There is a approximatly a 75% chance of getting a better price.
In several places on this website, we have made the comment that you can get a better price if you wait after a model signal. In a buy or sell, there is a 70%-75% chance of getting a better price. How is this possible? Take a look at the diagram above and correlate the roller coaster track to the stock market. Our buy signal is represented by the red line and it’s possible to cross that line in two places.
1Normally, you will cross the line as the prices are rising and the market is getting over bought. This will trigger the model; assuming no overrides are in place. However, there is a 70% plus chance that the market will continue to rise after the signal. Hence, you get a better price.
2However, what about the 25%-30% of the time you don’t. What could happen is that the model didn’t trigger on the way up but hits the sell point on the way down. Here, the price may continue to drop and you are forced to sell at a lower price or wait for the next cycle.
How is the 75% Calculated?
We calculate the 75% by reviewing every transaction over the past 32 years. Each transaction has a buy and a sell price. We analyze the historical data to see if the was a higher price (Sell Side) within the next 5 days. Same is true on the buy side where we look for a lower price within the duration of the transaction. Both result in approximatly a 75% chance of getting a better price. That being said, the model strickly buys/sells the end of the day price.