Tuesday, April 17, 2007

Trade-Ideas Releases Beta of v2.1 with Plenty of New Features

Spring, despite the ugly Nor'easter's effect on baseball's schedule, is sprung. We celebrate with the release of a new BETA version and upgrade called Trade Ideas PRO v2.1.


We reward readers of this blog with a special invitation to beta-test Trade-Ideas Pro Version 2.1 ahead of other subscribers and its formal release sometime in May. It is our intention to show our gratitude for your support and use of Trade-Ideas.

October 2006 marked the debut of version 2.0 - that makes this release one of the longest spells between versions.

New Features of 2.1

The major improvements include:

  • Added Exclude Lists and Single Symbols to the configuration window
    • Like the strategy but absolutely do not want to trade a particular stock(s) or sector? Make a list of the culprits and banish them from appearing in the alert window
    • And there is an easy way to look at alerts for a single symbol
  • Added Flip option to the configuration window
    • The flip feature switches between a bullish strategy and a bearish strategy in one click
    • For example, assume you are looking at new 7 day highs, which are at least 10% above their VWAP. When you click flip, the window will show you stocks which are making new 7 day lows and are trading at least 10% below their VWAP. Some items don't change. If you are looking for block prints in stocks which are in a consolidation pattern of at least 7 days, the flip feature will point you back to the same strategy

  • Several new fields were added to the Configure Odds Maker panel - a picture is worth a thousand words in this case:

    • Note the daily summary of how the strategy fared. The first number is that day's net winnings over the number of trades made that day. The daily summary reveals how well and what days the strategy performed best over the backtested period
    • The daily summary answers these questions, "Are the positive results evenly distributed across the period? Negative for all but one monstrously good day? stacked in the more recent days or more in the past?"
    • Showing the daily summary permits an evaluation of the particular strategy is trending in relation to the market by determining where the positive days are distributed. For example a strategy with positive trading days at the recent end of the backtesting period might suggest the strategy is beginning to work and could continue
The Odds Maker is available for free (for a total of 10 uses) but only to people who have signed up for the regular service. So in order to try The Odds Maker for free you must buy a one month subscription.

  • Users of Trade-Ideas Pro (TI Pro) are always encouraged to download the latest version of the application in order to benefit for our latest improvements. This is unrelated to any new alerts or filters we may add from time to time. Downloading the latest version of the application is necessary to benefit from other aspects of the service, like the visual enhancements described above and background "plumbing" maintenance that keeps the service as fast as possible.

  • No matter which platform you use (e.g., browser, TI Pro), you can always access any new alerts and/or filters we add. These are automatic to subscribers because both applications make a "call" to our servers for the latest list whenever someone interacts with our alert window settings via 'Configure'. When we add such alerts or filters, you receive them instantly. Note that The Odds Maker, however, is a feature found only in TI Pro.

  • This beta version lacks additional improvements and features that the final release will include. This is by design since we plan to include user feedback and solve any issues that may appear with heavier traffic and use. No flaws appear in our own testing of this beta release. However, should you find anything unusual (e.g., a bad print), please let us know at info at trade-ideas.com. We'll also take any praise there too!

Thursday, April 12, 2007

Stocks Up Exactly 8 Days

From TickerSense yesterday:
"This is just the 64th time since 1900 that the DJIA has been up 8 days in a row ... The last time the Index had an 8-day winning streak was in March of 2002."
I'm not suggesting a correlation between the DJIA and the following lists of stocks, but to carry a theme, here is a list of NYSE & NASDAQ stocks up exactly 8 days (this list refreshes daily after the close):

Stocks Up Exactly 8 Days

Source: Custom Scan from the Trade-Ideas Stock Research Center
Embed the Stock Screener on Your Blog or Web Page

Wednesday, April 04, 2007

2 Trader Takeaways from February's Market Drop

The market gapped down and fell more than 400 points on February 27, 2007 marking the largest drop since the September 2001 attacks. While the press and pundits analyzed the fall from many angles, there's been a paucity of comments regarding lessons learned from a traders' perspective. Here's our take that combines risk management technology and good old fashion trading plan advice:
  • Volatility plays havoc on backtested strategies that are used "rolling forward" - find a backtesting tool that can account for volatility or keep tight stops on your trades
  • If your P&L goes red for 3 consecutive days - take a breather from trading and launch an investigation on what's gone wrong: your plan, your emotional state/judgements, or behavior are prime suspects that are guilty until proven innocent

Imagine a nice placid pond with hardly a ripple on a calm, quiet spring morning ... and then all of a sudden taking a boulder and throwing it right in for a big splash.

In essence that is what happened on February 27. Prior to that day, the market was in a fairly normalized uptrend:

"The steepness of the market's drop, as well as its global breadth, signaled a possible correction after a long period of stable and steadily rising stock markets that had not been shaken by such a volatile day of trading in several years."
Stocks Have Worst Day Since 9/11 Attacks, AP/Yahoo News
When the markets experience such a day - all bets were off with regard to trendlines and what can happen next. Why? Days like these impact traders significantly because trading systems that use previous day(s) behavior in their screens and other set-up criteria immediately stop functioning and force a trader to go back to the drawing board.

Model for Volatility When Backtesting

Figure 1.0 illustrates several points of extreme volatility on a daily chart from January 9 to April 3rd of this year. This type of volatility is analogous to trying to surf the biggest waves on the planet - to stay afloat you better know what you are doing. Look at the span that covers the month of March. Our Odds Maker analysis showed a month where the predictability of systems was virtually non existent.

March, looking back, would have been a great time to sit and watch. If you can't read the tea leaves yourself, read the daily musings of TraderMike and follow his lead - often times its right on the money (look at his useful Trend Table at the bottom).

Even with TraderMike's crystal ball, it's still crucial to manage risk no matter what. In the face of very high volatility it is better to err on the side of caution and keep stops very tight - or even better - know the Volume Weighted Volatility for the stocks you are trading (see AAPL's VWV). To assist traders with the kind of volatility March gave us, we introduce additions to The Odds Maker which allows traders to enter any type of stop into a trading system. See the middle column "Profit Target/Stop Loss" in Figure 2.0 for a picture of what the new Odds Maker configuration menu looks like. (This new capability in The Odds Maker arrives 'shortly'.)

Three Strikes and You're Out

Another rule that we suggest is the consecutive days down rule. If you find that you are down 3 days in a row in your trading, it is time to take a day off and a serious look at where the problem could be hiding. Sometimes taking that little time off is what is really needed to get a trader off of the losing path and back on the right track. When losing days pile on, the emotions tend to get the better of us. It is better to know that ahead of time and have a course of action.

Kenny Rogers appropriately sang the lyrics of, “You better know when to hold 'em, know when to fold 'em, know when to walk away and know when to run”. Follow age-old trading plan rules and use innovative risk management technology - the combination will protect you from bad habits and bad trading situations.