Any prediction can fail but if it is combined with well-tested buy-sell rules, the result is much better. Addaptron Software provides predictions of major ETFs prices (Open, High, Low, Close) for the next day. This article describes one of the simplest algorithms to use one-day candle prediction data. The algorithm consists of four simple rules:
- Place Buy Limit order with predicted Low price before the stock market is opened.
- As soon as the Buy Limit order is completed, place Sell Limit order with predicted High price.
- Cancel the order if it is not completed during the first half of the stock market day.
- If the stock market is about to close but the order is not completed, cancel the Sell Limit order and place Sell Market order.
The following charts and tables demonstrate one of the practical examples of described above approach (symbol BOIL).
Predicted and actual prices chart (dark green and red filled candles – predicted, light green and red line candles – actual):
Intraday performance chart (actual prices) for the same period:
The result of using the described algorithm:
The example is based on the following assumptions: 300 shares are used for trading, transaction fee is $10 so that 2 transactions (buy and sell) within day cost $20. Another example (symbol SSO) can be find here