Tradability Index
We have been
experimenting with two new concepts; Tradability Index and Relative Minimum
Stops. Our goal - to reach a 100% Mechanical System. The M-1 Profile
uses these components to achieve this goal.
Relative minimum stops and Tradability Index shown on MAY
Tradability
Index (TI) Filter
Our Nirvana Labs has
created a new index which is designed to identify those stocks that have sufficiently
smooth movement to be "tradable", using a special method that determines the
'probability of a strong, volatile move'. When a volatile move is probable for a
given chart, we just avoid trading it. The chart above shows the output of this
filter. Basically, the shaded areas below the line indicate zones that are not
tradable. The filter calculates the probability of a volatile zone occurring in the chart,
which results in the Tradability Index.
Initial
Results for Tradability Index with ARM2
By applying Tradability
Index to ARM2, we are seeing the following performance on the S&P 100, over the recent
year of data. (note: these reports use the same method
for calculating accuracy that we have consistently used for ARM2).
We have never seen
accuracies in ARM2 above 90% before. Needless to say, we are
tremendously excited about this latest advance in ARM2 Technology.
Relative
Minimum Stops (RMS)
The second, related
component is the Relative Minimum Stops exit. These stops tend to hold trades longer
while providing an optimal initial stop.
Downloads
Available for Members.
Both of these components were presented at
Bash 2003. Nirvana Club Members can download the components and experiment with them
using other techniques. Many members are doing this and reporting their results in
the Nirvana Club Forums..
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