Whipsaw

Today we got a VLE sell signal. Tomorrow we will exit the long position for a loss and go short on the open. I suspect this will lead to another loss, but the point is that we do not know. Is this the beginning of a crash, or just a retest of the January low. We do not know. I could present valid arguments for either case, but the fact is that - we just do not know.



For those who have trading experience there is another way to deal with the expected gap down opening in the morning due to the Cisco disappointment. If the QQQQ opens near or below 42, it would most likely bounce after testing the January 41.61 low. After the test one could enter a stop loss just below the morning low. If it holds the QQQQ may run back up to the recent swing high. One could hold to see if a new buy signal is generated. A third approach is to wait to see if the gap is filled at 42.81+ to exit, thereby reducing the loss.



However, what we are doing here is demonstrating that following the system parameters requires the least decision making and trading finesse, while ultimately leading to profits if discipline is maintained.

The Cabot System has remained on a sell.

Remember that you are responsible for your trading decisions.



I am working on adding a sidebar with a spreadsheet to track each system presented.