, the hypothetical portfolio associated with the Model will most probably be fully invested, therefore, as you start to buy stocks they will be different from those in the hypothetical Model and therefore, could generate different results providing the opportunity to outperform the hypothetical portfolio. Second, the Stock Trend Spotter™ hypothetical performance Model adheres to a rigorous set of rules. For example: the hypothetical performance Model attempts to be fully invested when the market is good, and in most cases, it selects stocks in the order presented. You, on the other hand, can miss days; buy selectively from the signals presented; do additional research; confer with your broker or others; etc. All of which might help you to outperform. If you use Stock Trend Spotter™ as a key investment tool and outperform its hypothetical portfolio we think that would be awesome!
When there's a Sell Signal for a stock that I own, can I sell only a portion of the shares?
Not Suggested. You’re certainly free to sell a portion of your position in a stock. However, please remember that once the system issues a Sell Signal it assumes the entire position is sold and so it no longer monitors that stock. Therefore, you will not receive another Sell Signal on that stock. If you are OK with that, then by all means do as you wish.
How does Stock Trend Spotter determine the size of the Stop Adjustment?
It uses a proprietary algorithm based on the recent volatility of the stock price and other parameters. It is intended to provide downside risk management and minimize churn..
Can I buy stocks that were not signaled by Stock Trend Spotter?
Certainly! You are always free to buy whatever stocks you feel are good investments. But remember, if you mix stocks in the same brokerage account it will become difficult to measure the true performance of Stock Trend Spotter™. However, once you are convinced that Stock Trend Spotter™ is working for you those comparisons will no longer be that important. Stock Trend Spotter™ then becomes just one more of your investment tools. Hopefully, your most valuable investment tool!!