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Have a great week trading! And if you need
assistance at any time please email me at
powerratings@tradingmarkets.com,
or call 1-888-484-8220 ext 1 (outside the US please call 213-955-5858
ext 1).
John Lee
Associate Editor
Two Simple Rules to Trade PowerRatings (for Traders)
PowerRatings (for Traders) are the single most popular tool we have on TradingMarkets. In this article, we will show you how you can potentially improve your trading edge even further with PowerRatings. All it requires is the addition of two rules.
When we first published PowerRatings beginning in 2005, the simulated results were based upon a holding period of five days. If a stock had a PowerRating of 9, its simulated returns were based upon buying a stock on the opening and exiting the stock five trading days later. But, as we will teach you here, one can dramatically improve the simulated edges in PowerRatings further by adding two simple trading rules to them.
Here are the rules:
1. Only buy a high PowerRating stock (7 or higher) on a limit order below yesterday’s close.
2. Instead of using a static exit and waiting for five days, use a dynamic price exit by exiting the trade when the stock closes above its 5-day simple moving average (SMA).
By adding these two simple rules, the simulated returns rise substantially and expand the edges even more.
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HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING AND MAY NOT BE IMPACTED BY BROKERAGE AND OTHER SLIPPAGE FEES. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.
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