Friday, December 09, 2005

Mailbag: Running Alert Descriptions

Here is a recent question we received via email that at first glance seemed simple, but it's a question that goes to "what's under the hood" at Trade-Ideas. The answer describes the way in which we use statistical analysis and calculate our results.

When looking at TI, what does it mean in the description when it says, "Running up +.41 in 21 minutes 6 seconds?" Does it mean it took 21 minutes 6 seconds to go up 41 cents? If so, why the [seemingly] random times?

The Running Up/Down confirmed alerts actually use multiple time frames. This is similar to our pullback alerts, but we look at several possible messages. We ask, for example,

"Is it more interesting that this stock went up $0.40 in 5 minutes, or that it went up $0.60 in 10 minutes?"

We use the Black-Scholes formulas to choose one time frame over another. [Ed., Note: The previous link takes the reader to our Jerry Maguire-like manifesto on converting the data we receive into valuable real-time insight - an interesting read and one of the first publications written at Trade-Ideas - before any of the marketing copy] And we use volume, as our primary way to break up the day into time frames. The other running alerts work on a smaller time frame. In this case the specific times we are looking at are often based when specific events in the market happened, similar to the pullback alerts.

In other words Trade-Ideas looks at every stock and compares it to itself. It then lets you know when something unusual happens. That unusual can mean different things for different stocks. As we do analysis in real-time it gives you the significant time frame for that move in the message. For one stock that could be 1 dollar in 20 minutes while for another it could mean 10 cents in 5 minutes - depends on volatility, range and volume: the three key ingredients from which the majority of our indicators are derived.

We answer many questions in our "unofficial" Support Forum as well. Found here.

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