Saturday, September 27, 2003 6:58:48 AM
A common or "frequently asked question", usually asked by new X_DEV'rs is.........
"Why didn't X_DEV initiate a buy even though price dropped below the target price"
Example below on the QQQ's.
The X_DEV algorithm, in it's infinite inherent wisdom, takes not only price into account, but volatility and timing as well.
Note the first example below. On 9/24 X_DEV is rec'ing a buy at $33.21 but zero shares are also in the rec box. This is because the price is right near the X_DEV "equilibrium point" right between it's bands and X_DEV is saying if a drop that large was to occur, the probability of a further drop is large so
X_DEV wants to be sure it can get the best buy. Usually large price drops (as measured from the X_DEV 12 day median line) are accompanied by another drop the next day. The X_DEV algorithm is constructed in such a way that it recognizes this trading principle, and therefore automatically calculates not only the right price, but the right amount of shares based on the situation.
On the next example chart below (9/25), price has dropped again as expected. Now X_DEV has recognized that the price drop is really extreme enough to rec a buy with some shares attached to the recommendation. If it wasn't for this inherent "wait and see" function that is built into the X_DEV algorithm, the trader might have entered into the play too soon and not have received the best, or at least "better", entry price.
On 9/26, price opened below the X_DEV buy target, and the shares that were rec'd on 9/25 were purchased giving the trader a much better price than if he bought as soon as price hit the lower X_DEV line on 9/24. Pure genius, yes?
"Why didn't X_DEV initiate a buy even though price dropped below the target price"
Example below on the QQQ's.
The X_DEV algorithm, in it's infinite inherent wisdom, takes not only price into account, but volatility and timing as well.
Note the first example below. On 9/24 X_DEV is rec'ing a buy at $33.21 but zero shares are also in the rec box. This is because the price is right near the X_DEV "equilibrium point" right between it's bands and X_DEV is saying if a drop that large was to occur, the probability of a further drop is large so
X_DEV wants to be sure it can get the best buy. Usually large price drops (as measured from the X_DEV 12 day median line) are accompanied by another drop the next day. The X_DEV algorithm is constructed in such a way that it recognizes this trading principle, and therefore automatically calculates not only the right price, but the right amount of shares based on the situation.
On the next example chart below (9/25), price has dropped again as expected. Now X_DEV has recognized that the price drop is really extreme enough to rec a buy with some shares attached to the recommendation. If it wasn't for this inherent "wait and see" function that is built into the X_DEV algorithm, the trader might have entered into the play too soon and not have received the best, or at least "better", entry price.
On 9/26, price opened below the X_DEV buy target, and the shares that were rec'd on 9/25 were purchased giving the trader a much better price than if he bought as soon as price hit the lower X_DEV line on 9/24. Pure genius, yes?
~Mystic One~
http://stockwerld.com
(What matters)
http://www.investorshub.com/boards/board.asp?board_id=2543
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