Welcome to the new and improved Fulcrum Shift Trading Advisory blog

Fulcrum Shift Matrix White Paper

The Fulcrum Matrix® is an Excel based data mining application which profiles open-close relationships using a completely unique approach in an attempt to optimize trade entries regardless of the time frame one wishes to trade or time frame one wishes to hold the trade. Traditional technical analysis is not used in the final analysis as this is strictly a statistical or quantitative tool to refine ones entries.

The Challenge

 

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aps, in the traditional sense of trading are usually defined as an opening price which exceeds the previous day’s high or an opening price which opens below the previous day’s low. How then, do we do address a U.I. (underlying instrument) which, for example, were to have a hypothetical daily range of 6 points trading from  142-148, it then closes at a price of say 146, only to open the next day at 143? Once again the traditional technical analysis definition would not define this as a true gap given the previous days high and low were not breached by the current opening price. The Fulcrum Matrix® addresses this shortcoming which provides the trader, investor or institutional money manager definitive probable outcomes when such “intra gaps” occur, which by the way are far more frequent than the traditional gap (opening above yesterdays high or below yesterdays low). It of course also models the traditional definition of gaps as well. Using the Fulcrum Matrix® and its rules, a gap or “intra gap” (any change in price on the open relative to the previous day’s close) can technically be as minimal as .01. Generally speaking, something as minimal as a .01 gap open is not of real concern when considering initiating a trade but let’s return to the above example and assume we are analysing a stock which we are considering for a trade or investment. We will call the stock XYZ. A previous day’s range of 6 points would in most cases be considered substantial and closing at 146 is obviously near the upper end of the day’s range.  How then, could one capitalize on the “intra gap” open the following morning? Whether your opinion were that the stock has further upside potential or one which is forecasting a drop in price from these current levels, would it not be beneficial to know the statistics behind such a close -open price relationship prior to committing your hard earned (or clients)capital?

The Solution

 

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sing a process which sub-divides the previous day’s range, the Fulcrum Matrix® introduces a hybrid LCD or “Lowest Common Denominator” whereby the next day’s opening price must fall within one of those defined ranges. The LCD is applied in a uniform approach to all historical data for any particular underlying instrument and the following days open price is analyzed within the context of which range it opens within. Statistical close-open “intra gap” analysis is now possible over a large data set which now can quantitatively guide you in determining probable outcomes and optimal entry points or ranges in which to execute your trade and or stop loss for an existing position.

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More information and screenshots will follow along with a number of 5 minute web tutorials on exactly how to use this incredibly powerful application This application is part of a suite of other applications all developed in Excel. For any additional information or to have the entire white paper sent to you, you can contact me directly at atlus1432@cogeco.ca or through the links provided via this blog.

Fulcrum Shift Trading

“The ONLY thing in trading you can control is how much you are willing to risk”