TradeStops Strategies: Stock State Indicators

 

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Tom Meyer: Hello, everyone. Welcome to TradeStops. My name is Tom Meyer, and I’m pleased to be joined today by Naresh Vissa, our director of special events. Good afternoon, Naresh.
Naresh Vissa: Good afternoon, Tom. It’s a pleasure to be back on and another awesome training session.
Tom: We’re very excited to have welcomed thousands of new TradeStops members in the past few weeks. Our customer success team has worked their way through literally thousands of calls and emails and have been getting caught up. We appreciate everyone’s patience as we continue to answer these.
Hopefully, today’s presentation will answer many of your questions and help you on your way to using the TradeStops site effectively and easily. We are planning more training webinars over the next few weeks, this week, as well as the next several after the beginning of July.
You will see them posted on the website, and you’ll receive emails with the registration links.
Yesterday, we started a series of “Getting Started with TradeStops” training sessions. Albert and Marina have put in a lot of work. These are geared towards our newest members and those members wanting to refresh their course on the nuts and bolts of TradeStops.
This series webinar is also being recorded and posted on the TradeStops’ webinar site. We’ll show you where you can find those shortly. We are recording the presentation today, and we’ll send you a link to the recording later today, or tomorrow.
If there’s something you don’t understand, you’ll be able to review the presentation at your convenience.
We do have members of our customer success team answering your questions during this webinar. We’ll also answer some of your questions at the end of the presentation.
Please keep in mind that we cannot answer your specific investment questions. We are not registered advisors, and cannot give advice. We receive many questions that ask us, “What if in regards to tax consequences and the green, yellow, red light system of the Stock State Indicators?”
As individual investors, the final investing decisions are in your hands. We can’t give you any answers and we appreciate your understanding.
Also, we cannot help you with your computer issues. We are experts and can help you get set up using the TradeStops website, but we can’t help you with other technology issues.
Again, we appreciate your understanding.
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TradeStops is the one tool that can help you become a more successful investor from the very first time you login.
Dr. Smith and his team have spent years analyzing the risks of individual stocks and portfolios. Our TradeStops members are the beneficiaries of this research. The Stocks State Indicators were introduced last year and they complete the suite of individual stock tools on the TradeStops site.
The webinar today will be full of information. We encourage you to ask questions. There’s a question box on your screen and you can ask them there. We have Gail, Haidee, and Brian answering them, so you’ve got a great team working for you.
Today, our focus is going to be on using the Stock State Indicators. The Stock State Indicator is the life cycle of a stock. The SSI tools are the next evolution of the TradeStops Volatility Quotient.
We’re going to go fairly quickly. If you don’t pick it up the first time, you’ll be able to watch the recording and get the information when it’s most convenient for you.
Naresh, let’s go ahead and get started.
Naresh: Let’s do it. This is one of the most important and popular features our TradeStops users love, the SSI, red light, green light, yellow light. Let’s get right into it.
Tom: Sounds good.
For today’s outline, we’re going to work on understanding the Stock State Indicators. The green, yellow, and red zone, as Naresh just mention, how the signals are triggered, how you adjust the SSI alerts? We’re going to revisit the watch list to help show you how you can use the SSI alerts give you the information you want.
Let’s talk about the life cycle of a stock. Stocks tend to move in trends, both higher and lower. We all know that. We’ve seen stocks that have trended higher for a long period of time. They reach a peak. They start moving lower.
They move lower for a period of time. They reach a bottom and then they start moving higher again. This can happen over several month period of time. It can happen over years’ worth of time.
The purpose of the Stock State Indicator is to identify the difference between normal, day-to-day volatility, and when the current trend has been broken. The SSI utilizes the TradeStops proprietary Volatility Quotient as its basis.
Now, we like to use the SSI as a roadmap. In other words, where is the stock right now and in which direction is it headed?
Naresh, one of the things that people get caught up in is they get caught up in trying to guess, “Where is a stock going?” Here at TradeStops, we understand that nobody knows where a stock is going.
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We can use the SSI as a roadmap to understand, “Where is the stock right now?” The single most important thing in understanding where a stock might be headed is to understand where it is now and in which direction has it moved to get to this particular spot right now.
The Stock State Indicator Alerts tell you what stock price has been hit that has caused a change in the condition of the stock. We’re not so much concerned with, “Where are we going?” We want to know that. We all want to know that. We all wish we had a crystal ball.
The Stock State Indicator tells you, “Where are you now?” and especially in relationship to where you have been. This is the Stock State Indicator. This tells you the current state of a stock, the Green Zone, when a stock gives you a SSI entry signal, the Yellow Zone, then the three different trends, and then the Red SSI Stop, when a stock has been stopped out.
We’re going to cover all of these. You’ll have a good understanding of what the Stock State Indicators truly mean and when certain conditions are triggered.
Let’s look at some quick definitions. Let’s look at the SSI entry signal trigger. Now Mike had wanted to know, “What causes a stock to turn green?” This is it, Mike. This is the SSI entry signal.
A stock has to be at least one VQ from its most recent bottom and the SSI trend line must have a positive slope. The SSI entry signal is the first and most important entry into the SSI Green Zone.
We’re going to be showing you all of these on the website, but these definitions are important. The SSI stop signal is triggered when a stock has closed more than one VQ below the most recent high price. The SSI Stop signal is what causes the stock to move into the SSI Red Zone.
Again, I’m going to go over both of these because this is vitally important to the rest of the discussion. An SSI entry signal, the stock has to be at least one VQ from its most recent bottom, one Volatility Quotient higher than its most recent bottom, and the blue-dotted SSI trend line must have a positive slope to it.
Now, we do have an algorithm for that. I’m not going to tell you what that is because it’s proprietary. Both of those two things have to trigger before an SSI entry signal is triggered and before a stock enters into the SSI Green Zone.
This is a very conservative trigger. What this tells us is that a stock has definitely gotten into an uptrend.
Now what’s the difference between the SSI and the VQ stops? The SSI stop is the VQ percentage from the most recent high price shown on the charts. The VQ looks at that highest price, and then closes. Anything more than one VQ lower from that high price will trigger an SSI stop.
A VQ stop will be a full volatility quotient from the date of purchase or the date of setting up the stop. We’ll show you a couple of examples of where the SSI Stop and the VQ Stop will be different.
TradeStops makes it really easy to see the difference immediately in the stock analyzer.
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The SSI Stop and the VQ Stop can be the same if you bought the stock a long time ago and a new near term high has been hit. The whole Stock State Indicator system is truly an algorithmic trading system.
We have done a lot of back testing using the Stock State Indicator. Going back 20 years and going over almost 7,500 hypothetical trades using stocks, indexes, commodities, we’re looking at 52.7 percent winners.
That doesn’t sound like a lot. When you’re looking at close to 53 percent but you’re average gain per trade, this is not just for the 52.7 percent. Your average gain across all the trades is 36 percent.
Naresh, there are investors who invest their entire lives that don’t come close to this.
They’re fortunate if they get 36 percent on a single trade. The winning trades using the Stock State Indicator have an average gain of more than 84 percent. The average loss is 16 percent.
The winners outgain the losers by more than five to one. The average hold time is a year and a half. This is just incredible what this type of algorithmic trading is doing.
We’re using 1,300 tickers here for our back testing and for our trading. No one’s going to trade 1,300 tickers, Naresh, of course. This win percentage goes across all market caps, large cap, mid caps, small cap, indices, individual stocks, etc. This is an incredibly powerful tool.
Why is this so powerful? Because when a stock hits the Green Zone and triggers an SSI entry signal for the first time, it is already in an uptrend. Stocks that are in uptrends tend to stay in uptrends for a long period of time. Stocks that are in down tends to stay in a downtrend for a long period of time. Our Stock State Indicator takes advantage of this.
The beautiful part here is that there’s no human input. Dr. Smith doesn’t sit down and over the weekend, look at the output and say, “Yeah, maybe, we’ll call this one an entry signal, and we won’t call this one an entry signal.”
There’s none of that. There is no human input into this. The only human input is in the stock price and the closing stock price. Whatever that is, it is. From an algorithmic trading point of view, this is incredible powerful.
Let’s go ahead and go to the website, Naresh, and explore all of this. The very first place that I’d like to go, though, is before we log in, I want to go to our webinar link. Even before you log in, we show you what the webinar schedule is coming up. Here’s our Tuesday, June 27th. This is what we’re doing today.
We’ve got a couple of things tomorrow. One of these is a “TradeStops Essential” that Marina and Albert will be doing on getting started. Wednesday and Friday, they’ll be presenting. You and I, Naresh, are working on options on Thursday. This should be a really exciting presentation.
Now, we show you how you can register as we scroll down here. Here are some of the past webinars and presentations. This “VQ, the Heart of TradeStops” is a good one to be looking at
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especially in conjunction with Stock State Indicators. Yesterday’s presentation that Marina and Albert did has already been posted.
We talked about the risk rebalancer last week, etc., etc. There’s a lot of information here on our webinar site. We recommend that you check this out if you’ve missed some of our presentations, they’re here. If you missed some of the upcoming ones, we’ll be posting them here on this webinar link.
Let’s go ahead and log in, Naresh. For those who have joined us over the past several weeks of us doing these presentations, you know that we’ve got some portfolios already set up to show you. Let’s start working with the blue chip stock portfolio.
When you log in and you look at the positions and alerts, the first thing you notice is the color. This is the SSI state, the Stock State Indicator. What state is the stock in? Apple is in the SSI Green Zone. It triggered an entry signal all the way back in last August.
Caterpillar back in April of 2016 generated an entry signal. We have two stocks here that are in the Red Zone. Schlumberger stopped out a month ago in May. Target stopped out way back in January of this year.
We’re going to look at a couple of these stocks right now so that you can get a good feel for the condition of the stock. There are two ways that we can do this. We can click on the symbol, and that’s what we’ll do right now, or we could go to our research tab and go to the stock analyzer and look at these.
For our purposes right now, let’s go ahead and click on Apple. It opens up our card, the chose Apple. Here’s our one year chart on Apple. You can see the entry signal from August 8th, the price was $107 at that time. It has moved higher.
It has been solidly in the Green Zone this entire time. It has not even touched the Yellow Zone. The high price was $156.10. It closed yesterday at $145.82. This is going to be a really good example of the difference between a VQ Stop and an SSI Stop.
Let’s go to the research tab. We look at the stock analyzer. Let’s type in Apple. Let’s assume that we wanted to buy Apple based on yesterday’s closing price. Let’s take a look at the chart here.
We know that the high was made about six weeks ago at $156.10. The volatility of Apple is 17.5 percent. It’s a medium-risk stock. It’s at the low end of the medium-risk range.
Based on the Stock State Indicator, which is using the most recent high, this high back in May of 2017 of $156.10, our stop price is $129.38.
Now, if we used a full Volatility Quotient Stop, a full VQ Stop, based on yesterday’s closing price of $145.82 and take that 17.5 percent into consideration, our stop price would be $9 lower than the SSI Stop price. That’s a little over $120 a share.
This gives you a good view. We tell you what the difference is. You don’t have to figure it out on your own. Go to the research tab and the stock analyzer.
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I’m going to get off track here a little bit, Naresh, and take a look at Berkshire Hathaway B, because we had that same condition show up where Berkshire Hathaway had a high price that was made back on March 1st of $177.28. You can see that the stock moved lower. It moved down into the Yellow Zone, then moved back up, and it’s come back down again.
It closed yesterday at $167.49. That is about $10 price difference. If we were to use the Stock State Indicator Stop based on this high that took place in March, our stop-out price would be $156.49.
If we were to buy Berkshire Hathaway B shares today and we wanted to take the full Volatility Quotient Stop, we’d be looking at 147.74. Again, almost a $9 difference in the stop price.
Let’s go back to our blue chip stock portfolio. Feel free, Naresh, to jump in if there’s some questions that you believe pertain to this. Next, I’d like to…
Naresh: Let me jump in with one question that we’re getting. You mentioned one VQ or two VQs. What exactly does that mean?
Tom: Let’s go back and look at Apple again. I’m going to use the stock analyzer as our tool.
Now the Volatility Quotient, and we go over this a lot in our other webinar that talks about VQ, but every stock has its own volatility.
As a matter of fact, if you look at the editorial that Dr. Smith sent out today, there is a lot of good information on why it’s important to use the right volatility when you’re setting your stops.
For Apple, we know that Apple has been in the Green Zone since it triggered an SSI entry signal last August. Remember, we looked at that in the chart a little bit earlier, August 8th.
The Volatility Quotient, meaning the normal volatility for Apple, the normal one-year or more than one-year volatility is 17.5 percent. That means the stock could move against you by 17 percent and still be in an uptrend because the 17 percent is the normal volatility. That’s the normal noise you should expect in a stock.
Stocks don’t go straight up. Very few stocks go straight down. They have this saw tooth movement, up and down, up and down, up and down, up and down.
Our research has shown that the normal volatility on Apple is 17.5 percent. If we wanted to get into the stock today and we wanted to use a Stock State Indicator exit signal, we would be 17.5 below this high that occurred on May 12th of $156.10. That works out to $129.38.
If the stock closes below $129.38, it will generate an SSI Stop signal and move into the SSI Red Zone. If you were buying Apple today, Naresh, you wanted to put this in your portfolio and you said to yourself, “I want to risk the entire amount of volatility in Apple stock,” then we would ignore the SSI indicator stop.
We see 17.5 percent is the normal volatility. If I buy it at the closing price yesterday, $145.82, and I give it the normal volatility, that’s 17.5 percent, then the stock would have to close under $120.30 before I get alerted to sell the stock.
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There is no right or wrong by the way, Naresh, as far as using the Stock State Indicator Stops or using a VQ. That’s a decision that an individual investor makes.
Now, as you are using the Stock State Indicator and start getting more and more of your portfolio evolved into using these tools, you’ll probably want to use the Stock State Indicators because they are the pure green, yellow, red signals.
For someone who is just now getting into TradeStops or there’s a stock that they have to buy, they probably want to use the VQ Stop for this particular purchase.
Let’s go back to our positions and alerts. I hope that answer the question for you.
Naresh: Yeah, that does.
Tom: I wanted to show you what a stock looks like that recently generated an SSI entry signal and just now entered the Green Zone. Coca-Cola triggered an SSI entry signal on June 15th. This stock has been a little bit late to the game.
Let’s go ahead and click on KO. We’ll open the chart.
[pause]
Tom: Going to show you something really cool here, Naresh.
You can see from the E that we got this entry signal based on the close of June 15th. We’ve only been in this for a few days.
Here’s how this entry signal was triggered. Remember, there are two elements to triggering an SSI entry signal.
Number one, the stock has to be at least one VQ above its most recent low. You can see that the VQ is just a little over 10 percent, 10.58 percent.
Let’s go ahead and take a look here. You can see that the most recent low for Coca-Cola was on December 1st, more than six months ago. That was at $39.49. 10 percent above that, you’re looking at about a $44 price, a little bit more than $44 or right around $44 I guess would be your entry signal.
Look what happens here. As we’re climbing, we got all the way up to $45 and no entry signal. Why is that? Because this blue-dotted line, the SSI trend line hadn’t started moving higher at a great enough angle for us to trigger this entry signal.
Finally, back at the middle of June, we had this entry signal trigger because the trend line had turned up enough. This is the only time and the only way that we officially use the trend line. Each stock has its own trend line based on its own volatility.
This is not a 200-day moving average. It’s not a 100-day. It’s not a 50-day moving average. It’s based on a stock’s own volatility.
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For some stocks, it could be under 100 days. For some stocks, it could be more than 200 days. We don’t let that information out. Again, that’s proprietary information.
This is the only time that we officially use the SSI trend line to have an action that triggers either an entry or an exit. The SSI trend line does not have anything to do with exiting, but it does have something important to do with entering.
Because we had had this bottom in December and we moved up more than one VQ, that was the first element, that was the first thing that had to happen. We were waiting for this trend line to move higher. That was the second thing that happened for the SSI entry signal to trigger.
Really good example of what causes that. I hope that works out well for you, Mike, that you’re able to see that.
Something else, let’s take a look at a couple of these that are in the Red Zone now. Schlumberger stopped out on May 25th, a little bit more than a month ago. Let’s look at that chart.
We actually got an entry signal back at the end of May, 2016. Because this is a one-year chart, we don’t see it. The high was in January. We hit the Yellow Zone in April and finally stopped out in May.
Since that period of time that we stopped out, the stock was just under $70. We’re now in the $65 range. Stocks that are in downtrends tend to stay in downtrends. Stocks that are uptrends tend to stay in uptrends.
A little bit later, we’re going to set some alerts so that we’ll know when this stock has turned around and has entered the SSI Green Zone by triggering the SSI entry signal.
Let’s go ahead and take a look at Target. This’ll be our last look at a stock from this portfolio. We stopped out of Target in January in the $64 range. The trend has been lower, lower, lower.
The stocks closed yesterday at $51.5. Again, another great example. Stocks that tend to trend lower continue to trend lower until something changes.
We don’t know what that something will be. We do want to be alerted when that happens. How do we do this?
I purposely have zero alerts set up on this entire portfolio. What I’d like to do now is I’d like to go ahead and set up SSI Alerts. We’ll get to some specific SSI Alerts later.
Look, here’s how we set up bulk alerts. We click this box up here. All of our positions are now checked. We go down here to where it says add alert.
We’re going to set this alert up with a Stock State Indicator. Add.
[pause]
Tom: There we go. That’s how simple it is. The alerts have been successfully created. If we go to our alerts tab, it’s showing you we have our SSI Indicator Alert on.
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When Shclumberger or Target hit the Green Zone, we’ll be notified. When these other stocks that are in the Green Zone, if they hit the yellow zone or the red zone, we’ll be notified. That’s how easy it is to set up an entire portfolio of stocks with a single Stock State Indicator Alert.
I’d like to move now, Naresh, into the watch portfolio I set up for GDX. Now GDX is the gold mining ETF. Gold has turned around a little bit in the last week or so, but it was moving lower for a while.
You can see that the top 10 stocks that make up this ETF, only two are in the Green Zone. It looks like two are in the Yellow Zone. We’ve got six that are in the Red Zone.
Let’s go ahead and look at a couple of these, Naresh. Let’s take a look at AEM, which is in the Green Zone.
[pause]
Tom: Naresh, can you believe the high for this stock was all the way back in August? We hit the Yellow Zone one time, two times, three times, four times, five times. Each time, it bounced out to the Green Zone.
If you go from where it almost stopped out in December, you can see that the trend is a little bit higher, not a whole lot higher. If you look at the blue dotted line, that’s the SSI trend, it’s flat.
Here’s a stock that generated a buy signal more than a year ago. It generated an entry signal more than a year ago. It hasn’t stopped out yet. It’s come close, but it hasn’t stopped out yet.
What is the yellow signal? The yellow signal is when a stock is more than halfway between the high price and the stop-out price. It’s based on the stock’s volatility.
We’ve got AEM, which is 39.24 percent. It’s a high-risk volatility stock. Again, we don’t tell you exactly what the Yellow Zone is as far as percentage because that is proprietary. It’s not a Fibonacci number. It can be very close to that, but it is not a Fibonacci number.
When a stock has moved a little bit more than 50 percent below its most recent high, that becomes the Yellow Zone. What that means, as an investor, is the stock is more than halfway from its high towards stopping out.
Theoretically, it’s within that range in the case of AEM, that 39.24 percent range, of normal volatility, but you have a lot less risk in the position should you get into it in the Yellow Zone because the SSI Stop is so close.
In this case, let’s take a look at the box that pops up. You can see that the stock price is $47.41. It was almost $60 last August. The Yellow Zone is $45.23, and the stop price is $35.96.
If the stock moves into the Yellow Zone, you’re only nine points away from stopping out as opposed to when you were back at the high here of $59. You were $24 away from stopping out.
If you were to get into AEM, it’s still considered bullish, but you’re a lot closer to the stop. That’s AEM. Let’s take a look at a stock. Let’s look at AU.
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AngloGold is in the Red Zone. It stopped out in November. It had the high at about the same time that AEM had a high. It’s been moving lower. Stock price now is $10.5.
It’s stopped out about six, seven percent above where it is right now. At some point in time, when gold turns around and the gold miners turn around, this’ll give us a new SSI entry signal.
The last one that I wanted to look at is GG, which is actually in the Yellow Zone right now. This one has a little bit of a different chart. It gave us an entry signal in February with a high that occurred just a week or two later.
It has been in the Yellow Zone one, two, three times. It is currently in the Yellow Zone. Again, that means that it has dropped more than 50 percent between the high price and the stop price.
It’s not stopped out. It’s not in the Red Zone. The stop price is $11.06, the stock close at the Yellow Zone yesterday of $13.67. This is a stock that, if you were considering gold miners, this is actually one of the better performing of the gold miners.
Remember, we have six stocks that are stopped out in the red in GDX, only two in the green, and two in the yellow. If you were going to be looking, if you wanted to consider some of these, the only ones you’d want to consider right now would be the four stocks that are in green and yellow.
Let’s go ahead and set up some individual alerts here. Let’s say that I want to set up an SSI alert. I want to do this for AEM.
[pause]
Tom: Here’s for our GDX portfolio. Here’s our AEM.
Now here’s where we have some fun things that we can do. Now the first thing that pops up is a Stock State Indicator Alert. Before I add this alert, I want you to see some of these additional settings.
The Stock State Indicator Alert is five alerts in one. It will tell you when a stock has hit the SSI Green Zone. It will tell you when a stock has hit the Yellow Zone with the SSI trend line moving higher, the SSI trend line moving sideways, or the SSI trend line moving down.
We believe that, if the trend line is moving down, it’s probably in a weaker condition than moving higher, but we haven’t done a lot of testing on that yet. We want you to be able to know what condition it’s in.
Lastly, when does the stock hit the SSI Red Zone? Now let’s say with AEM, I couldn’t care less what happens in the Yellow Zone. If I bought the stock, it’s in the Green Zone right now, all I care about is when it’s stopped out.
I can uncheck these three Yellow Zone boxes. Add alert. Now this is only going to give me an alert when the stock hits the Red Zone. It’s already in the Green Zone. It’ll give me alert when the stock hits the red zone. I am ignoring all of the yellow zone movements within a stock.
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Let’s go ahead and add alerts for those other two positions, but let’s give them full Stock State Indicator Alerts. With GDX, we’ll take a look. We’ll go to the AU that we looked at earlier.
There is currently no alert set up. In the case of AU, I’d like to have all five conditions. I want to know when that happens. I’ll click on add alert. I now have the Stock State Indicator Alert that easily on AngloGold.
Let’s set up one more. Again, click on add alert. We’re going to look at the GG, Goldcorp. Remember, that’s the one that’s in the Yellow Zone already.
I especially want to know if it moves back up into the Green Zone. That means that the stock has made a positive move. I certainly would want to know if it hits the SSI Red Zone as that would be my signal to get out of the stock.
Again, I’ll leave all five of these checked. Click add alert. Go back to our positions and alerts page. Here we go. We’ve got all of the alerts set up, the Stock State Indicator Alerts.
Of course, if we wanted to set up alerts for the other tickers, we could do that. You’ll notice that, when a stock has no alert, there’s a little line through the bell. When the stock has an alert, it has a little dark bell signal without the line to it.
Now one more thing that I’d like to do, again I like being able to set up the Stock State Indicator Alerts because they are five in one.
Let’s go to our sector ETFs. Don’t have any alerts set up for these tickers. Since I want to really follow closely how each sector is performing, let’s go ahead and do the bulk alerts again.
Check the box in the upper left-hand corner, which will check all of the ticker symbols. We’re going to click on add alert. We’ll add our Stock State Indicator Alert. Go ahead. We’ll add that.
Now the Stock State Indicator Alert was not created for XLRE. Why? Because XLRE, which is the Real Estate Sector, has not been around for two years. It has not traded for two years.
We have a VQ. We have a Volatility Quotient on it, but we don’t have a Stock State Indicator. It takes two years for a stock to trade for us to develop a Stock State Indicator.
What I’d like to do in this case is I’d like to add an alert for XLRE. Let me go back to our positions, and you can see that we have the bell signal for everything except for XLRE.
What I want to do is I want to go into my alerts. I want to add an alert for XLRE. Since we can’t do a Stock State Indicator Alert, I’ll do a…See, there’s not enough historical data here.
I’ll go ahead, do a trailing stop, and I’ll do a VQ alert. I’m going to use today as the start date.
It’s easy to get this done. Let’s do the 26th. We’ll use yesterday’s closing price. Add alert, and we’re done.
Go back to our positions and alerts. You’ll see that for XLRE, which doesn’t have a Stock State Indicator symbol, we’re still using a VQ trailing stop based on yesterday’s close of $32.64, which means $28.69 will be our trigger price.
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That’s how we go ahead, and that’s how we put together these alerts. That’s how we put together the Stock State Indicator Alerts. Now you know pretty much what they mean.
I highly recommend that you set up watch lists. I know we say this during every presentation, but the more watch lists that you can set up, the more you can become familiar with putting on alerts, adding alerts, playing with the Stock State Indicator Alerts to decide if you want only the Green Zone to trigger, only the red, or if you want all five to trigger. That’s certainly up to you.
There’s a lot of information on our help center. If you’re looking at Stock State Indicators, go to Getting Started, and we give you information there. Positions and alerts, we show you all sorts of the alerts that are available, the Stock State Indicator Alerts, how you update those, create your watch lists, and create the alerts from that, etc.
The stock analyzer, of course, is going to show you the information that has the VQ, VQ Stops, SSI Stops, and so on.
We believe that 90 to 95 percent of your questions can be answered by going to the help center. You can find out the information easily. If you can’t find the information, you can certainly call our customer success team.
As we know, Dr. Smith talks about, successful investing is about staying in the game. If you get a five-to-one winners over losers and you’re winning on more than half of your trades, you’re going to be a successful investor. You’re going to be staying in the game for a long period of time.
Our customer success phone number, 9:00 to 5:00 Eastern Time, 866-385-2076. Of course, send an email to support@tradestops.com.
Naresh, I know you’ve been getting a lot of questions. Let’s go ahead and get some of these answered.
Naresh: A lot of questions, and I’m not surprised that they’re off-shoots because you can do so much with this SSI system.
One recurring question that we get a lot and that we’re getting a lot today is, do we publish either alerts? Do we have a list or portfolio of stocks that have just gone green or just gone red?
Tom: No, we do not have a search system built into the TradeStops website. This is why the watch lists are so important.
On another login, I’ve got all the Dow Jones stocks listed. I’ve got the top 30 stocks in the market. I want to know when those stocks are giving us new SSI signals.
This is something that each investor will have to set up for themselves.
Naresh: Good question. Let’s go with Vincent. He has a good question. Why would anybody want to keep a red stock in their portfolio? Is there any reason at all to keep a red stock?
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Tom: Great question, Vincent. There are a lot of good reasons to hold onto red stocks. It depends on your own portfolio management and your goals.
I’m going to give you a couple of situations where it might make sense. Let’s say you’ve held onto a stock for years and years and years and your cost basis is extremely low.
Maybe for your tax situation, it doesn’t make sense to sell that stock. Yes, you know that it’s in the red, and there’s not a lot you can do about that. If you’ve owned a stock for 20 years, 25 or 30 years, it might not make sense to sell it because of the tax ramifications that you’ll be dealing with.
Let me see if I can find one here. Another is if a lot of your investments are in income-producing stocks. Take a look at this for instance.
Here’s a closed-end fund that made a high in July. Remember, interest rates started moving higher then. It stopped out in September. If, for whatever reason, you were getting income from this and this income was an important element, you might have segregated that stock off to the side and say, “Hey, yeah, it was in the Red Zone for nine months.”
Here, it just triggered a new entry signal yesterday. You might not have wanted to trade out of that because of the income it was giving you. Really, it boils down to one reason why you hold stocks in the Red Zone, and that’s because of your investment objectives with that stock.
We don’t believe in trading in and out of positions. We believe in trading the signals. Many times, there are reasons to not trade the signals. That’s based on your own investment philosophy and your own investment needs.
Naresh: Another question has to deal with, I guess, potentially new features. Are we planning to come out with a feature that shows the trend of the stock even after it’s in a certain SSI color?
Meaning, if it’s in the green, is it downward trending green or an upward trending green? If it’s in the red, is it a downward trend?
Tom: I don’t know that we have anything on the table as far as increasing our SSI Stops to nine different alerts, whether it’s green with an uptrend, sideways trend, or downtrend. Red, the same thing.
I haven’t heard anything about that. If Haidee is still on, maybe she might want to address it. I don’t think anything like that is in the works.
There are other things that we’re working on that we can’t announce, but that are more important to the user experience than the trend line itself, but I could be wrong.
Haidee: No, you’re correct, Tom. We do have a lot of things on the schedule for this year, the remainder of this year, very exciting things. I don’t want to let the cat out of the bag too early, but everyone will be very happy with what’s to come.
Tom: Nice tease there, Haidee. Way to go.
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Naresh: Awesome.
Tom: Already what we have introduced this year, especially for the lifetime members, the Pure Quant tool and the Billionaire portfolios, it’s absolutely incredible.
Naresh, we are almost to the top of the hour, maybe one or two more questions, and then we can start getting the recording processed and get it to our TradeStops members as quickly as possible.
Naresh Vissa: Tom, let’s make this our final question because I know we’re running low and we have a couple of folks want to know about our upcoming webinars.
Is it better to buy a stock that just turned green or to buy a stock that’s been in the green for a long time?
Tom: That’s a great question. Last year, Dr. Smith did a lot of study on this. Click on the blog, and type in the search “Going green.” All of our research has shown that it is best to get in to a stock when it turns green.
Those statistics that I showed you a little bit earlier about the 52.7 percent winning trades, that’s all with getting in to a stock once it turns green.
I recommend going to Dr. Smith’s blog and reading this article from October 18th. There are a number of other articles about the green SSI condition, certainly recommend that you take advantage of those. That is the best time to get in.
Sometimes, that’s not the only time that you can get in, because you’ve missed the signal. Anyone who’s a relatively new TradeStops member right now essentially has missed all of the entry signals on stocks that are in the Green Zone.
There are some stocks that you can buy, and there are some stocks that, maybe, you don’t want to buy. Look at for some of our articles that talk about two VQ higher. I’m not going to get into it in depth, right now.
Basically, the Green Zone is the best time to get in, when it first triggers that SSI entry signal.
Naresh: Tom, if you can bring up, again, tradestops.com/webinars. We’re getting more questions. How can I get the replays of these training sessions? How can I find out about upcoming training sessions?
Tradestops.com/webinars, go here. You can see what we have on the calendar for the rest of this week. When you click the individual hyperlinks for each event, you can register for the event, so you’ll be sent reminder emails and follow-up replay emails, so tradestops.com/webinars has all the information you need to know about our upcoming TradeStops online events.
Tom: Thank you.
Naresh: Awesome, and that about wraps it up, Tom. We’re getting close to our hour. Any final thoughts on the SSI system?
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Tom: No. I think that this is something that’s important to work with the VQ and understand exactly how we are applying the VQ to the Stock State Indicators. We have the VQ presentation.
If you scroll down a little bit, you’ll be able to see that, or you can view this particular recording and then tie that in with the Stock State Indicator presentation from today.
You’re going to have a good system to manage your stocks and to be able to understand the amount of risk you’re taking in the individual positions.
We appreciate your joining us today. We are going to close down the webinar in a moment, and if you do have questions that are still outstanding, Brian and other members of our staff will get back to you later this afternoon with those answers. Brian, thank you for all that you do on that.
Thank you, everyone.

Transcription by CastingWords