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 MarketTrak Question/Comment Message


Posted By: Peter   Date: Tue Oct 14, 2008

Title: Trailing stop

Message:
  I am not sure what the rules are if the DJI drops below the trailing stop point. If that happens, I know you would sell everything but at what point do you get back in the market? Also is the trailing stop used only for the daily closing price or intraday?

Response:
  If you are following the trading model, a closing DJIA price below the trailing stop (assuming a long position) would mean that you would go to cash at the end of the day. If the DJIA drops below the stop intraday but closes above it, no position change would occur, unless the delayed ANO had crossed into cash region.

  The trading rules cover a stopped out condition. The rules are exercised at the close each day regardless of your current position. For example, if you were just stopped out the day before, rule one would fire and you would remain in cash at the close. Four days after being stopped out, rule one would not apply and some other rule down the list would fire. When a rule fires, you exit the list.

  Your investment allocation should depend on your risk tolerance and financial condition. This system is still experimental so you should consider confirming our signals with more traditional models.

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