What are the Stock State Indicators?
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.
These signals indicate 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 appears to be on an uptrend.|
|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.|
The TradeStops Stock State Indicators are designed to give you a quick indicator of the currency performance trend for a given stock. Based on this indicator, you may consider whether you wish to continue to buy, hold, or sell a particular stock. TradeStops does not provide investment advice or recommendations with respect to buying, holding, or selling a particular stock, and you are solely responsible for making your own investment decisions. Investing involves substantial risk. TradeStops does not make any guarantee or other promise as to any results that may be obtained from using the SSIs.
NOTE: Momentum is a key component of our Stock State Indicator (SSI) system. The TradeStops Stock State Indicator (SSI) Entry signal is a very conservative signal. It requires a stock to have made a bounce off the bottom of at least one Volatility Quotient (VQ) percentage and the stock’s trend must be strongly positive.
How SSI Alerts Are Triggered
If the position has already moved more than its VQ% below a recent high, the SSI Stop Loss will trigger. It’s an indicator that the position has corrected more than what is normal for this stock. It means to take caution.
You may have a red SSI on stocks you have just purchased. In cases like this, you could use a VQ alert as your Trailing Stop.
Below are the SSI icons. They give you an at-a-glance idea of where any stock stands relative to its current SSI Stop Loss, SSI Low Risk Zone, and SSI Entry Signal conditions. This will allow you to see what state your stock is in at any time and how long it has been in that state.
Please keep in mind that a stock needs at least 521 public trading days for an SSI to be calculated. Options do not have SSI data.
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