Choose better entry points with trend following systems

While the market rally continues, Signals of the long NDX short DOW and the implied long SPX appeared on August 20 are still in negative territory. This suggests us that entry points are very important.

Fortunately, we have the trend following system both for indices and pairs.

The above chart shows the system that combines the pairs trading model shown on this blog and a trend following system. Instead of opening the pairs position at 12:30 on August 20, we could wait until the system shows a buy signal at 12:45 on August 24. As a result, instead of making 0.5%, the pairs would make 1.5% so far.

For the SPX timing, we also have a trend following system:

We won't buy SPX until 9:55 on August 27. The result? Trading on SPX would up over 1% instead of still down 3.38%.

Another note, the FX signal system is also online.