Full Transparency
Understand exactly how our rule-based signals are generated. No black boxes, no hidden algorithms.
Our Methodology
GhostNet uses transparent, rule-based technical analysis to generate daily trading signals. Our approach combines multiple technical indicators to identify potential trading opportunities.
Simple Moving Averages (SMA)
We use 20-day and 50-day SMAs to identify trend direction. Price above both SMAs suggests bullish momentum, while price below suggests bearish momentum.
Relative Strength Index (RSI)
14-day RSI helps identify overbought (above 70) and oversold (below 30) conditions. We use this for mean-reversion signals and momentum confirmation.
Average True Range (ATR)
14-day ATR measures volatility and helps us calculate appropriate stop-loss and take-profit levels based on each stock's typical price movement.
Bollinger Bands
20-day Bollinger Bands (2 standard deviations) help identify breakout opportunities and extreme price movements relative to recent volatility.
Signal Generation Process
1. Data Collection
We fetch daily OHLCV (Open, High, Low, Close, Volume) data from Alpha Vantage for our universe of stocks. Data is cached and refreshed to ensure accuracy.
2. Indicator Calculation
We calculate all technical indicators using the latest 100 days of price data. This provides enough history for accurate indicator values while staying responsive to recent price action.
3. Micro-Signal Scoring
We generate four types of micro-signals: trend (SMA crossovers), momentum (RSI strength), mean reversion (RSI extremes), and breakout (Bollinger Band touches). Each micro-signal contributes to an overall score.
4. Direction & Confidence
The combined score determines direction: scores above +0.3 suggest long positions, below -0.3 suggest short positions, and between -0.3 and +0.3 suggest staying flat. Confidence is calculated based on score magnitude and normalized by volatility.
5. Risk Parameters
Entry zones are calculated as ±0.5 ATR from the current price. Stop-loss is set at 1.5 ATR from entry, and take-profit at 2.5 ATR, providing a favorable risk-reward ratio of approximately 1:1.67.
Known Limitations
These are experimental, rule-based guesses—not investment advice. Our signals have several important limitations:
- Technical analysis alone cannot predict future price movements with certainty
- Past performance of these signals is not indicative of future results
- Market conditions, news events, and fundamentals are not considered
- Signals may generate false positives and false negatives
- Transaction costs, slippage, and execution timing are not factored in
- No backtesting results are provided (yet)