Let’s Kick Off STP Algo Trader!

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Welcome to the first issue of Signal Trader Pro Algo Trader!

Yes, we published an introduction to our service last week.

THIS issue, however, is where we really kick off this new publication. The goal of this publication is to share insights from our proprietary software TRADING system – Signal Trader Pro.

Every Tuesday, we will share insights that are being driven by the data from the system. For our paid subscribers, we will also be giving a brief position highlight.

On Wednesday, we will be sharing the STP "User Blog." This is where one of our users shares their experience with the system. We will welcome any user submissions for this letter in the future.

Every Thursday, we will share a thorough review of a recent signal. We will go through a play-by-play analysis of why the system chose the idea and how it played out. Paid subscribers will also receive a brief signal highlight.

Finally, on Saturdays, we will publish the STP Algo Trader Master Series. This is where we go through each of the individual aspects of our system and explain them in detail.

Feel free to share any feedback or comments at any time. Either at the bottom of our web page or at [email protected]

Again, welcome to Signal Trader Pro Algo Trader. We look forward to making YOU money!

The Market is Signaling a RALLY

Our software – Signal Trader Pro – is based on our three decades of trading the stock market.

Over those decades, we refined a set of characteristics that could produce winning trades.

When we say "winning" trades, we start by looking for a very high probability of success or "hit rate."

Many traders don’t emphasize this and focus on making their winners win much more than their losers lose them. The popular view is that it is difficult (or impossible) to win on your trades the majority of the time.

The popular view is 100% wrong.

We have demonstrated for years that we can identify a group of characteristics that can identify high-probability bets. Over the last half-decade, our system has produced winning trades around 70% of the time.

What is interesting about the system is that it can generate individual winning trades and give us insight into what is happening in the stock market.

Recently, the system generated an interesting signal about the current stock market.

Our system works by looking at fifteen different characteristics across technical and fundamental analysis. This creates a "15" point scoring system, with a score of "15" having the highest probability of winning.

Stocks enter into our system when they become oversold.

We measure this by looking at the "relative strength index" or "RSI." This technical indicator measures how overbought or oversold a stock is at the time.

This measure goes from 0 to 100.

It measures the velocity of the stock price, how far it has moved, and how quickly.

It is also a great measure of investor enthusiasm.

An RSI above "70" shows investors have extremely positive enthusiasm. Usually, this means that the stock is ready to take a break.

An RSI below "30" shows investors have extreme negative enthusiasm or fear. This is a powerful signal indicating that a rally is soon.

One of our system's "15" points is when a stock trades below this "30" level and then back above it. This indicates that the shares have recently experienced extreme pessimism but have begun to recover.

The RSI "buy" signal is one of the six points assigned to technical indicators in our system.

The other nine points have to do with the fundamentals of the company. The system focuses on finding consistent growth, companies that beat numbers and see rising earnings revisions.

A score of "15" indicates that we are seeing a "winning" stock and company with a strong share price and operational performance history that has recently been oversold.

Our system will generate a “buy” signal – which we call an “Entry Signal” – when one of these winning stocks generates that RSI “buy” signal.

Before that happens, however, we first generate a “Watchlist” signal. This tells us that a winning stock has recently traded below the 30 RSI level.

Think of it as great stocks that have become deeply oversold but have not started to recover.

This can be a great place to look for potential positions.

The current model we use with the system has been running since July 2024. In it, we monitor the number of outstanding "Watchlist " signals.

Here is a chart showing that data…

The chart shows that we have seen a significant spike in the number of "Watchlist" signals as the stock market sells off.

What is more interesting to us is when these “Watchlist” signals become “Entry Signals.”

This means that not only have many stocks become oversold, but now they have also begun to recover from that oversold position.

Here is a chart showing the same date for the open number of “Entry Signals” …

Interestingly, a significant increase in "Entry Signals" has indicated a rally in the stock market within a week. We saw such a big increase occur just last week when the stock market rallied on Wednesday.

Does this mean that this sell-off is over?

There are no guarantees in life or the stock market, but our system gives us high-probability bets.

We think it is giving us a unique insight into one of these bets right now!

Click here for more information and to sign up for the market’s best algorithmic trading platform, Signal Trader Pro.