Answers to Frequently Asked Questions (2025 Update)

What is Balance Trading Blog?

Balance Trading Blog is my trading notebook. It's a place for me to record my thoughts, ideas, and long-term (weeks to months) trades.  I'm sharing it with anyone who cares to read it.  Please kindly note that my notes, thoughts, and ideas are not trading recommendations or investment advice. They are simply notes, thoughts, and observations of an x-aerospace engineer who changed his career in 1997 and became a full-time trader who trades for a living.

I retired in December 2024.  

What is SGS?

SGS is a proprietary mathematical market timer designed for long-term trend following over weeks to months. Unlike price-based timers, SGS operates as a smoothed and normalized measure, aggregating the difference between new highs and new lows across approximately 4,000 liquid stocks and ETFs traded on the NYSE and NASDAQ. This calculation is performed for five distinct timeframes: daily, weekly, monthly, quarterly, and yearly.

A new SGS value is calculated daily shortly after market close. However, to minimize the impact of market noise and reduce whipsaws, only the SGS value calculated on Fridays is used to determine its status.

The SGS status is defined as follows:

• LONG: If the Friday SGS value is greater than 0.
• SHORT: If the Friday SGS value is less than -200.
• NEUTRAL: If the Friday SGS value falls between 0 and -200.

What is SGS-ST (short-term)?

SGS-ST is a proprietary mathematical market timer designed for short-term trend following, operating over timeframes ranging from hours to days. Like SGS, the SGS-ST status can be long, short, or neutral. However, SGS-ST includes additional flexibility, allowing it to shift from long to neutral in the event of an overbought condition or from short to neutral in the event of an oversold condition.

The status of SGS-ST is determined using two key factors:

1. Total Area: The cumulative area, measured in price-time, between the 13-hour EMA (Exponential Moving Average) and the 20-hour SMA (Simple Moving Average) of the S&P 500 (SPX).
2. Growth Rate: The rate of change in this area, expressed in price-time per hour.

SGS-ST values are calculated hourly during regular trading hours (9:30 AM to 4:00 PM ET). Its status is updated based on the most recent hourly calculation.