Using the BASED Trend Signals to Improve Profit Margins

The BASED Trend Signals are a tool with which you can identify trends in the market—on short, intermediate, and long timeframes. The Trend Signals are designed to support your decision making by giving you data-based directions of where the price is likely to go on these timeframes. This article dives into the BASED Trend Signals and how you can use them to improve your decision making—and your profit margin.

BASED Trend Signals—data-based decision making

The Trend Signals are based on our proprietary statistical analysis which takes into account hundreds of thousands of rows of historical and real time data from the markets. The analysis has been automated and optimized for each instrument we cover in the reports. So even though you only see bullish, neutral or bearish each week, that signal is backed by hundreds of thousands of rows of data and has been optimized for that specific asset.

• The short term signals are for one month or less.
• The intermediate term signals are for six months or less.
• The long term signals are for 3 years or less.
• The Buy/Sell Zones are for the next week.

You can use the Trend Signals as your guide on where the price is going on these timeframes. These signals may affect the level of inventory you want to hold, the margins on the prices you quote to your customers, the time you buy or sell your inventory, or the level of hedging you make.

As a rule of thumb, you always want to be positioned with the trend, not against it. If all the Trend Signals are pointing in the same direction, the trend is at its strongest. When all or some of the signals are neutral or conflicting, the overall trend is weaker.

In addition to providing you with a weekly update on the current trends in price, it's worth keeping an eye on the trend changes—from neutral or bearish to bullish and vice versa. Often the best opportunities emerge just as trends change, especially as the intermediate term trends change. Keeping an eye on the trend changes, you will notice new developing trends early on and get to position yourself as soon as the trends start to emerge.

The Trend Signals have been designed to default to safety when the risk of extreme price changes is historically high. This means that the Trend Signals will move to neutral when the odds of a crash are high—guiding you to safety before it's too late. If you suddenly see all the Trend Signals flip from bullish to neutral or bearish, it's best to reduce your risk quickly—and such changes are noted in the report's remarks.

Conclusion

The financial markets exhibit a so-called momentum phenomenon—which essentially means that trends tend to continue. Until they don't. The BASED Trend Signals help you take advantage of the prevailing trends, help you spot new trends as soon as they emerge, and guide you to safety in times of excessive risk. Knowing where the price is likely to go will and acting accordingly will contribute to a higher profit margin.

Financial markets are also chaotic—as we saw in 2020 and 2022—and so from a risk management perspective, it pays to stay flexible and adjust your view as the data changes. This is important since we never know when the next crisis or pandemic may hit—the only thing that is certain is that there will be new crises in the future—but luckily the BASED Trend Signals are designed to help you navigate these challenging markets and stay on the right side of price trends.