Our new multi-phase approach to TLT swing trading includes the PDQ Dashboard, which is actually a basket within itself. The Dashboard has been extensively posted on previously and with some recent refinements it has become a critical set of eyes to help forecast short term market momentum. What we’re trying to deliver is a consensus view of TLT’s path based on it’s correlated linearity with other market sectors using an adaptive Z-Score algorithm.
At the same time we’re looking for pair linearities that are relatively in sync (correlated) to further aid in defining a “Days†value, which is really the maximum anticipated length of the trade. The Dashboard features 4 different stops, all user programmable, to help manage risk. The most important of these stops is probably the equity curve stop which puts an effected pair’s participation in the Dashboard into limbo when trade results fail to adhere to the mean of the equity curve. The PDQ Dashboard is currently programmed as an end of day tool.  Based on extensive back-testing we have concluded that the best swing trading results are generated when the model buys at the close and sells at the close.Â
As a result, the Dashboard is updated about 30 minutes before the US market close so the PDQ can capture current market dynamics and so that trades can be executed within that pre close window. The stops, which are incremental, can be reset, tightened, loosened, added to or turned off and on any time during the course of the trade. In the past the PDQ has demonstrated that it frequently forecasts market reversals a day or 2 before the actual turn. This has been both a blessing and a curse for PDQ beta testers and we have now resolved this premature ED problem (execution dysfunction) with a new tool we call “Heads Up†signal.
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