MCV Relative Strength

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RELATIVE STRENGTH

The MC VALUE is a single number in a bounded scale. This feature provides a quick “relative strength” comparison to other like markets for spread or paired opportunities.

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Every market has an MCV and that value is bounded in the MCV Table scale. The MCV technical rank allows a trader to quickly identify the markets that are technically bid or offered in a sector and select strategies that will work best for each market individually, by default creating a technically paired opportunity.

  • Note: the MCV is not a “signal” and does not indicate a spread should be initiated that establishes a long position in a positive MCV market and short in a negative MCV market. It can however be used to accept sell signals in the markets of a sector that have weaker MCV and buy signals in markets with a stronger MCV.

 

 

MCV Size Management

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SIZE MANAGEMENT

The MCV can be used for size management to gauge the amount of leverage used for a signal.

For example assuming all System or Fundamental strategy signals are accepted, size can be increased or decreased depending on the system signals confluence with the MCV.

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The one thing we know for sure about the markets is that we don’t know what they are going to do. By accepting all signals but using the MCV as a size management tool, your strategies can naturally leverage up when they are aligned with the MCV.

For discretionary traders when your market bias is in line with the MCV you can step out a little more and when it is not in alignment, step back and trade more conservatively with smaller size.

MCV DIS

The edge discretionary trading has over machine signals is the “gut” feel to anticipate an opportunity. The MCV can be used as a “reality check” to keep your leverage and risk in line with the probabilities and not what you “think” “should” happen.

 

MCV Strategy Selection

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STRATEGY SELECTION

The MCV is an objective Technical Indicator, which can be used as a criteria filter for confluence with a fundamental position, a technical system signal or discretionary market bias.

For example, in its most basic form a SELL SIGNAL would only be accepted when the MCV is negative and a BUY SIGNAL only when the MCV is positive.

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This does not mean that negative system or fundamental signal will not “work” when the markets technical state or MCV is in a positive position, it just means that the chances are lower that it will and the follow through potential of the signal is decreased.

For a discretionary trader, if you have a positive outlook on the market but the MCV is negative you should be more conservative and selective in your trades and avoid “pressing” the long side with the understanding that today the MCV bias is against you and if you have profits from any longs you should take them.

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Note: Markets are dynamic and are shifting from one technical state to the next. By keeping signal acceptance in line with the MCV the chance of success is improved. This does not mean that signals counter to this bias cannot be profitable and no doubt most major “reversal” signals are “counter” to the current technical state, however they do occur less frequently.