ActiveTrader 2013-01 | Google Trends [Rev.A] by Eugene

Google Trends: Composite Sentiment Index system (Revised)

Note: after the magazine publication, Google has considerably changed the way Google Trends are calculated. Consequently, old rules no longer apply. We had to adjust the strategy to the new calculation.

This system uses Google Trends for buy/sell signals. For background and theory, see original magazine article: Google Trend Sentiment Systems.

System rules

  1. Buy at stop next bar at the 5-week highest high price if Google Trends filter is bullish (trend entry).

  2. Buy at market next bar if the Low price has been declining for 6 weekly bars in a row or more if Google Trends filter is bearish (counter-trend entry).

  3. Sell trend position at stop next bar at the 5-week lowest low price if Google Trends filter is bullish.

  4. Sell counter-trend position at market next nar if the High price has been rising for 3 weekly bars in a row or more and Google Trends filter is bearish.

 

Google Trend filter composition rules

This equal-weighted index is built of four “bearish” search keywords: “Roubini”, “stock market crash”, “recession” and “unemployment”. It is considered valid when its value is greater than 0.

  • Index is bullish: by default i.e. no unusual interest to the bearish keywords. The stock market is considered intrinsically bullish.

  • Index is bearish: composite Google Trend rank value for the current week is above its own 10-week simple moving average, indicating increasing interest to the bearish keywords.

Author: Eugene
Category: Fundamentals
Creation Date: 3/14/2014
Licence: Freeware
Availability: Globally
Instructions for Script Download
  1. In Wealth-Lab client software, open the Strategy Explorer (Ctrl+O)
  2. Click the "Download..." button
  3. Click "Begin Download"