How to Trade "Close Signals"

Yesterday we needed to wait right until 4 pm to know if the Q’s were going to close higher for the day and trigger a short signal. There are days when you literally need to wait until the final minute before knowing if you’ll have an official signal.

So what happens if you decide to take the signal a few seconds before the close and then the Q’s had sold off and closed down for the day? Should you get out in after hours? Should you exit the next day? These are real questions that arise from situations like this.

The answer is if you took the trade and then the signal wasn’t official it’s your decision whether or not to keep the trade. Our testing is based upon exactness and we want to be as precise as possible. But sometimes it’s not always possible to be precise when prices are bouncing around near the close. Therefore you do the best you can and if you are in a position that officially is not a real signal, it’s up to you to decide how to proceed.

The second piece of this is what time do we look at the signals? Is it 4 pm ET or do we wait until after market hours? The answer is that you should look to place your positions on as close to 4 pm as possible. And if you know for sure a signal is going to trigger, put on a Market on Close order in a few minutes before the close. Your fill should be fine, especially with the bigger ETFs we often trade.

Again, it’s not always possible to be perfectly precise but the goal is to be as precise as you can be.

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