Q. Why are we using "Quick Trades" in the scanner instead of "M&M Favorite" a.k.a. "Mark & Markus Favorite”?
The current algorithms are optimised for "Quick Trades" as the current recommendation is to continue using the "Black Bar" exits. Sometime in the future we may move to "M&M Favorite" and stop using the black bar exits, in this case we would only use the profit target and stop loss exits.
Q. Why are Rockwell suggesting only taking long trades?
Because Mark and Markus have back tested over seven hundred thousand trades across 4 markets using 2 years of data, and found that long trades far outperformed short trades, that's why they are recommending only taking long positions.
Q. Why is the Profit & Loss Chart now more important than the Trendability & Gappiness?
Greater emphasis should be placed on the profit & loss chart as this is a better indicator of profitability, the chart should ideally be climbing smoothly from the lower left to the upper right for most of the last 2 years. So less emphasis should now be placed on Trendability and Gappiness, as stocks that are not trending well and have gaps will typically have a poor profit & loss chart.
Q. Do I need to watch the market all day?
You really shouldn't need to be spending your day watching trades, if you're buying stocks all you have to do is set two bracket orders (Putting half the shares in one, and half the shares in the other) to exit on the lower and upper Profit Targets and the same Stop Loss. Then all you have to do is check once a day before the market opens to see if you have a black bar, and if you do then exit at the beginning of the next session.
If you're trading options all you have to do once you've bought the option is to set 3 alerts either in your brokerage platform or with Tradingview, one for the stop loss, one for the lower Profit Target, and one for the upper Profit Target. If one of the alerts is crossed then you should either close half the trade or all of the trade, and the same rule applies for the black bars. Either way you only need to take action in the morning before the market opens, there is no need to watch it all day.
Q. Why are there two Profit & Loss Charts under the Stock Chart?
There are two profit and loss charts so that you can compare the two strategies side-by-side, to see which has been more profitable over the last two years.
Q. Isn't the Profit & Loss chart strongly dependent on a stock's trendability?
Yes, for the most part a solid profit and loss chart is dependent on good trendability, however spikes in the trends can lead to profits, these spikes are typically not repeatable, so the profits they generate should be discounted.
Q. How is the Average Daily Range (ADR) calculated?
Add the difference between the high and low for the last seven days and divide it by seven.
Q. Should I be concerned if one of the scanner results is a 2X or 3X leveraged ETF?
Although this might be an issue for other strategies, it is not a concern with the PowerX Strategy as we are using a stop loss, and will typically only be in a trade for 1 to 3 weeks.
Q. Does the PowerX strategy have a special rule about trading into or through earnings?
There isn't a strict rule when trading PowerX into earnings, if the stock doesn't usually react to earnings then it is fine to hold onto a position through earnings. If you wish to be more conservative you can close the trade the day before earnings, so it's up to you.
Q. How long should a stock be trading above $5 (Penny stock range) to be considered worthy of more research?
With PowerX we really want the stock to be trading above $5 for at least 18 months.
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Contents: PowerX Analyzer User Guide