Thursday, September 03, 2009

Tracking the Odds of Trend Days: Excellent Tool From Vertical Solutions

Few questions are more vital for the active trader than identifying day structure: whether the current trading session is shaping up as a trend day or a day that will trade within a range. Identifying a trend day enables you to hold trades through the session, as trend days typically open near their low (high) for the day, trade with expanded volatility, and close near their high (low) for the day. On a trend day, you want to trade the market's direction; on range days, you want to fade it. On a trend day, you'll tend to hold trades; on a range day, you'll tend to get in and out of swings. How you trade a market will critically depend upon the day structure that you identify.

Henry Carstens of Vertical Solutions, who develops, trades, and manages money with mechanical systems based on historical testing, has conducted research into the characteristics of days that turn into trend days. Based on that research, he has developed an indicator (see above) that spits out--in real time--the odds of whether the present day in the stock market is likely to be a trend or range day. Best of all, that indicator is available on his site at no charge, along with other forecasting tools that he has developed.

If you check out Henry's Twitter page, you'll find his trading signals also posted in real time, along with trend status. His strategies have performed quite well and now are available for managed accounts. Great resources!