May 7, 2024
Understanding Score: The Game Plan
Score values can be negative or positive.
Positive Score: We’ve climbed from the open and up from the intraday low.
Negative Score: We’ve dropped from the open and from the intraday high.
Here’s how to play each side:
- Bulls:
- Negative Score: Reverse and charge higher!
- Positive Score: Keep the momentum and soar even higher, but it’s riskier—proceed with caution!
- Bears:
- Negative Score: Keep diving lower, but it’s risky—brace yourself for possible losses!
- Positive Score: Reverse course and drop!
On a typical trading day, it’s quite rare to see SPY or QQQ hit a score of +4 or -4 without a reversal.
For alerts with a score of +/- 4, you’re only getting a 100% return if we drop/gain another dollar or more, which is rare. Trading a bear alert with a score of -4 is high risk and low return. The same goes for a bull alert with a score of +4.
It’s more likely the price action will reverse.
The score is all about risk/reward. If the score matches (negative for bears, positive for bulls) and the value is more than -4 or +4, then it’s all risk and no reward.
On high mode (trend) days, we only even try for reversals at scores of +/- 10.