The Ultimate signal is a mechanical system which aims to determine when a sustained up or down trend has been established. The foundation is a trend following system. However, it will also issue buy and sell signals when conditions are met indicating a market bottom or top.

There will be a BUY signal about 75% of the time.  A SELL signal is issued when the model indicates there is higher risk of a down trend. A SELL signal is like buying insurance, it doesn’t always pay off but it keeps you safer.

There are often a lot of false starts to a down trend with a sharp V bottom after a few days that quickly reverses.  They are usually driven by automatic program trading. A lot of people get scared and sell low just before the sharp upturn.  The model attempts to weed out those traps and not issue a sell signal at every sign of trouble.  There will be times the model will be long and there will be a sustained down trend.  When that happens the model will not generally sell but will ride it out.  I have tested many methods to limit loss such as adding a trailing stop.  In the long run, it hurts performance.  It creates too many false sell signals to make up for the few times it pays off.