Trading Delay

Updated 07/25/14

You can select the length of the delay between signal tic mark on a FastTrack chart and day the indicated trade is executed on the J and 2 Charts. Change the "Trading Delay" field as shown in the lower center of the illustration to the right.

For mutual funds (except Fidelity Selects), reality is a one day trading delay.

Setting the Trading Delay

1. In the evening you get a sell signal from your FastTrack indicator.
2. The next morning you call the mutual fund's 800 number to make the trade.
3. The mutual fund company executes your trade at the closing price.

For stocks, " Trading Delay" does not reflect the return of real trading, which would be made at some intraday price. However, if you were to place a limit order at the prior day's closing price, then it would likely be filled. This is equivalent to a trading delay of zero.

You can change the trading delay to suit your trading style by right-clicking the label (in the illustration the small white words, "tot return" and "rel stren") to display the Parameter Set dialog. This has practical applications. See AccuTrack below

Change the Trading Delay

Show the Parameters dialog box by clicking on the chart and pressing <U> or right-clicking on the chart name and choosing "Parameters" from the pop-up menu. If you typically make decisions based on today's trading and can call in your trade before the market closes, then set both BUY and SELL delay to 0. If you believe that your special insight will lead to a decision a day sooner than the signal, then set the delay to -1 (yes, a negative number).

Comparison to Weekly Charting

Weekly charting has a lot of followers, A signal on Monday may be reversed by Friday preventing a whipsaw. Unfortunately, as the week goes on, weekly trading loses its value. With FastTrack's trade delay, every signal gets 5-trading days to reverse itself. This style of trading is more effective than waiting till the following Monday to make trades from Friday's signals.

AccuTrack Practical Application

Unlike timing indicators, AccuTrack is not highly sensitive to trading delays. Setting the trading delay to a modest value, like 5, can reduce whipsaws without sacrificing return in many cases. This is another argument for the relative strength trading . . . you have longer to make up your mind.

Can I wait a while to see if it's a good signal?

Not every investor will make his decision to trade immediately. This can have a dramatic impact on the success of your trading strategy. Conservative investments are forgiving of delays. Since they move more slowly, you can take more time to make your decision.

Moving average (V Chart and P Chart) is particularly sensitive to trading delays because its signals are generated by breaking a trend. Usually half the move will happen very quickly after a moving average's signal. Don't delay taking a moving average signal . . . or don't use moving averages.

Signals generated by MACD are less sensitive to trading delays. One of the most common complaints about MACD is that it gives the right signal too early. Trading delays may be quite useful.

FastTrack will show you the impact of decision delays so you can shape your investing strategies accordingly.

The Impact of Trading Delay on the J and 2 Charts

The J and 2 charts evaluate the success or failure of a set of indicator signals. The trading delay has a substantial impact, often positive - on the success of a signal set. For more details see the discussion on signals.

FTRebalance

Within FTRebalance, you can use trade delays in backtesting, but there is no support for real-time trade delays. When you click the Run button you get the recommended changes including the most recent closing prices. If you impose a trade delay and modify the models trading decisions,  this is a manual exercise without Model assistance.