[FAQ is a work in progress]
Forecast Models and Strategies
What are the different forecast models?
The All forecasts model selects the forecast with the best historical pattern of accuracy from 540 possible forecasts (30 seasonal models x 3 base forecasts x 6 seasonal relatives).
The A0, A1, A2, A2W, A3, and A3W models select the forecast with the best historical pattern of accuracy from 30 possible forecasts (30 seasonal models x 1 base forecast). The A0 model has no seasonal relative adjustment at all: it’s the base forecast with the confidence bands determined solely on the different seasonal models. The other models adjust the base forecast value with a forecasted seasonal relative built using one of five different moving average models.
What are the combined strategies?
The five combined strategies each layer three different forecast strategies, selecting the highest limit order entry price each date from the three strategies. This maximizes the potential buy signals for the stock, but that’s not always a good thing. The quality of the entry signals matters more than the frequency of the signals.
That being said, the losses in the signal tables are the result of forced exits at the end of the designated hold period. These are presented for research purposes. Changing the hold period almost always turns a losing signal into a winning signal.
Trading Strategies (Research Only)
How do the limit order trades work?
TSF Stocks forecasts daily limit order prices for each stock, one week in advance. These are the optimal entry signals — a target price each day that would be statistically low for that stock. Limit orders can be placed in advance and the order fills only if the intraday price of the stock dips below that value.
The exit strategies are based on a fixed profit target, 3%, 4% or 5%. When you open a position, place a sell limit order at the desired profit target and wait.
What about stop-loss?
Stop-loss strategies apply when you can’t know you bought the stock at a statistically low price. TSF tells you WHEN to buy, and you buy only WHEN the price is statistically low.
The hold periods in the signal analysis tables impose a forced exit at the end of the hold period. A 7-day hold that doesn’t hit the profit target in 7 days is sold at the end of the 7th day, which can result in a loss. But holding the stock for longer periods gives it time to hit the profit target.
Can these strategies be used for day trading?
Research into day trading strategies is ongoing, but applying these signals to day trades is not recommended. While the vast majority of the entry signals result in profitable trades, hitting the profit target requires more than a few hours in most cases.