ftse next day signals

I thought I would share a post here that I recently posted on iii.co.uk in response to some confused readers. With more in depth examples of trading the system...

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bracke
I know it is confusing, i should try to explain it better with examples.
So here goes:
The system is not designed to give targets, only to (hopefully) predict the next days direction and close, be that up or down from the previous day.

example 1. on the 9th december the ftse closed at 4380.

At the end of that days trading my system gave a DOWN signal.

on the 10th December the ftse closed at 4335.

if you had went short at FTSE close on the 9th at 4380 and bought at close on the 10th you would have gained +45 points.

if you had closed at the low on the 10th at 4313 you would have + 67 points.

Now I know this is best case scenario, and going short overnight you risk being stopped out due to fluctations of futures prices. That is why I have found the system to be good for getting you going in the right direction for the following day.

example 2.

at the close on Friday 19th December at 4412 the system gave another UP signal.

close on Monday 22nd was 4424 giving + 12 points between closing prices. The high on the 22nd was 4432 giving 20 points.

But if you had waited until the market had opened it dropped to a low of 4392 before heading up to the high.

so a long after open at the low would have gained you a maximum 40 points.

Again this is best case scenario.

The system also occasionally throws out UP/DOWN or DOWN/UP signals. These signals are (about 75% of time) saying the market will head up first before retracing, or down before heading back up.They do not always predict the closing level, just direction.
The difficult part of these signal are that there is no target for reversal, so a knowledge of some indicators showing overbought/oversold conditions and reversals would be needed.

The one thing that I do find with these signals is that even if you only follow the UP or DOWN (first stage of the signals) you are going in the right direction, sometimes on a bullish day the down part of an UP/DOWN signal can only give you a 10 point retrace from a high.

example 3rd December ftse close 4333 the system gave an UP/DOWN signal.

on the 4th the FTSE went up to a high of 4353 then retraced to close DOWN from the previous days close at 4330.

this is a very good example but as I have said before sometimes the DOWN part of this signal does not mean the FTSE will close below the previous day, just that it will retrace from its high at some points, even only 5 to 10 points.

The same goes vice versa for DOWN/UP signals.

In testing the system I applied a 25 point stoploss to long and short signals, if the market swung 25 points or more out of my traded direction (even before reversing and heading in the intended direction) I took the paper loss. The system is still showing good points just between closing prices.Never mind the highs or lows!

Phew!
I hope this helps you a little.
Please post back if more explaining is needed.
Any other comments or ideas about how best to work with this system are always welcome
regards.R