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Frequently Asked Questions

Dr K Market Direction Model
On a change in signal, is it more accurate to use opening price to make the calculation?
Q: On a change in signal, is it more accurate to use opening price to make the calculation? For example, you recommended a change signal this morning before the open but subscribers cannot go back to trade ETFs using yesterday's closing price.

 

A: If the signal change comes during the day, I take that current price. If the signal comes after the close but before the open, I take closing prices to keep it consistent since some will buy after the close or before the open. For example, the closing price on 1/11/11 was 49.45. Thus, on a day where the market gaps down, the model's performance is slightly penalized. On a day when the market gaps up such as 1/12/11, performance is slightly enhanced.


Published: Jan 20 2011