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Understanding when to trade
Algorithm Science
Trading Strategy Discovery
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Stocks trade either at signal, at open or at close. You can tell from the algorithm acronym where the buy or sell will trade. xxS algorithms trade "at signal" meaning they buy or sell at the moment the signal arrives. Its easy to implement with a stop or limit order entered either at the open (for xOS algorithms) or prior to it (for xCS, xHS, xLS algorithms). If the buy or sell point is reached the stock will buy or sell automatically.
If the stock price opens within your buy/sell point criteria (for xCS, xHS and xLS algorithms) you will need to buy or sell at the open. The algorithms do not take after-hours price action into consideration.
xxC algorithms buy or sell at the close on the day of the signal. For most trading platforms this is a manual process.
xxO algorithms buy or sell at the open on the day after the signal. You simply enter an order after the close at any time prior to the open.
You should ignore superfluous signals, for example if you are long the stock (or out if you are shorting only), you can ignore buy signals.
If the stock price opens within your buy/sell point criteria (for xCS, xHS and xLS algorithms) you will need to buy or sell at the open. The algorithms do not take after-hours price action into consideration.
xxC algorithms buy or sell at the close on the day of the signal. For most trading platforms this is a manual process.
xxO algorithms buy or sell at the open on the day after the signal. You simply enter an order after the close at any time prior to the open.
You should ignore superfluous signals, for example if you are long the stock (or out if you are shorting only), you can ignore buy signals.