FAQs Frequently Asked Questions - Investor Education

What are the differences between VoSI and OwlTrader?

How has the model performance vs. buy & hold over the last few years in this QE to no-QE environment?

Please walk me through the basics on how to use the Market Direction Model in my trading.

For Dr. K's Market Direction service, when you recommend a specific ETF to buy, does that buy recommendation come with a stop loss as well?

Why do you think the market moves in a specific manner (not the future but the present)?

I just joined. The suggested ETFs are trading higher today than where they were originally recommended. Should I buy an ETF now or wait until the next signal change to act?

While the model has done well since early 2019, and outperformed from early 2016 to early 2018, it had difficulty for much of 2018. Please explain.

If MDM is on a sell signal, should I go long a stock?

How important are the timing models in determining asset allocation in stocks?

On decay factors, when do leveraged ETFs underperform and when do they outperform? To remove the bias, it seems better to short a normal leveraged ETF instead of just buying an inverse leveraged ETF.

When the model siwtches signals, do I buy the 3-times etfs? And if a neutral pick happens, do I sell them?

You place importance on back testing. What in your opinion is the proper way to back test a trading idea?

Why short a normal leveraged ETF instead of just buying an inverse leveraged ETF?

Please explain how quantitative easing (QE) has introduced material changes to the model.

Your MDM reports sometimes include explanations that are non-technical. Does the model account for non-technicals?

Have either of you considered keeping MDM in a buy signal as long as QE is in effect?

I did a brief calculation of the MDM performance over the past 10 years (16% annual return) and the last 35 years (30% annual return). That's a pretty significant difference. Is there anything in particular that explains this difference?

MDM had a buy signal. I bought a 3x ETF. The ETF moved higher but now has moved back to my original buy price. At what point should I have exited if at all?

What are the strengths of the model?

How can I use this site to boost my returns since we are living in such challenging times?

Should I expect returns similar to those achieved by the model?

Will the MDM ever change to a buy signal without a follow through day? What about sell signals from a confluence of distribution days?

I got "whipsawed" lately trying your market calls since the model (understandably) could not handle the short-term fluctuations. What % moves are required for MDM to work well?

When there is a buy or sell signal on the MDM, do you position size based on where you have to set your stop-loss on the trade or do you commit a fixed percentage of your account on every trade..

How has high frequency trading affected the interpretation of price/volume action?

Some market timing sites show huge returns. What should I watch out for?

It has been few days since you updated your Market Direction Model. Is it showing a sell signal after the last few distribution days. If not, can you elaborate how far are we to seeing a sell signal.

Why is your model still on a buy signal since I thought buy signals are neutralized during the trading day once the NASDAQ trades below the closing price the day before the gap-up buy signal day.

I am new at this and was curious what 1x, 2x, and 3x ETF code means? Do you also recommend buying all the ETFs or merely picking one from each group?

Is your model discretionary in any way? Do you only adhere to the market direction model rules in your book?

I was curious as to the reason why your Model would switch to a buy today and IBD's Big Picture did not go back to Confirmed Uptrend? What is the benefit of your model over IBD's model?

The Big Picture column in Investor's Business Daily is on a buy signal, yet MDM is still on sell. Please comment.

How is it that your MDM is a sell whereas you have stocks to buy in your PPR?

You often speak about the MDM as if it's some robotic, non emotional thing that makes it's decision based on x,y,z factors.

How has Dr K MDM systematic model done against some of the best timing sites on the internet?

I was looking over the history of the MDM. It seems the model has given nearly twice as many signals in the last 12 months compared to most other periods.

I prefer to wait for a trending market to use the Market Direction Model. Rebalancing/decay works to one's advantage in trending markets.

What if I am only able to act on signals at the open of the following trading day?

The model just switched from a sell to a buy signal. If I were to switch into cash rather than go long and the market took off to the long side, would I ever get another buy signal?

You write "using TYH with NO leverage" but isn't TYH a leveraged ETF?

I was late buying an ETF when the model switched signals. Now that the price of the ETF is back to where it was, can I buy now?

How are you calculating your returns in the tables in the results section?

How do I handle my ETFs on buy or sell signals issued by the model?

I am having a bit of difficulty understanding the Market Timing Results as published on your website.

Your model tracks price/volume action of leading stocks. How do you define a leading stock?

The model went from a buy to a cash signal, then from a cash to a sell signal all on August 31, 2011. Yet August 31 was not a distribution day. Please explain.

What intraday volume sources do you use for NASDAQ Composite and S&P 500 indices? What if it is not clear whether volume will be higher than the prior day's volume near the close of the trading da

Your Market Timing Results page it states "(as of May 31) +46.8% [general trading using all services including the market timing service]". Can explain how you are getting the +46.8%.

How many failed follow through days did we get in the 2010 'flash crash' May-Aug ?

The last signal I received was "Neutral" but when I logged in the signal was Cash. Is there a difference?

What if I miss the neutral signal because it came just a few minutes prior to the close?

I am confused about your references to stop losses of 7-8% with your direction model.

What do you recommend for stop loss limits on 3x index ETFs like TZA. Typical 8% or do you need to give it more room?

What are typical drawdowns I can experience in a 3-times ETF?

Can you let us know when the model is close to switching signals? Can you also recommend position size when it does switch?

What do you mean by inverse ETF?

How do you determine the model's fail-safe?

I'm a new subscriber. On your Market Direction Model service, you recommended four ETFs. What is the suggested buy price?

Various ETFs

I am wondering if the MDM can be used effectively in an IRA or 401k by just taking the long signals only?

This choppy news driven market not ideal for trading but at least you warned us to expect that during whipsaws. In this type of environment do you find it better to be more focused on ETFS or stocks?

I've noticed that the TQQQ performance (103%) dwarfs many of the high octane stocks: ARUN (72%), ARMH (72%), NFLX (54%), PCLN (52%), BIDU (47%) since 9/1/10.

What are the long term returns of your model if you used a 3x ETF that approximates 3-times the NASDAQ Composite?

Recently, it seems the model made most of its gains on its buy signals since 2009, and most of its gains on its sell signals in 2008. Why not ignore the sell signals during bull markets?

The model has an enviable track record as measured by its performance using US stock exchanges. What about foreign stock exchanges?

What I would like to know is what to do with our pocket pivot positions when market direction changes to cash. Based on your portfolio management, I'm thinking we should at least scale back some.

On a change in signal, is it more accurate to use opening price to make the calculation?

Why don't you show results for the discretionary portion of your model?

Should I use the systematic or discretionary portion of the model in my own trading?

I mainly have only enough time for the MDM. In general it looks like the MDM has its own safeguards with really the only bad year in 2007 where it underperformed-do you have any insights on that year?

Why do some of the signals occur on Saturdays?

Is investing in one ETF enough, or is more ok? I do have a small account. Are there additional buying opportunities in an ETF, and would you tell us in updated reports?

On your results page, you show -3.12 for 11/16/10 which was a sell signal, then a blank for 12/1/10 when your model went to cash. Please explain.

Does your MDM model also indicate a switch for the emerging markets, or just the USA?

If you get to full margin quickly, when your model goes to sell do you sell all your positions or do you focus on your seven week rule, the 10 and the 50 day averages?

You mentioned in recent emails that part of the switching process is contextual. If this is the case, how did you come up with your backdated results?

What do you mean by fail-safe?

Why do you suggest shorting S&P500 ETFs, not NASDAQ ETFs, even though your MDM signals are flashed by the behavior of NASDAQ index, not by S&P500 Index.

Does this market MDM neutral or sell signal mean that any ETFs bought from your original buy signal should now be sold?

The ETF is thinly traded. Should I be concerned?

Why did you not include TYH in your recently suggested ETFs since you use it as a 3-times proxy for the NASDAQ Composite?

Is your model applicable to ETFs that track foreign exchanges?

I am interested in knowing more about the MDM service. What knowledge do I need to possess and how much time is necessary to achieve positive returns?

Based on your macro comments in prior reports, do you think ETF123/stock xyz is a good investment?

When the Timing Model signals a buy or a sell, do you automatically buy or sell stocks?

My question pertains to add points on the ETF's.

Do you trade the market timing model just for ETFs, or do you also use it for stocks?

One of the most important but often neglected parts of CANSLIM is the M, the need to time the market. You have created your own market timing model. Can you describe it and how it differs?

Regarding distribution days, I was wondering if your model takes into account the "zone of relevant action", when counting Dist. days. ie. when the NASDAQ moves up 5% from a dist. day....

Should I consider tighter stops on my stocks when a sell signal is issued by the model?

Dr K's MDM and the relation to the current trend

When your model signals a buy or sell, should I invest in a 3x ETF or a 1x ETF?

For the leveraged ETFs, I have read over the past year that these are tricky to use over the long term since they reset daily and have some tracking problems.

Are you still recommending TZA based on your Market Timing Model having a sell signal?

The latest Market Direction Model Report is dated 5 days ago, is this because there has been no change in the signal?

How do you feel about using calls and puts on the QQQ's if not able to buy double or triple inverse ETF's?

During your studies, when is the best time to enter your direction model and the best time to exit?

Do you plan to send emails to advise us that you have posted a new update?

Can you please help me clarify the Market Directional Model signals?

Where did the name The Virtue of Selfish Investing come from?

Why has the Dr K MDM systematic model done so much better over the long 35 year time frame from 1974 to 2009 compared to the last few years?

How can I know that your rules that guide your model will continue to work?

Is the systematic portion of your market direction model a black box in that it is computer programmable?

What are the weaknesses of the model?