Frequently Asked Questions
Q: Do you offer a free trial?
A: We offer a permanent free trial by posting the daily reversal levels for major indexes and a selection of stocks on the blog every day. So, you can see how the method would do for you and you can verify the published profit/loss (P/L %). We can't make it any more transparent than that and it allows you to watch and test as long as you want. You can always see the good, the bad and the ugly on any given trading day.
To see the daily file our subscribers get you can pick up free samples at the bottom of this page.
Q: Why have I never heard about this method?
A: I don't believe in flashy websites and aggressive marketing. If a service is good it will grow organically without doing anything special. If you subscribe and cancel after a few months I won't even bother to send you emails after you are gone. Because I don't like to be bombarded with such marketing myself. This service is offered on a "convince yourself" basis and there are no books about it. I intend to compile an ebook with the method and strategies, but that's a work in progress with no fixed timetable.
Q: Your predictions for yesterday didn't work very well. But your table always shows a lot of blue (profits). Why should I believe this?
A: The reversal levels are not a prediction, they are an approach to trading. It will always take more than a few days to see if a method is good or not. We expect our readers to question and verify, not just believe blindly. You can easily verify the "P/L %" numbers in our tables. Just take the Open price on the day after the buy (sell) signal was given and calculate the change to date. It should match the values in the table. If that is not the case, feel welcome to post a comment or contact us with your inquiry.
Q: I am a fundamental investor, how can I use your reversal levels?
A: Better timing never hurts, even for a long term buy and hold investor. For example if fundamental analysis tells us that a given company offers great value, then we can still wait until the reversal levels give a buy signal or speculative buy signal to get in. More often than not this will improve our ROI.
Q: Do you have any backtest results that can convince me of the value of this method?
A: I have never been a fan of backtesting, because it is too easy to show cherry-picked examples where a given method "would" have done very well. I think people should be doing "forward testing", and that's what this blog allows you to do. I only have two articles that discuss some back test results for S&P 500, Oil and Apple stock:
Q: A stock I own is already trading below its reversal level, so it will probably give a sell signal and turn to bearish mode. Do I need to wait for tomorrow's Open to sell this stock?
A: If going into the close we see that one of our stocks is almost certain to close below the reversal level then we can already sell it with a MOC (market on close) order. Sometimes this will give a slightly better exit than waiting for the next day.
Q: My favorite stock jumped more than 10% yesterday and is now given a buy signal. Is it not too late to buy?
A: It depends. If a stock jumps 10% on good news it may still be a good buy, but it is not giving us a very good entry point at that moment. In that case we can avoid the trade or wait until the price comes back down to the reversal level to pick it up. Of course, if you wait the stock may keep marching on, never giving you a cheaper entry price.
In general, whenever a buy signal appears it is good to check how far the stock is above its reversal level already. That gives us an estimate of how much risk we take in this trade, because the stock will be sold if it closes back below the reversal level. So, this is where we can use some discretion.
Q: Do I need to take all sell signals for stocks I own? What if I am sure my stock will recover soon?
A: If you intend to use the reversal levels properly, then the answer is: yes, always sell when a stock has closed below its reversal level. On average it is better to take the profit (or loss) and move on to the next chance. True, sometimes a stock will come right back after giving a sell signal, but many more times that doesn't happen and the stock just keeps sinking for some reason. Several weeks later and some 20% lower we then discover the real reason for that drop. So, this is a discipline kind of thing.
If the stock happens to come right back then it will climb back above its reversal level and give us another buy signal. We can then just buy it again. It is not a problem.
Remember, the reversal levels method aims to get in on the big trending moves. We will take small losses on the trades that do not work, and sometimes we will buy back a stock at a higher price than we sold it a few days earlier. But that's the "entrance fee" we are paying to get in on the big profitable trades that come along every year.
Q: Shouldn't we buy more when a stock we own is down? Why not reduce our average cost basis?
A: With reversal levels we do not add to losing positions. The "Add" signals you see in the tables are always at subsequently higher prices, which is a "doubling up" strategy (anti-Martingale). So, we do not double down on losers, we just sell them and wait for the next buy signal. This has the advantage that we don't end up with overly big positions in poorly performing stocks that may keep going nowhere for weeks or months.
Exception: with the speculative buy signals (spBuy and dBuy) we can decide in advance to buy in 2 or 3 tranches, because we can have several speculative buy signals before a stock finally goes into bullish Mode. E.g. a good strategy is to buy a half position on a speculative buy signal and then buy another half position on the next regular Buy signal. That gives us a full position and then we hold until Sell signal.
Q: How many winners can I expect with this method?
A: Using the regular Buy and Sell signals you can expect about 37% winning trades, and up to 40% if you avoid distressed companies. That may appear rather disappointing. But with this method the average win is much bigger than the average loss, because losses are cut and winners are allowed to run.
Our tables show what this method does for thousands of stocks. There are always plenty of stocks that show 10% or even 20% profits (see "P/L %") on their currently active trade, while losers (shown in orange) are usually small. Cutting losses quickly is a feature of nearly all good investing approaches.
Q: If my stock crashes 50% and falls below the reversal level then it will give a Sell signal at the end of the day. But, that doesn't help me today and I do not want to suffer the risk of such big losses. What can I do?
A: A large adverse move overnight can never be ruled out. A well diversified portfolio of quality stocks will offer some protection. If it helps sleep, use a disaster stop-loss, which I would put 10 or 20% below the reversal level. That will sometimes get you out of a crashing stock before the losses get even bigger. There is no such thing as investing without the risk for losses. But we can control the risks.
If you have a question that isn't answered here then feel free to post it in the comments section below.
I checked your blog and noticed the same stock can be held until a new buy signal comes in. Then, the number of days start all over from zero. I gues if I already own the stock I should hold.ReplyDelete
Also, what do you consider a win in your 37-40% success rate? A buy/held until a sell signal with profit?
When there is a Buy(Sell) signal the nr of days is set to zero and we take the next Open as the entry price for the purpose of calculating the P/L%. From then on the P/L is shown and the number of days increases every day until we get the reverse signal.Delete
If you already own a stock and you start using reversal levels then you can hold all stocks that are in bullish mode. If they are in bearish mode then you can decide to sell and get back in on the next Buy signal, whenever that may come. Long term positions can be held if they are in bullish trend(Tr), but that's up to you.
37% wins is on the basis of the standard Buy and Sell signal (so negating the spBuy and other advanced signals)
If I subscribe how easy is it to cancel if I want to?ReplyDelete
Very easy. When the next payment cycle is due you always get an email and it contains a link to stop your subscription if you want.Delete
You can also just drop me a message any time and I will take care of it for you. No questions asked and we don't bombard you with advertisements after you are gone.
I been following your system for about a month and I can only say that your work is outstanding. I only hav one question before subscribing, I can use the reversal level as my stop loss price right??
Yes, the reversal level functions as a stop-loss, but only on a closing basis. So we do not keep a stop order in the markets. If a stock closes below its reversal level, then it becomes a Sell signal for the next day. It is quite common for a stock to trade below its RevL intraday but rebound and close above it, that is not a Sell signal. More explanation and examples are available in the strategy articles we share with our subscribers.
It would be very helpful if you made available (perhaps to paid subscribers) a spreadsheet with the historical sums of all your posted daily summaries. ThanksReplyDelete
That's not practical with frequent ticker changes, new listings, delistings, mergers, etc...
Also, there are different strategies that can be used with reversal levels, so summarizing them in a spreadsheet in a format that people can understand is too difficult.
There are no shortcuts to doing some work for people who want to succeed in the markets. Following the system and seeing for yourself how the system works for a portfolio of stocks over a certain period of time is an excellent way to learn the method. This cannot be replaced by spreadsheets covering thousands of tickers.
Backtested results are of limited value anyway. See my articles from 2015: https://lunatictrader.com/2015/12/09/what-a-trading-method-can-do-for-you-part-2/
Will I get access to the full RL archive after payment?
Yes. Registered user can download all daily and weekly reversal levels files we have sent out since June 2015 from our Google Drive archive folder.
I signed up this weekend but i don't have access to anything. Do I need to take any extra steps?
Hi Danbar. If you signed up over the weekend you should have received several mails from us already. We always respond within 24 hours of signup, and usually within 12 hours. Check your bulk or spam folder if you didn't get any mails from reversallevels.com domain.Delete
I didn't see any new signup from a person named Danbar, but maybe you have used another name.
Haven't received my update for August 17th
Hi. The files just went out. I had some technical problems over the weekend. Sorry for the delay.Delete
Hi, I've been following your posts on twitter and found them quite accurate. I'm wondering if your indicators work for KOSPI and KOSDAQReplyDelete
Yes, we have KOSPI in our daily coverage, as well as the USDKRW currency pair. You can pick up a free sample of our daily files and see all the stocks and indexes we cover. Download at the bottom of this page: https://www.reversallevels.com/p/subscribe.htmlDelete
i received the files in google drive but they are all just random code/gibberish. How do i actually see them or open them correctly?ReplyDelete
I can't see who you are. But anyway:
1 - did you read the FAQ on the subcribers' site? (the 1st question explains how to display the files on various types of devices)
2 - did you check your bulk folder and set up your email account to receive the daily files?
3 - did you email our customer support (just reply to any of our mails)?
That are the first things to do if you are a new subscriber.
It appears that just because a bought stock (a stock with a previous buy signal) is BELOW a reversal level a sell isn't issued. Is that correct? For example looking at today's output (dec 27) Paypal has it appears been held for 45 days with good profit. The close of paypal is 192.01 and the reversal level is 200.67 but a sell isn't issued.ReplyDelete
So what conditions trigger a SELL if it isn't just falling below a reversal level? Thanks and happy holidays!
Hi, Paypal hasn't been held for 45 days. Paypal is in red/pink mode, which is bearish, since its Sell signal 45 trading days ago. And it is 25% below the most recent Sell price(so you could now buy it back 25% cheaper if you want), as is indicated in the P/L% column. Two other articles give more details: https://www.reversallevels.com/p/about_17.html and https://www.reversallevels.com/p/strategies.htmlDelete
Could you add ticker USA to your collection?ReplyDelete
The ticker USA is included in our coverage that subscribers receive. It's not in the free demo portfolio we post every.Delete
Hello Lunatic Trader - Thank you for your free posting.ReplyDelete
I am a longer term investor and intend to use your weekly signals. If I subscribe, how often would I receive updated/current weekly signals?
Hi Scoarm. Subscribers get the latest daily reversal levels every day, and the weekly reversal levels are recalculated and sent out each Saturday morning. Even for longer term investors the daily RL are useful for optimal trade entry. What you get is also explained here: https://www.reversallevels.com/p/subscribe.htmlDelete
Hi, I see reference in a comment to purchasing daily signals less frequently, like once a week. If that is still available, I would be interested, as I can prepare trades on weekends for week ahead, but not daily attention. Thank you.ReplyDelete
Thanks for your question. It is not really feasible to use the daily reversal levels once a week. If a stock you own gives a Sell signal on Monday, but you only get your RevL file on the next weekend days, then you will be selling 6 days too late. Our method is end of day and requires some daily attention (but not sitting in front of monitor all day). Most people enter their orders in the morning, before going to work. People who are unable to spend that little bit of time are very unlikely to benefit from this method. What you can do in that case is use the free daily signals we post on the blog every morning.Delete
Hello Lunatic - New subscriber now and sort of a follow-up to the previous question.ReplyDelete
Do some of your subscribers use it for less frequent trading, say ignoring daily levels and only making moves base upon weekly signals? And would appreciate your thoughts on using such a strategy. Thanks.
Hi scoarm. Welcome. As a new subscriber the first thing to do is study the strategy articles on the subscribers site, in which such questions are covered in more detail. There are specific strategies for trading with a longer term perspective. If reading the articles still leaves you with questions then you can always write us of course. There is a learning curve to go through. Just take your time with it.Delete
Will do, Lunatic, and thank you.Delete
Hey Lunatic - I did not see the July 20 update posted in the Google Shared Drive (now 2pm Wed) - am I missing something?ReplyDelete
There was a data glitch yesterday. The emails went out on their normal time, well before market open.Delete
Hello Lunatic - New subscriber (a few months) and have read your materials; I prefer longer-term (fewer) trades. (1) Under the "Switch" strategy, once you get "double green," daily signals are ignored and the trade is not exited until the Weekly Trend turned pink or red, correct? (2) Would you ever consider entering based on a Weekly "spBuy" (long) when both weekly and daily trends are still Red? (3) Which scenario is more likely before going "double green," that daily is Green and Weekly is not yet Green, or that daily is Red and Weekly is Green? Thanks.ReplyDelete
Hi. Please email us with any questions you have about the subscribers strategies. Those strategies are kept to subscribers only, so we don't discuss them on the public blog. DanDelete
Hi, I can't find explanation of the blue highlights in the "Close" column.Can you advise? Thank you.ReplyDelete
The blue highlights in the Close column show you which stocks/indexes are getting very close to their reversal level. This mean they could give Buy/Sell signal soon. This is also useful to spot stocks that give bullish/bearish continuation. E.g. in a pullbacks stocks tend to drop back to just above their RevL (giving them the blue highlight), and then MoM turns back up and the rally continues. So that where you can look to add to positions (or start a position if you missed the original Buy signal).Delete
Hello, I'm a new subscriber and I'm loving it. Two questions:ReplyDelete
1. regarding The LunaticTrader software, have you ever combined it with the Reversal Levels to see if it would improve the performance of the Reversal Levels? For example, if the LunaticTrader software shows a bearish phase, ignore the buy signal from trading an ETF highly correlated with the S&P 500 (SPY, QQQ, etc.) using the Reversal Level system.
2. The Reversal Levels I read the stats were about 37% winning trades. Do you know the percentage of long trades vs short trades? Do you have stats of how short trades perform in a bear market and how long trades perform in a bull market?
Welcome and thanks for your questions. 1. You can combine reversal levels with anything you might be using already, but it may take some testing. Actually, my indicators came out of an effort to filter the lunar cycles for the best setups. The Earl indicator, which I worked on 10 years ago and became the "MoM" you now find in the tables, was my first step in that direction. See: https://lunatictrader.com/earl-indicators/ 2. The reversal levels are mostly made and described from a long only trading point of view. There is almost always a bull market somewhere, so why make your own life difficult in trying to short stocks? Some people are good at shorting, but that's mainly because they are good at selecting short candidates. If you can do that then using reversal levels for your short entries and exits will help your trading. But many stocks are not good short candidates. So, making stats on how well shorting works on all 3000 stocks we cover is not a very useful exercise. And stats always look at the past. Try "forward" testing, because that's the only good way to test a method. Anyone with software can cook up some good looking backtests. Such systems usually fall apart in forward tests. Overfitting is then the problem. Hope this helps.Delete
Hello, I also read in your Strategy FAQ about how to use the reversal levels (using the multiplier) when the security is trading in a range (not trending). Do you what indicator might be good to know if the stock is trending or not? ATR? Also, in general, do you recommend that we look at the Weekly trend first before we decide to act on the Daily signals? For example, if the Weekly trend is red, we can ignore Daily Buy signals. Is there a reason why you don't include this as part of the Strategy #1 (Basic Strategy), since you have commented somewhere else (in the weekly market commentary) that we should pay attention to the Weekly trend and always trade with the Weekly trend? Thank you for your time.Delete
Hi. For specific questions about the subscribers' strategies you better email us, because those belong to the paid materials, so we don't discuss specifics in the public domain.Delete
Just in general. There are no "shoulds" in using reversal levels. The decision to take only Buy signals when weekly trend is green, or take them regardless of weekly Tr, depends on your risk profile and overall game plane. If you want to trade with low risk then you focus on participating in bull markets and stay out when trend is red. But if you are into shorter term swing trading then you can negate the weekly Tr.
Why is this not included in the Basic strategy? Because the basic strategy only tries to explain the basics, and then other considerations are explained in separate articles, which are things you can add to refine your own approach.
How do we know if a stock is trending or not? Basically we don't know. Maybe a stock has been trending very nicely for over a month, but it could have stopped trending two days ago and we wouldn't know it until several weeks later, as we would then notice that it has gone nowhere for weeks. If there was an indicator that tells us in real time when stocks are trending, then trading would become very easy. We just stay on the beach and come back when a trend is starting a trend and go along with it.
So there is no such thing. That's why we take chances and we cut out the Buy signals that do not give any trending move, which automatically leaves us with the trades that do keep moving. As we do that we develop the habit of taking small losses early and letting the winners run. Once this is routine the other strategy elements will also fall into place too. That's why the basic strategy is first step and then you can add elements to grow in the direction you want to go with your trading (short term, swing, long term, shorting,....). So it's like different building blocks. Your experience with a certain method will also grow and that becomes a building block in its own right. It's a journey.