Reverse Signals


Q: What is Reverse Signals™?
A: Reverse Signals™ is a registered trademark of Reverse Signals, Inc. provides online access to the results of the Reverse Signals' trading solution. For registered users Reverse Signals™ will show either a “buy” or a “sell” signal at all times, unless data quality of particular ticker symbol is in question or it's been discontinued. Active subscribers can view the latest trading signals' reversal date. Currently over 5,000 stocks registered at NASDAQ, NYSE Amex Equities and NYSE stocks exchange and over 15,000 mutual funds are included in the analysis. Signals shown are calculated daily for each stock and mutual fund included in the study during a default period of nine years, or from the symbols inclusion date. Email updates are also available.

Q: What is the objective of the Reverse Signals™?
A: The main objective of Reverse Signals' trading solution is to produce consistent and measurable results, higher than S&P500 index and “buy and hold” investment strategy, that can help you increase your investment returns and reduce your risk exposure, while limiting the amount of trade transactions.

The conventional wisdom that a well-diversified portfolio shields investors from market disasters did not work during the bear market of 2007-2009 that wiped out $6 trillion worth of wealth in the U.S. alone. Only “reverse signaled” portfolio can provide that extra defense mechanism to protect your investments against such rapid downfalls the stock market experienced during the beginning and the end of the last decade. The results show that Reverse Signals™ consistently outperforms the stock market each and every year with measurable results.

Q: Why keeping a low number of buy and sell transactions, is considered good?
A: Keeping the number of transactions low is one of the most important characteristics of a trading strategy, next to the profit. Achieving consistent and steady long term gain by high-frequency trading in unstable or declining markets, we have experienced twice during the last decade, is an illusion considering in addition that the time required, higher taxes and risk, commissions and potential penalties could substantially reduce your investments.

Because the number of buy and sell transactions is kept at a minimum with the Reverse Signals' trading solution, the investment cost is considerably lowered. Mutual funds often limit the number of transactions over certain time period. Therefore, it is imperative to make the best of these limitations by knowing when to buy or sell. Reverse Signals™ provides results, which can be relied upon to maximize your gain, while minimizing the number of trade transactions required to do so.

Q: What makes Reverse Signals™ different?
A: Reverse Signals™ produces buy and sell trading signals as a result of a trading solution designed by the principles of cybernetics and proprietary trading techniques created for, owned and operated by Reverse Signals, Inc. These proprietary trading techniques, formally known as “Reverse Signals Trading”, are applied to determine superior buy and sell decision points to help increase your investment returns and reduce your risk exposure, and not to predict future stock market prices.

While at different phases of the study, artificial intelligence methods including neural networks have been used to produce the trade reversal points, there are a number of published and proprietary data analysis concepts and patterns simply used for data filtering, cleansing, normalization and optimization process during the Reverse Signals™ analysis.

Q: Why analyzing nine years of stock market data?
A: As a result of numerous and intensive back-testing studies with data since 1975, it was concluded that by analyzing a period of nine years of stock market data, prior to the last day of trading, Reverse Signals™ produces returns with optimal gain to risk ratio with a minimum number of buy and sell transactions.

Q: Why Reverse Signals™ operates with adjusted-closing prices?
A: When examining historical returns, the adjusted-closing price gives an accurate representation of the stock or fund value beyond the simple market price. The adjusted-closing price takes into consideration, all corporate actions affecting the value of stock for a particular day, such as stock splits, dividends distributions and rights offerings.

Q: Are the character of the stock market prices random?
A: This is the fundamental question to ask when evaluating any trading system or investment strategy. There have been a number of studies conducted with the intent of proving that stock market prices are predictable and oppose the century old conclusion that “the mathematical expectation of the speculator is zero”. Predictability is not what our “Reverse Signals Trading” solution is designed to explore.

Reverse Signals™ is designed and implemented with the realization that for the purpose of practical exploit stock prices move randomly. Good reading material about the subject of investing can be found in the book “A Random Walk Down Wall Street”, by Burton Malkiel and for more curious minds in the book “A Non-Random Walk Down Wall Street”, by Andrew W. Lo and A. Craig MacKinlay.

Q: Who created Reverse Signals trading solution?
A: After receiving a M.Sc. in Systems Automation, the visionary and architect of Reverse Signals worked as a researcher with a large computer manufacturer. Since 2000, he has been providing IT consulting services for a number of S&P 500, private and government entities across a variety of industries. A non-inclusive list of clients include AOL/Time Warner, US Department of Treasury, Citigroup, HSBC Bank, Coca-Cola, Aegon/TransAmerica, IBM, Allstate Insurance, Exelon/Commonwealth Edison, Wal-Mart, Safeway, Nissan North America, Lenovo, Alticor, USAA Insurance, Kana Software, Nationwide Insurance, State Farm Insurance, PFPC Global Fund Services, Household International, Cerner Software, Louis Dreyfus.

Q: How do I know Reverse Signals' past performance is real?
A: All subscribers are able to view the last trade dates and quotes of their portfolio picks and monitor the performance of individual stocks and mutual funds to verify the accuracy of our returns and transactions amount.

Q: How do I make changes to my subscription?
A: You have complete control over your subscription at all times. You can cancel your subscription through your account at PayPal. All payments are processed by PayPal secure payments. Reverses Signals, Inc. does not collect any credit card information, customer name or mailing address.

Q: What is the refund policy?
A: With the subscription and buy now options there are no refunds on charges made. If you decide to cancel a subscription PayPal will immediately stop all future scheduled payments for this subscription.

Q: How do I get trading signals for my stocks and mutual funds?
A: Sign up and create custom portfolio with your stocks and mutual funds. Reverse Signals™ provides separate web pages for stocks and mutual funds. From the home page menu select “Stocks” or “Funds”, type the symbol or multiple symbols separated by a space and press “Get Results”. Active subscribers can also get last trading reversal date and email trading updates if this option is enabled. Portfolio entries are updated daily.

When you sign in and press 'Show Porfolio' on the left side of the portfolio window 'Del' button will be shown. Select symbols from the input box at the top and use a 'Add' button to add symbols to your portfolio. You can use the 'Add' and 'Del' buttons to modify your portfolio at any time. You can add up to 50 symbols if you are an active subscriber and view signals for symbols up to the amount of your subscription type.

From the home page you can select, view and compare performance results of Reverse Signals™ trading with some famous investors' stock picks, i.e. "reverse signaled" investors' stock picks:

Performance Example

Q: How should I read the results of the Reverse Signals' trading solution?
A: Reverse Signals™ will display the results of each stock or fund requested in a "trading results" window. The annualized investment returns and the number of buy and sell transactions committed are the key for comparison with others' investment strategies. The “Period Owned” shows the percentage of the entire trading period in which the stock or fund was actually owned (bought). The last column shows the last nine days of price fluctuation. For registered members with active subscription "buy" or "sell" signals will be shown in their custom portfolio. Across the very bottom of the results window, it shows the average returns and transactions committed for the selected symbols.

In addition, an overall statistic is presented in another table below your selected results, which shows how the Reverse Signals™ is performing within different stock indexes or fund categories.

Trading Statistics Example

Q: What is the approximate investment gain or loss?
A: Reverse Signals™ results do not include the cost an investor incurs when executing a trade transaction, nor does it consider distribution of dividends during the trading period. However, by considering the data provided in “Trades/Year” and “Period Owned” columns one can easily calculate these costs and thus approximate the total gain or loss of our trading solution within reasonable accuracy.

Q: What does consistent and measurable profit mean?
A: Reverse Signals™ has been back-tested periodically using several decades of historic daily quote price data from over 20,000 stocks and mutual funds. The results showed that Reverse Signals' trading solution consistently outperforms the stock market each and every year and provides positive results, including the periods of the 2000-2002 bear market (S&P500 lost over 47%) and the stock-market decline of 2007-2009 (S&P500 drop 55%) during which major stock indexes and fund categories lost a significant portion of their values, i.e. your money.

Q: What is the meaning of “Period Owned”?
A: The “Period Owned” column shows what percentage of the entire trading period Reverse Signals™ maintained the "buy" signal for a particular ticker symbol, index or a group of funds.

Q: How is the Win-to-Loss Ratio calculated?
A: A ratio of the total number of winning trades to the total number of losing trades: Win-to-Loss Ratio = Winning Trades / Losing Trades

Q: How is the Kelly Ratio calculated?
A: A mathematical formula relating to the long-term growth of capital developed by John Larry Kelly Jr.: Kelly Ratio = W – [(1 – W)/R], where W is the winning probability factor and R is the total positive trade amounts divided by the total negative trade amounts.

Q: How is the system Expectancy calculated?
A: Expectancy is widely used by professionals to evaluate the profitability of a trading system: Expectancy = (Probability of Winning x Average Win) - (Probability of Losing x Average Loss)

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