Knowing when to get into a trade is easier than knowing when to exit. Too often we stay with a position too long and suffer a loss or get out too soon and miss out on profits. This is where TradeStops comes in and helps. Our unique alerting system tells you when to exit a trade. That way, you don’t suffer losses or get out too soon.
Today, we will go over 2 of our alerts – the Stock State Indicator (SSI) and Volatility Quotient (VQ). These two simple alerts can really help you with your portfolio performance.
What is the Stock State Indicator (SSI)?
The Stock State Indicators act as a full life-cycle indicating the health of your stock. They are designed to tell you at a glance exactly where any stock stands relative to TradeSmith’s proprietary algorithms.
What this signal indicates is the current health of the stock (performing well, in a period of correction, or stopped out).
The SSI will tell you one of five things:
|Indicates the stock is performing well and has not corrected below its recent high. If a stock has not yet hit this price, it is still on an uptrend and safe to keep holding it.|
|The stock pulled back into the Yellow Zone but is still trending upwards. This indicates that the position has corrected somewhat below a recent high. It has not yet hit its stop price.|
|The stock pulled back into a Yellow Zone and is moving sideways. The position has corrected somewhat below a recent high. It has not yet hit its stop price. It isn’t trending upwards nor downwards.|
|The stock pulled back into a Yellow Zone and is trending downwards. This indicates that the position has corrected somewhat below a recent high, it has not yet hit its stop price but is moving downward.|
|The stock has hit its SSI Stop Loss and is now in the Red Zone. This indicates that the stock has corrected more than its VQ% below a recent high. The stock is not behaving in a way that is usual based on its historical market trend.|
NOTE: Momentum is a key component of our Stock State Indicator (SSI) system. A stock changes from red to green in the SSI system only after it has already gone up a healthy amount and has started a solid uptrend.
What is the Volatility Quotient (VQ)?
The Volatility Quotient, or VQ%, tells you how volatile a stock is – in other words, how much room you can give a stock to not get stopped out too early.
It tells you how much uncertainty or noise there is in your stocks. More conservative stocks like J&J have lower VQs (as of 5/12/2017 11.51%). More speculative / less certain stocks like Tesla have higher VQs (as of 5/12/2017 29.15%). The lower the VQ, the more stable the movement of that stock. Higher VQ percentages indicate the stock is more volatile in its market moves over time.
Where can I find the SSI and VQ?
The SSI and VQ can be found on the Positions & Alerts tab. To locate the information:
- Click on Positions & Alerts in the top blue menu
- Click on the Positions tab
- The SSI is the third column of data
- The VQ is the fourth column of data
Are the alerts already set since I see the columns of data?
It is possible that your alerts have not yet been set up for your positions even though you see the SSI and VQ data on this page. The data on this page is for your reference.
If you haven’t set up automatic alert creation or created alerts for your position, you will not get email alerts for SSI changes or if a position is stopped out based on the VQ.
You can review how to view your current alert status and how to add alerts here
What do the letters and numbers mean in the SSI?
You might have noticed some letters and numbers in the colorful SSI boxes. These letters and numbers tell you how long a position has been in that current SSI. We do this so you can quickly see how long a position has been performing in a certain way. It’s a great time saver.
- D means days
- W means weeks
- M means Months
- Y means years
My SSI says N/A. What is that?
You might notice that some of your stocks say N/A for an SSI. This happens for a couple reasons.
In this case, you could use a VQ alert on the position. This way, you would still be safe and get stopped out at the appropriate time for your positon.
Once a stock has been trading for 521 days, you will see an SSI appear for your position. You would then be able to use the SSI on your position.
What VQ percent is too high?
The VQ tells you how volatile your stock is. You might be willing to take on more risk than your friend. Remember, the higher the VQ number, the more volatile it is.
- Below 15% is low risk
- Between 15% and 30% is medium risk
- Between 30% and 50% is high risk
- Above 50% is sky high risk
TradeSmith has written about the right kind of volatility and how volatility can affect multi-year moves. Check out his article here.
Can I organize the data?
Yes! Anytime you see columns of data in TradeStops you can organize them. Just click on the column title, and you will see the information change.
For example, if you click on the SSI column title, all your Green stocks will move to the top. If you click on the title again, the red SSI will appear on top. This is a great way of quickly knowing which stocks are performing well based on our indicators. Best of all, it only takes a couple clicks.
Review the SSI and VQ Today
The SSI and VQ quickly give you an overview of your position. These alert types can help you become a more powerful investor by knowing exactly when to exit your position. You can say good bye to the days of staying in too long or exiting too soon. The SSI and VQ can make your investing more self-directed, profitable, and fun.
To your positions,
Customer Success Team