The TradeSmith Early Entry Signal
The “Early Entry Signal” will provide you an aggressive entry signal when an equity is still in the Stock State Indicator (SSI) Red Zone.
This indicator is separate from the Stock State Indicator, which continues to be our most conservative indicator.
For an “Early Entry Signal” to trigger:
- Price has moved above the SSI Trend Line
- It has bounced at least 1.05 times its current Volatility Quotient (from lowest bottom since SSI stopped out).
The SSI algorithm is also considering the Rate of Change in the SSI Trend Line. The SSI Trend Line is specific to each stock and is taking into account the stock’s Volatility Quotient.
For more information on the SSI Trend Line, please read the following articles:
If both the SSI Trend Line’s required Rate of Change and required price bounce happens at the same time, than it would trigger the SSI Entry instead of the Early Entry Signal.
The Early Entry Signal does not require the same ROC as the SSI. The SSI algorithm will follow more stringent requirements.
As mentioned, the SSI is a more conservative signal, and we would need to detect a positive uptrend for each individual stock, based on its volatility quotient.
You can view the Early Entry Signal on both the Position Card Page and Stock Analyzer in TradeStops.
The Early Entry signal will appear as an orange “E” on the chart.
In both our examples above, you can see that the Early Entry signal was triggered while both AMZN and DG were in the SSI Red Zone.
Please note that you will need to set up a stop loss strategy if you use the Early Entry Signal as your entry point.
Because the equity would be in the SSI Red Zone, you’d need to set up a different alert, such as a:
- Trailing Stop
- Volatility Quotient alert
- Price alert
- Or something else