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Explanation of Keybot the Quant Algorithm and the Market Weighting Displayed in the Left Margin

DISCLAIMER: DO NOT INVEST IN ANY STOCKS OR INDEXES MENTIONED ON THIS SITE UNLESS YOU WANT TO LOSE YOUR MONEY. This information is for educational and entertainment purposes only. Consult your financial advisor before making any investment decision.

© 2011-2021. The Keystone Speculator™. All Rights Reserved.

The Keystone Speculator™ separates the stock trading discussed on this site into two groups; the Core Position Trading and the Short-Term Speculative Trading.

The Core Position Trading is 65% of the overall portfolio and the Short-Term Trading is 35%.

The larger 65% Core Position Trading part of the portfolio is traded solely by Keybot the Quant™, Keystone’s proprietary trading algorithm. The status of the core position is constantly displayed in the left margin on this site. The Keybot the Quant algorithm moves thru the year with the smoothest trading line possible, alternating between bull and bear positions (either long or short the market) that maximizes profit while keeping risk at a minimum. Keybot only see's 1's and 0's, so it trades without emotion, and simply flips back and forth from long to short. For any trader looking for a gauge on the bull-bear status of the broad markets at any given time, reference the Keybot the Quant™ status in the left margin. For anyone that wants lower risk, and perhaps does not have a lot of time to trade, or simply prefers to not trade all that often, and is more concerned with a return over a longer period rather than participating in wildly volatile up and down near term speculative market moves, Keybot is an attractive tool to follow but it must be checked daily since it can flips sides on any given day. If Keybot is long, you want to be long; if Keybot is short, you want to be short. 

The 35% Short-Term Speculative Trading part of the portfolio involves trading individual stocks, indexes and ETF’s and takes advantage of positive and negative divergences, stock chart patterns, trend lines, support and resistance and other technical analysis, seasonality and proprietary indicators, as presented on this site daily. These trades are not held long term and are typically shorter term highly speculative and extremely dangerous trades including day trading. These trades provide higher rewards, but, at much higher risk, and may result in much larger losses. Positive divergence trading is knife-catching so very wide scale-ins are required when entering long. Negative divergence trading is top-calling and are short positions best placed with wide scale-ins as well. The good thing about divergences are that they do identify the longer term tops and bottoms in place so even if the trade goes the wrong way, price will typically react as expected over time.  Also keep in mind that the short-term trades may serve as a hedge against the Keybot core position.

As a rule, do not view the markets as a long or short, black and white, proposition only. Diversification is key spreading out stock plays among many different sectors as well as holding both long and short positions at the same time. If you believe the markets are headed south, do not view that as having trades that are 100% on the short side with no longs. Instead, view that as having about 70% of the positions short but maintaining 30% or so long. Everyone has to decide their own risk tolerances. Likewise, if you are very bullish the markets, do not place an all or nothing 100% on the long side, instead, hold about 70% of the positions long but maintain about 20 or 30% of the positions short. For example, if you are bullish overall, perhaps maintain five or six positions long and a couple short. Conversely, if you are bearish the markets, perhaps maintain about five or six short positions with a couple of long plays. Staying diversified with both long and short positions typically insures that something is working for you on any given day and helps lower risk.

The left margin also display's Keystone's overall Portfolio Weighting. This shows the percentage that the overall portfolio is net long, or net short, which includes Keybot and all other ongoing trades. Remember that the weighting can flip quickly since when Keybot flips sides, the net long and net short weighting will instantly flip 65%.

Keybot the Quant identifies the current stock market status.

© 2011-2021. The Keystone Speculator™. All Rights Reserved. No part of this blog or its contents may be reproduced in any fashion without expressed written consent from The Keystone Speculator™.