How to Read and Understand Jasons Day Algotrading trend indicators buy and sell alerts
This system is based on a normal distribution and detects outliers in long and short frequencies to identify and time the market for buying and selling stocks algorithmically. I will break down its basic components and explain what conditions must exist before the alert is triggered.
The structure consists of 4 distribution ranges using 3 different frequencies of Simple Moving Averages (SMA) and a real time Bollinger Band. Both the 180 (white) and 600 (yellow) SMAs have upper and lower bands that are set % above and below the SMA to define a range of no activity until it is surpassed. This eliminates buying or selling too often and to soon. It is key in eliminating Pattern Day Trading Triggers that can freeze your trading account. Its best to strike at the right time and that is what these bands assist in doing.
A Buy or Sell Alert is set to trigger when the current price breaks past the upper or lower Bollinger Band. When the price reenters the band it triggers an alert. If it comes down from the top it sells, if it comes up from the bottom it buys. That is the basic function, and all other SMAs provide conditions that have to be met before the alert can trigger. That is where the G6, G5, G4, D6, D5, D2 come from.
The “G” stands for “Golden Sell.” The “D” is for “Deep Buy”.
I will start with the Deep Buy rules and how they apply.
D2- Deep Buy 2 – adds the additional rule that the price has to cross up the SMA 9 before buying. So, in addition to crossing up the Bollinger Band, it also has to cross up the SMA9. This addition eliminates buying the drop moves closer to buying the dip. If all conditions are met, you should be close to the dip at this stage. The Algo will trigger several Buy Alerts that should, in theory, average out just above the bottom dip.
D5 – Deep Buy 5 – adds the additional rule that the SMA 600 (Yellow) must be less than the SMA 2000 (orange). This insures that we are in a bearish situation and we are timing the market. The last hurdle is that price has to be less than the lower SMA 180 band. If all these conditions are met it will trigger a buy D5.
D6 – Deep Buy 6- adds the additional rule that the price must be below the SMA 600 lower band.
Not surprising….. Golden Sells are the exact opposite
G4 - Golden Sell 4 – has to be over the 180 SMA upper limits.
G5 – Golden Sell 5 – The SMA 600 (yellow) has to be over the SMA 2000 (orange)
G6 – Golden Sell 6 – The price has to be higher than the SMA 600 upper limit.
These alerts run on the one minute interval usually with a couple of exceptions and can trigger once a minute.