Dealing with Gap Ups
Corona Del Mar, CA
Howdy Friend!
A question came up on last week's The Boss Group call that you might have as well.
It's about dealing with gap ups.
Specifically, we're going to look at the gap up in Tesla the other day.
Gap ups occur when the opening price is higher than the previous close.
What I told Boss members was that gap ups are actually a sign of strength.
Let's not take my word for it though...let's actually test that hypothesis using the first "DB Transaction" strategy built by Ai (DB Platinum).
"DB Transactions" allow you to buy stocks at massive discounts -- often right before they explode in value as you can see from these trade signals:
Let's see what happens if you use "DB's" to buy the open no matter how far up prices gap.
When I run a test from 1988-2020, I get an annual growth rate of 53%.
If I run a test that buys at yesterday's close and lower (never buy a gap up), then the CAGR drops to 51.5%.
Let's look at a more extreme example:
If I decide I'll only buy a half an average range below yesterday's close, then my CAGR drops in half to 27.8%.
Yikes!
That's because the strategy only trades on a specific day of the month.
Trying to ecke out that little extra discount turned into one helluva opportunity cost didn't it?
Waiting for that "perfect" opportunity ended up sabotaging profits! Suddenly that cushy retirement gets pushed back to 102.
This is why we test!
When you test, you aren't holding in breath in the hopes that things will go your way...
...you know EXACTLY what to do in all situations.
P.S. The next "DB Transaction" date for buying stocks at a discount is coming up quickly!
|
|
Wondering how to get started?
Step 1: Get a free copy of my book: Artificial Intelligence, Real Profits here >>
Step 2: See a demo of The Boss "SuperAi" Strategy Builder.
During the presentation, you'll learn: How to Generate Consistent Retirement Income Using "SuperAi-Designed" Trading Strategies. Click here >>
Download Portfolio Boss Software >>
Step 3: Online training to vastly improve your trading with Ai.
Watch the podcast >> | Read the blog >>
Step 4: Additional Resources
The Relaxed Investor (Downloaded by over 200,000 readers)
Disclaimer: The results listed herein are based on hypothetical trades. Plainly speaking, these trades were not actually executed. Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under (or over) compensated for the impact, if any, of certain market factors such as lack of liquidity. You may have done better or worse than the results portrayed.
Responses