C O D I N G T R A D E R. C O M. Stock Sweeper Manual. Version 1.00

Transcription

1 C O D I N G T R A D E R. C O M Stock Sweeper Manual Version 1.00

2 Table of Contents What is Stock Sweeper?... 2 Scanning Algorithms... 4 Installation... 9 Application Layout How to use Stock Sweeper Disclaimer / Disclosure... 20

3 What is Stock Sweeper? Stock Sweeper is a powerful yet user friendly stock screening program which gives you the ability to scan through every stock in your exchange using cutting edge algorithms, alerting you on stocks that fit your investment needs/trading strategies. - Quality Time-tested Trading Algorithms Unlike most stock screening programs which provide dozen of basic technical scans, Stock Sweeper s scanning algorithms are based on time tested strategies such as Breakout and Retracement trading. Leveraging on our proprietary cutting edge trend detection system, these strategies have been enhanced to adapt quicker to the fast changing market which investors/traders now face. - Algorithms re-designed for Stock Markets Most technical indicators were designed for the commodities markets initially and do not suit the stock markets. The algorithms employed by Stock Sweeper have been re-designed specifically for analyzing stocks, taking into account the stock market structure and relationship between stock price and its volume. - Create your Own Scans Stock Sweeper allows you to combine multiple scans together to create your own scanning criteria. Mix and match different scans to find higher winning probability trades which suits your investment/trading needs. - User-Friendly Interface Utilizing a simple table style layout, the program provides you with a one-glance view of all the short-listed stocks, allowing you to better focus on analyzing the stocks. - For Investors and Traders We understand that most folks do not actively trade stocks and have no clues of what stocks are available except for the few over-hyped stocks which their colleagues always talk about during lunch hour. No matter if you are a Novice Investor who is at lost with which stock to buy or a Seasoned Trader looking for new trading opportunities, Stock Sweeper will help in your analysis process, saving you tons of time. In short, Stock Sweeper is the ideal tool for retail traders/investors who do not have time to actively analyze the market. 2

4 To learn more about Stock Sweeper or other CodingTraders s trading applications, please visit For technical support / enquiries, our technical support team at support@codingtrader.com 3

5 Scanning Algorithms Stock Sweeper currently provides the following 3 Scanning Algorithms 1) MV Breakout 2) Trend Retracement 3) Triple CrossingStar The scans are done daily after market closes and are based on the day s closing prices. It also includes 2 Scanning Filters which are useful for analyzing the market conditions 1) Successive Higher Close 2) % Change in Volume Illiquid Stocks Filter Illiquid stocks are not suitable for normal investing/trading portfolios and should be avoided. In addition to the Scanning Algorithms, all stocks with low average volume over a period are filtered off by the program. Automatic Algorithms Update We are constantly working on improving our existing algorithms and creating new ones. New algorithms will be added into Stock Sweeper automatically. Existing Scanning Algorithms will also be automatically updated in your program. 4

6 1. MV Breakout Algorithm Trading Breakouts is one of the oldest (and arguably most successful) trading strategies around. In fact it forms the basis of most tactical entries employed by modern trading strategies. However a breakout in the stock market is usually news-based and tough to catch. Technical levels typically do not apply well to stocks as compared to other instruments such as currency pairs or commodities. Unlike normal channel breakout strategies designed for the commodities market, MV Breakout is designed to catch stocks which are breaking out in their a) Momentum and b) Volume. During a momentum breakout, price rises at a fast rate. There is strength in the price movement. Signals are filtered by price momentum ensuring that trades are placed in this direction of price movement. Price moves supported by volume are likely to be real and have the strength to sustain the move. If the volume for a price move is low, the move is more than likely to fade off rather than follow through. The stocks scanned are additionally filtered for a rise in volume during the momentum breakout to give firmer confirmation of the move. FIGURE 1 MV Breakout 5

7 2. Trend Retracement Algorithm Retracement Trading is the strategy which gives 1) the best Risk/Reward ratio while 2) trading in the direction of the trend. A retracement (temporary pullback in price) gives traders the opportunity to enter into a trend trade at a better price, risking lesser money and yet stand to profit from the trend. Most novice traders doing retracement trades will enter into a trade whenever price reaches a prefixed level (e.g. Fibonacci level, Support/Resistance level etc). They do not realize the danger of going against the current price move and are predicting that price will reverse at the price level they entered. You often hear people saying The stock is a good buy now. Price is low. More often than not, it turns out to be a trend reversal and they get stopped out of the trade. The Trend Retracement Algorithm is intended to help you identify price retracements. It makes use of our cutting edge Trend Detection System to determine the price direction and only inform you when price resume movement in their original trending direction. This protects you from entering into a trade where the trend is reversing against you! FIGURE 2 Trend Retracement 6

8 3. Triple CrossingStar Algorithm A Time-tested Moving Average crossover strategy which has been employed successfully by professional traders over the years. When 1) a crossover between a short-term MA and a medium-term MA and 2) a crossover between a medium-term MA and a long-term MA occur simultaneously in the same direction, it indicates a change in the trend direction. Entering in the direction of the crossover gives a high probability trade. The algorithm is enhanced by using Adaptive Moving Averages instead of common moving averages, increasing the response time of the crossover. For investors who are looking for longer term trades, this scan will provide you with stocks which are in their initial stage of a rising trend. FIGURE 3 Triple CrossingStar 7

9 4. Successive Higher Close Filter Filter stocks which show 2 successive days where the close is higher than the previous day close. This filter is typically used as a market sentiment gauge. When a high number of stocks are screened out by the filter, it shows that the market is generally bullish. Vice versa when only a few stocks are screened out by the filter, the market is generally bearish. FIGURE 4 Successive Higher Close 5. % Change in Volume Filter Display the % change in volume of a stock. The filter is usually used together with the Scanning Algorithms, to determine if price moves are supported by an increase in volume or if the price moves are likely to fade when the volumes are low. When a high number of stocks show a decrease in volume, it indicates a lack of activity or hesitation in the market. It is advisable to stay out of the market and only trade when a clear direction has been established. 8

10 Installation 1. Double-click StockSweeper.exe to start the application. 2. If you are running Stock Sweeper for the first time, you will be required to activate it. (Remember to use the same supplied for your purchase) FIGURE 5 Activate Product 3. A token file, sweeper.tok will be created in the same folder which StockSweeper.exe resides. (Do not delete the file away) 9

11 Application Layout There are multiple views in Stock Sweeper. FIGURE 6 Basic View In Basic View, the 1) Last Scanned Date, 2) Scans List and 3) Results of the corresponding Scans are shown. Click on the individual scan result to view the shortlisted stocks. To display the 4) Advance View, click on the <Advance View> button. 10

12 FIGURE 7 Basic Scan Result View Basic Scan Result View showing shortlisted stocks. Click on the Stock name to view chart. 11

13 FIGURE 8 Advance View In Advance View, combine Scans by checking the 1) Scan Selection checkbox for each Scans. For some Scans, there are additional 2) Scan Options to specify. 3) To view the combined Scan result, click on the <Combine Filter> button. To return to the 4) Basic View, click on the <Basic View> button. 12

14 FIGURE 9 Combined Result View Combined Scan Result View showing shortlisted stocks fulfilling multiple Scans criteria. Click on the Stock name to view chart. 13

15 FIGURE 10 Chart View Chart View displaying chart of selected stock. (Yahoo Finance Chart) 14

16 How to use Stock Sweeper 1) Trade Individual Algorithm The Scanning Algorithms - 1) MV Breakout, 2) Trend Retracement and 3) Triple CrossingStar are full trading signals, which can be directly traded. The characteristics of the Scanning Algorithms are listed below. a) MV Breakout Based on Price Momentum and Volume breakout, price usually follows through immediately and rises substantially following the breakout signal. You should enter a trade immediately in the day following the signal. It is recommended that you do not set a take profit level but instead close your trade when 1) prices started falling with high volume or 2) volume started falling. FIGURE 11 Trading MV Breakout 15

17 b) Trend Retracement The retracement gives traders the opportunity to enter into a trend trade at a better price, risking lesser money and yet stand to profit from the trend. This is a high probability trade as you are trading in the direction of the current/new trend move. However retracement moves usually do not blossom into huge price move. Profit taking level should be conservative. Stop loss level should be set just below the last swing low to give a low Risk/Reward ratio. FIGURE 12 Trading Trend Retracement c) Triple CrossingStar This is a strong signal where 3 moving averages cross each other almost simultaneously. Price has just switched to an uptrend. There are 2 scenarios where this may occur. 1) Price has been consolidating and suddenly burst up. 2) Price has been moving up and is switching from a downtrend to an uptrend. In both cases, results have shown that entering into a trade immediately following the signal is profitable. However in the 2 nd case, there is a high chance that price will retrace before continuing with its new uptrend. It is advisable to wait for a retracement before entering into a trade. 16

18 FIGURE 13 Trading Triple CrossingStar 2) Short-list Potential Stocks Although the Scanning Algorithms are full trade signals which can be directly traded, traders/investors might want to further analyze the stocks screened out before arriving at a trading decision. With thousands of stocks per exchange, it is impossible for a trader/investor to analyze every single stock. Stock Sweeper is distinctly useful for helping you create a short list of stocks which you can then further analyze, cutting short your research and analysis process. 3) Create your own Scans Stock Sweeper let you combine scans from multiple algorithms/filters. a) Including 2 Successive Higher Close Filter Stocks which have closed higher in 2 successive sessions are strong. Using this filter together with other Scanning Algorithms confirms the scans signals, only short-listing stocks which are rising in price. 17

19 b) Including % change in Volume Filter Volume precedes price. Stocks with an increase in volume during a move are more likely to follow through rather than fade off. By including this filter with the scan results, you can select stocks which exhibit increasing volume, further strengthening the scan s signal. c) MV Breakout with Triple CrossingStar When a MV Breakout coincides with a Triple CrossingStar, the stock is breaking out strongly from a consolidation/downtrend. This signal is strong. Just BUY! 4) Gauging Overall Market Strength/Participation Market Strength - When a high number of stocks appears in the 2 Successive Higher Close filter, it indicate that the stock market is rallying. Vice versa, when there are only a few stocks in the 2 Successive Higher Close filter s result, the stock market is either consolidating or falling. Market Participation When a high proportion stocks under the % change in Volume filter shows a decrease in volume, it indicates a lack of activity in the market. This usually arises when the market is indecisive and do not know where to go. It is advisable to stay out of the market and only trade when a clear direction has been established. 18

20 FIGURE 14 Gauging Market Strength 19

21 Disclaimer / Disclosure By using Stock Sweeper product, the User agrees to be bound by these terms of use, conditions and disclaimer and all applicable laws and regulations. If you, the User, do not agree with any part of these Terms of Use, you must immediately discontinue any use of the product. These Terms of Use may change from time to time without notice and it is the User s responsibility to check for updates. By using this product you, the User, are agreeing to be bound by the current version of these Terms of Use. Stock trading carries a high level of risk, and may not be suitable for all investors. Before deciding to trade stocks, you should carefully consider your investment objectives, level of experience, and risk appetite. You must be aware of the risks of investing in stock and be willing to accept them in order to trade in these markets. Trading involves substantial risk of loss and is not suitable for all investors. CodingTrader.com (CodingTrader) has taken measures to ensure the accuracy and timeliness of the information in the application, however, does not guarantee its accuracy and timeliness, and will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from the use of or reliance on such information, inability to access the information, for any delay in or failure of the transmission or the receipt of any instruction or notifications sent through this application. The Application Provider, CodingTrader owns all rights to the intellectual property, underlying processing and analysis technology, presented on Stock Sweeper. The User may not use, transfer, reproduce, publish, disclose or sell Stock Sweeper or any of its components or content, except as provided for in this Agreement. The Application Provider, CodingTrader reserves the right to change, suspend, remove, or disable access to the Stock Sweeper product and/or any Services at any time without notice. In no event will the Application Provider be liable for the removal of or disabling of access to the product and/or to any such Services. The Application Provider may also impose limits on the use of or access to certain Services, in any case and without notice or liability. This application is neither a solicitation nor an offer to buy or sell stocks. Please remember that the past performance of any trading system or methodology is not necessarily indicative of future results. 20