Sunday, February 9, 2020

Answers to Frequently Asked Questions (2020 Update)

What is Balance Trading Blog?

Balance Trading Blog is my trading notebook. It's a place for me to record my thoughts, ideas, and long-term (weeks to months) trades.  I'm sharing it with anyone who cares to read it.  Please kindly note that my notes, thoughts, and ideas are not trading recommendations or investment advise. They are simply notes, thoughts, and observations of an x-aerospace engineer who changed his career in 1997 and became a full-time trader who trades for a living.

What is SGS?

SGS is a proprietary mathematical long-term (weeks to months) trend following market timer.  SGS is not a price-based timer.  It is  a smoothed and normalized aggregate of the number of new highs minus the number of new lows of a pool of around 4000 liquid stocks and ETF's (traded on NYSE and NASDAQ) for five discrete time periods (daily, weekly, monthly, quarterly, and yearly). 

Everyday shortly after close, a new value for SGS is calculated.  In order to reduce whipsaws, only the value of SGS calculated on a Friday is used to determine the status of SGS.  If the Friday value of SGS is greater than +50, then the status of SGS is LONG. If less -50, then the status of SGS is SHORT.  For any SGS value between +50 and -50, the status of SGS is NEUTRAL.

What is sgs-st (short-term)?

sgs-st is a proprietary mathematical short-term (hours to days) trend following market timer.  Similar to SGS, sgs-st status can be long, short, or neutral.  Additionally, sgs-st could change its status from long to neutral if an overbought condition is triggered or change its status from short to neutral if an oversold condition is triggered.

The status of sgs-st is determined by (1) the size of the total area between between 13 and 39 hourly EMA's of SPX measured in price-time; and (2) by the growth rate of that area measured in price-time per hour.  The value of sgs-st is calculated every trading hour during the regular session (9:30 AM to 4:00 PM). The status of sgs-st is determined by its hourly calculated value.

How SGS and sgs-st are used for trading?

Since November 1, 2019, I've been tradeing SPXL and SPXU using the status of SGS and sgs-st as summarized in the table below:

Sunday Feb 9, 2020

SGS  Market Timer Status:  LONG 
SGS is a Long-Term (weeks to months) Timer
Why Market Timing Is A Must

sgs-st Market Timer Status: 

sgs-st is a Short-Term (hours to days) Timer

SGS advanced last week and confirmed major indices rallying higher.

Support and resistance levels for SPX for this week are shown above. 

My Plan

Last Monday morning at 10 AM sgs-st status turned from short to neutral and I closed my SPXU position (33.3% of capital) with a loss.  Then at 2 PM sgs-st changed its from neutral to long and I opened a SPXL position (100% of capital).  On Tuesday sgs-st triggered an overbought signal and changed its status from long to neutral.  I closed my SPXL position.  

I'm in cash and waiting for the next sgs-st signal.

Current Long-Term Portfolio
Past Long-Term Portfolios


SPX: S&P 500 Index    SMA: Simple Moving Average
DJI: Dow Jones Industrial Index    EMA: Exponential Moving Average
DJT: Dow Jones Transportation Index    PDL: Primary Downtrend Line
NAZ: NASDAQ Composite Index    PUL: Primary Uptrend Line
RUT: Russell 2000 Index    ASL: Active Support Line
OEX: S&P 100 Index    ARL: Active Resistance Line
NDX: NASDAQ 100 Index    DTL: Dynamic Trend Line   
TUL: Tentative Uptrend Line   TDL: Tentative Downtrend Line
TLR: Trend Line Resistance   TLS: Trend Line Support

Disclaimer: The views expressed are provided for informational purposes only and should not be construed in any way as investment advice or recommendation.  Furthermore, the opinions expressed may change without notice.