ALGORITHMIC TRADING TIPS.

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1 tradesignal.com ALGORITHMIC TRADING ISSUE 19 MOUNTAIN RANGE. Yosemite National Park, USA. With an area of square kilometres on of the largest national parks in the US. VISUAL SIGNALS ON YOUR CHART INCLUDING WORKSPACE FOR DOWNLOAD. How to create your own indicators and visualise your signals. Tradesignal Ltd., London.

2 DOWNLOAD WORKSPACE FOR TRADESIGNAL HERE: Try the new workspace which is provided here for both Thomson Reuters and Bloomberg data. More workspaces can be downloaded at THOMSON REUTERS BLOOMBERG 2

3 VISUAL SIGNALS ON YOUR CHART. How to create your own indicators and visualise your signals. With Tradesignal and its formula language Equilla you can create virtually any indicator and trading strategy. In this issue we would like to show you how specific market situations can be shown graphically on the chart. This makes your analysis more efficient and comfortable, at the same time you can discover new patterns in the market and back test them later. For this purpose we provide the following source codes that can be used as a starting point for creating your own tools: bb TREND BAR INDICATOR 4 Visualises overbought/oversold conditions depending on the trend situation. bb BIG BAR INDICATOR 6 Marks all bars in the chart which exceed a certain trading range. bb PULLBACK INDICATOR 8 Colours the bar chart depending on the direction of the trend. bb 2 BAR REVERSAL INDICATOR 10 Visualises a reversal pattern consisting of two bars. 3

TREND BAR INDICATOR. VISUALISING TRENDS. The Trend Bar Indicator colours a bar chart depending on its current situation and trend, thus ensuring a better overview in chart analysis.

4 TREND BAR INDICATOR. VISUALISING TRENDS. The Trend Bar Indicator colours a bar chart depending on its current situation and trend, thus ensuring a better overview in chart analysis. A simple moving average (SMA) serves as input for the definition of the trend. Of course, it is possible to use any desired trend indicator, or even a combination of several indicators. You can easily modify the Equilla code contained in the workspace to suit your needs. By default, a bar chart is coloured green when the price moves above its 200-period SMA. If the price is below the SMA, the bars turn red. The colour feature is made possible by the use of the Drawbar command in Equilla. ˁˁ FIGURE 1: &P 500 WITH TREND BAR INDICATOR APPLIED TO THREE TIME FRAMES The screenshot shows the Trend Bar Indicator in action. Shown is the S&P 500 as a weekly, daily and hourly chart. Using the colour distinction, you immediately realise whether the index holds above or below its long term trend. 4

5 EQUILLA CODE FOR TREND BAR INDICATOR Meta: subchart(false); Inputs: LongPeriod(200); Variables: longav, colour; longav=average(close,longperiod); colour=black; if close<longav then colour=red; if close>longav then colour=green; drawbar(open,high,low,close, colour,colour); Please note our disclaimer on page 13. 5

6 BIG BAR INDICATOR. MARKING IMPORTANT MARKET SITUATIONS. Marking disproportionately large candles in a chart can serve as valuable information that can be used for analysis or to generate trading strategies. The Big Bar indicator is created by using the Drawforest command and labels all bars whose range exceeds an arbitrary percentage value. The amount of margin can be set with the input BarPerformancePerc. The subsequent Equilla code (next page) can be adapted or expanded at will. ˁˁ FIGURE 2: DAX WEEKLY CHART WITH BIG BAR INDICATOR The Big Bar Indicator marks all candles with a minimum margin of 8 per cent. Price declines are marked orange, while price increases are labelled gray. In the sub chart the Big Bar indicator was reinserted and adjusted with a percentage value of 4 percent. 6

7 EQUILLA CODE FOR BIG BAR INDICATOR Meta: subchart(true); Inputs:BarPerformancePerc(3,0.1); if close<((100-barperformanceperc)/100)*close[1] then begin drawforest(0,1); drawforest(1,0); end; if close>((100+barperformanceperc)/100)*close[1] then begin drawforest(0,1); drawforest(1,0); end; Please note our disclaimer on page 13. 7

8 PULLBACK INDICATOR. VISUALISATION OF OVERBOUGHT AND OVERSOLD AREAS. Buying after corrections in an intact up trend is the most popular trend-following approach of all. Following the motto buy the dip it is important to take advantage of oversold conditions in an intact upward trend for long entry. In a down trend, the motto on the other hand is sell the rally, i.e. short-term recoveries, which end in an overbought condition, represent a good exit or short opportunity. A simple method to improve the timing of trading decisions and to provide for a systematic basis, is to identify overbought and oversold market conditions by means of an oscillator. The following example demonstrates the added value that provides the interaction of a SMA (trend follower) and Stochastic (oscillator). Shown here for the EUR/USD in a 30-minute chart. bb Green triangles: oversold condition within an up trend bb Red triangles: overbought condition within a down trend ˁˁ FIGURE 3: PULLBACK INDICATOR FOR THE EUR/USD 30-MINUTE CHART The indicator identifies overbought and oversold conditions and marks them based on the prevailing trend. 8

9 EQUILLA CODE FOR PULLBACK INDICATOR Meta: subchart(false); Inputs: ShowSignalsWithoutTrendDetection(true), Period_Stoch(10), Stoch_BuyTrigger(20,1), Stoch_ShortTrigger(80,1), Period_SMA(200); Vars:stoch,sma; stoch=slowk(period_stoch); sma=averagefc(close,period_sma); if close>sma and sma>sma[2] and stoch crosses above Stoch_BuyTrigger then drawsymbol(low,"",symboltriangleup,15,green,green); if close<sma and sma<sma[2] and stoch crosses below Stoch_ShortTrigger then drawsymbol(high,"",symboltriangledown,15,red,red); if ShowSignalsWithoutTrendDetection=true then begin if stoch crosses above Stoch_BuyTrigger then drawsymbol(low,"",symboltriangleup,8,darkgreen,darkgreen); if stoch crosses below Stoch_ShortTrigger then drawsymbol(high,"",symboltriangledown,8,darkred,darkred); end; drawline(sma,"",stylesolid,2,darkgray); Please note our disclaimer on page 13. 9

10 REVERSAL PATTERNS. FLAGGING INDIVIDUAL PATTERNS IN A CHART. The display of individual patterns in a chart provides a useful overview, making it a valuable tool for all market participants. A two bar reversal serves as an example of the visualisation of a simple pattern. For a bearish reversal: After a positive candle a negative one follows, which also closes below the former candle. Both candles must have reached a definable minimum size. This is calculated using the Average True Range (ATR). If these conditions are met, an icon in the chart is shown. For bullish reversals the reverse rules apply. The accompanying Equilla code (next page) can be modified freely and serve as a good basis for developing your own patterns. ˁˁ FIGURE 4: TWO BAR REVERSAL INDICATOR FOR THE BASELOAD FRONT YEAR CONTRACT CAL 18 All detected reversal patterns are automatically shown in the chart. 10

11 EQUILLA CODE FOR 2 BAR REVERSAL INDICATOR Meta: subchart(false); Inputs: ATRmultiple(0.5),VolaPeriod(10); Vars: ATR,BearReversal,BullReversal; ATR=avgTrueRange(VolaPeriod); BearReversal=(close[1]>open[1]+ATRmultiple*ATR and close<open-atrmultiple*atr and open<close[1]); BullReversal=(close[1]<open[1]-ATRmultiple*ATR and close>open+atrmultiple*atr and open>close[1]); If BearReversal then begin drawsymbol(high,"",symboldiamond,10,red,red); end; if BullReversal then begin drawsymbol(low,"",symboldiamond,10,green,green); end; BY THE WAY: To create a back test only a short extension of the code is required: If BearReversal then short next bar at low stop; If BullReversal then buy next bar at high stop; Please note our disclaimer on page

12 To check the robustness and performance of the pattern, you can use already pre-installed exit modules. In the screenshot below the exit takes place on the open of the following trading day. CREATE INDICATORS AND BACK TEST. As you can see, Tradesignal provides all the tools for creating your personal graphic tools. Using the examples provided you can implement your ideas quickly. Only a few lines suffice. It is also possible as we have shown to enhance existing indicators into simple trading strategies. This enables you to back test and explore how those indicators would have performed in the past. Take care, take profit and auf Wiedersehen. ˁˁ FIGURE 5: 2 BAR REVERSAL STRATEGY APPLIED TO BASELOAD FRONT YEAR CONTRACT CAL 18 With the expansion of the indicator with buy or sell orders and the use of a simple exit on the following day, you can back test the 2 Bar Reversal Pattern. 12

13 DISCLAIMER. Tradesignal Ltd. obtains information from sources it considers reliable, but does not guarantee the accuracy or completeness of its information contained therein. Tradesignal Ltd. and its affiliates make no representation or warranty, either express or implied, with respect to the information or analysis supplied herein, including without limitation the implied warranties of fitness for a particular purpose and merchantability, and each specifically disclaims any such warranty. In no event shall Tradesignal Ltd. or its affiliates be liable to for any decision made or action taken in reliance upon the information contained herein, lost profits or any indirect, consequential, special or incidental damages, whether in contract, tort or otherwise, even if advised of the possibility of such damages. This material does not constitute an offer or a solicitation of an offer or a recommendation to buy or sell securities. All expressions of opinion are subject to change without notice. This code is provided free of charge and as is, without warranty of any kind, express or implied, including but not limited to the warranties of fitness for a particular purpose and noninfringement. In no event, shall Tradesignal Ltd. be liable for any claim, damages or other liability, whether in an action of contract, tort or otherwise, arising from, or of or in connection with this code or the use of this code Tradesignal Ltd., London. Distribution allowed under a Creative Commons Attribution-Noncommercial license: Tradesignal is a registered trademark of Tradesignal GmbH. Unauthorized use or misuse is specifically prohibited. All other protected brands and trademarks mentioned in this document conform, without restriction, to the provisions of applicable trademark law and the copyrights of the respective registered owners. 13

ALGORITHMIC TRADING 19 VISUAL SIGNALS ON YOUR CHART. PROFIT FROM THESE TRDING TIPS & VIDEOS TOO. 14 INCLUDES VIDEO SKYSCRAPER. Taipei 101, Taipei.

DOWNLOA TRADING TIPS 09 15 INCLUDES VIDEO SKYSCRAPER. ICC Tower, Hong Kong. The todays tallest building in Hong Kong on the scale of 484 metres high. UNLEASH THE FORWARD CURVE.

Petronas Twin Towers, Kuala Lumpur. The todays tallest building in Malaysia on the scale of 452 metres high. 1 3 ALGORITHMIC TRADING WITH RENKO CHARTS.

TRADING TIPS 10 PARTS 1 3 ALGORITHMIC TRADING WITH RENKO CHARTS. Parts 1 3: How to combine Renko charts and Bar charts to create a profitable trading strategy. INTRADAY EMISSIONS TRADING.

INCLUDES VIDEO CONTROL AND MONITOR YOUR ASSETS BY RULE-BASED APPROACHES. How to create a portfolio in Tradesignal, apply trading strategies & monitor all positions. SKYSCRAPER.

14 ALGORITHMIC TRADING 19 VISUAL SIGNALS ON YOUR CHART. PROFIT FROM THESE TRDING TIPS & VIDEOS TOO. 14 INCLUDES VIDEO SKYSCRAPER. Taipei 101, Taipei. The todays tallest building in Taiwan on the scale of 508 metres high. 08 TRADING TIPS 08 INDICATORS ON INDICATORS. INDICATORS ON INDICATORS. Simple steps to advanced analysis. DOWNLOA TRADING TIPS INCLUDES VIDEO SKYSCRAPER. ICC Tower, Hong Kong. The todays tallest building in Hong Kong on the scale of 484 metres high. UNLEASH THE FORWARD CURVE. How to visualize forward curves to maximize information. 10 SKYSCRAPER 01. Menara Carigali, Kuala Lumpur. The todays third tallest building in Malaysia on the scale of 267 metres high. SKYSCRAPER 02. Petronas Twin Towers, Kuala Lumpur. The todays tallest building in Malaysia on the scale of 452 metres high. 1 3 ALGORITHMIC TRADING WITH RENKO CHARTS. PARTS 1 3: How to combine Renko charts and Bar charts to create a profitable trading strategy. How to visualize forward curves to maximize information. TRADING TIPS 10 PARTS 1 3 ALGORITHMIC TRADING WITH RENKO CHARTS. Parts 1 3: How to combine Renko charts and Bar charts to create a profitable trading strategy. INTRADAY EMISSIONS TRADING. How to trade volatility breakouts profitably. FOR DOWNLOA 16 INCLUDES VIDEO 12 SKYSCRAPER. The Shard, London. The todays tallest building in the UK on the scale of 310 metres high. INCLUDES VIDEO CONTROL AND MONITOR YOUR ASSETS BY RULE-BASED APPROACHES. How to create a portfolio in Tradesignal, apply trading strategies & monitor all positions. SKYSCRAPER. Guangzhou International Finance Centre, Guangzhou. The todays fourth tallest building in China on the scale of 438,6 metres high. 13 WHAT IS THE MARKET OUTLOOK? How to create your own dashboard in Tradesignal for a quick, precise overview. INCLUDING WORKSPACE D. FOR DOWNLOA SHARPE VS. SORTINO. RISK-ADJUSTED PROFITS OF TRADING SYSTEMS: SHARPE VS. SORTINO Choosing the right Reward/Risk metric for your strategies. INCLUDING WORKSPACE D. FOR DOWNLOA Choosing the right Reward/Risk metric for your strategies. 17 SKYSCRAPER. China World Trade Center Tower III, Beijing. The todays tallest building in Beijing on the scale of 330 metres high. INCLUDES VIDEO SELL IN MAY AND GO AWAY? TRADING TIPS 12 CONTROL AND MONITOR YOUR ASSETS BY RULE-BASED APPROACHES. How to create a portfolio in Tradesignal, apply trading strategies & monitor all positions. BUY AND SELL ORDERS, POSITION SIZE AND STOPS. PART 1: The Toolbox for Traders. TRADING TIPS 17 BUY AND SELL ORDERS, POSITION SIZE AND STOPS. INCLUDING WORKSPACE D. FOR Part 1: The Toolbox for Traders. DOWNLOA 18 BROADCAST TOWER. Tokyo Skytree, Japan. The todays second tallest structure in the world on the scale of 634 metres high. SKYSCRAPER. One World Trade Center, New York City. The todays tallest building in the US on the scale of 541,3 metres high. How to profit from seasonal patterns. TRADING TIPS 11 How to profit from seasonal patterns. SELL IN MAY AND GO AWAY? TRADING TIPS INTRADAY EMISSIONS TRADING. TRADING TIPS 15 How to trade volatility breakouts profitably. INCLUDING WORKSPACE D. SKYSCRAPER. The Cheesegrater, London. The todays fourth tallest building in the UK on the scale of 225 metres high. UNLEASH THE FORWARD CURVE. How to optimize the position size of your investments systematically. How to optimize the position size of your investments systematically. 09 MAXIMIZE PROFITS USING THE KELLY FORMULA. INCLUDING WORKSPACE D. FOR Simple steps to advanced analysis. MAXIMIZE PROFITS USING THE KELLY FORMULA. TRADING TIPS 14 TRADING TIPS 18 HOW GOOD ARE YOUR SIGNALS? INCLUDING WORKSPACE D. FOR DOWNLOA HOW GOOD ARE YOUR SIGNALS? Evaluating the quality of your trading signals correctly. Evaluating the quality of your trading signals correctly. TRADING TIPS 13 WHAT IS THE MARKET OUTLOOK? How to create your own dashboard in Tradesignal for a quick, precise overview. MORE KNOW-HOW AND VIDEOS HERE: 14

ABOUT THE AUTHOR. David Pieper. As Senior Technical Analyst at Tradesignal Ltd., David is responsible for the in-house training of institutional clients and editorial content.

15 ABOUT THE AUTHOR. David Pieper. As Senior Technical Analyst at Tradesignal Ltd., David is responsible for the in-house training of institutional clients and editorial content. He has more than 15 years experience in the financial markets. After completing his business degree and continuing education to become a Certified International Investment Analyst (CIIA), he spent several years in the investment research department of a large German federal state bank. His passion for trading and technical analysis is expressed regularly in articles of TRADERS magazine. You may contact David at david.pieper@tradesignal.com 15

Tradesignal is a registered trademark of Tradesignal GmbH. Unauthorized use or misuse is specifically prohibited. CLEAR STRATEGIES NOT GUT REACTIONS.

16 Tradesignal is a registered trademark of Tradesignal GmbH. Unauthorized use or misuse is specifically prohibited. CLEAR STRATEGIES NOT GUT REACTIONS. Act smart and always use objective and clear signals. Tradesignal. Überlegen handeln. Made in Germany. OOPS YOU AREN T ALREADY A TRADESIGNAL USER? VISIT AND START TESTING THE SOFTWARE RIGHT NOW.

INTRADAY EMISSIONS TRADING. How to trade volatility breakouts profitably.

TIPS. 15 SKYSCRAPER. ICC Tower, Hong Kong. The todays tallest building in Hong Kong on the scale of 484 metres high. I NCLUDES VIDEO INTRADAY EMISSIONS TRADING. How to trade volatility breakouts profitably.