Update on IGV

A recurring theme at "A Dash" has been the need for a systematic and disciplined approach.  Formal trading systems and models are more readily tested than the records of individual traders.

Yesterday's article highlighting the TCA model and IGV, a software ETF, shows many facets of the modeling process.  We thought that the recent IGV buy would provide a good example.

To our surprise, tonight's model run indicates that we should sell our position on the opening.  (We continue to invite commentary on the IGV chart from technical experts.)

It is not our intention to provide market signals in real time, since we are not recommending specific trades.  At "A Dash", we are trying to provide education, not investment advice.  Most people who have not traded begin by thinking it is easy.  They overrate their own "feel for the market."  Seeing what is actually required is an important lesson -- and a cheap one at our prices!

Having said this, our whole team is uncomfortable with highlighting a sector and then selling it the next day.  We expect to continue the series with a fresh example.  We hope the new one will be closer to our average holding time of more than one month.

Comments

[Andy]

Your model's buy decision coincided with a buy signal on slow stochastics. A lot of other people bought the 'oversold' condition based on money flow index and accumulation/distribution signals. And on the weekly chart, IGV is still above its long-term support, dating back to Apr 2003. (I confess I need to go back to yesterday's post to read the description of the model before I open my yap any more than this.)

[oldprof]

Brig -

Thanks for your observation, which is, no doubt, shared by others.

It does illustrate what I am trying to show about a system. If you believe in the method, you follow it. There are losing streaks (although this was not a losing trade) and there are moves that seem foolish.

If you have tested your method properly, you have the confidence to trade it. Let us hope that the next few examples provide a better illustration.

It is a difficult market with big swings. Most models are geared for more typical conditions. I posted this change because it was more important to be honest with readers than to look smart!

Thanks again for raising this point.

Jeff

[Brig]

2 day RSI? Yeah yeah I'm sure its much more complex than that.