Displacement issues

Q: TradeStation, Ninja Trader and other trading platforms allow showing indicators with some displacement against original price chart. How we can pick up the best displacement for indicators?

A: Our platform is not just another technical indicator suite. Instead, it is the complex forecasting engine carefully tuned up to the incoming data stream. We took extraordinary efforts to ensure the precise synchronization with the incoming data to achieve the best possible accuracy of market indicators.

Artificially displacing indicator against its original market synchronization will completely obscure its built-in forecasting ability and will produce completely misleading results lacking any validity. It will yield artificial results and will prevent the tests on historical data to match real live market performance because broken synchronization will cause engine to use forward-looking information and fake all historical testing process. At no circumstances user can introduce any displacement to indicator displays to avoid false results and overall confusion.

Predictors behave different to indicators in terms of displacement. By meaning, they express future value intrinsically displaced into the future on the number of steps equal to the forecast length input into algorithm. We calculate market predictions for the next market step or, with the less accuracy, for the few next steps. It is advised and encouraged to adjust manually predictors exactly to this amount of forward steps (typically one) to get best trading advises.

Predictors and indicators

Q: Some algorithms in user guide are referred as predictors, others – as indictors. What is the difference between these two kinds of algorithms in trading usage?

A: We offer classical indicator style algorithms intended as the analysis tool for historical data and as an auxiliary supplement in building custom strategies by the user. Indicators are very similar in their usage to the standard technical indicators common in most trading platforms.

Predictors, even though very similar in display to indicators, are much more elaborate algorithms in mathematical sense. They are designed not to simply monitor the price dynamics, but to predict future dynamics depending on existing historical prices. Predicted future price serves as the advice to trader to make immediate decision on the current positions to maximize returns. Trader may wish to perform certain actions depending on the predicted price change. For instance, trader may wish to close position, if he will see that the price is likely to move down on the next bar, according to predictor. In this way, predictors serve as precise trading advisors.

Futures, Forex and Equities Trading Strategies on Your Favorite Dealing Platform.

Futures, Forex and Equities Trading Strategies on Your Favorite Dealing Platform.

Unraveling The Mystery Of Stock Prices

Here’s a simple method you can apply to interpret financial charts. It uses classical statistics as well as a number of simple chart indicators, which may help you better understand classical charts from the viewpoint of random processes.

Every trader is familiar with stock charts. To most traders the chart is just a common tool, like a hammer is to the carpenter. The exception is the new trader reading charts for the first time or the advanced trader who begins to question the value of the charts he or she watches.

Financial charting is specific. There are many exotic charts common to most modern trading platforms. You may begin with the classical bar charts or candlesticks and continue on to Equivolume, kagi, renko, and others. Add to that numerous technical indicators and strategy signals, and you have something packed full with useful information.

You want to concentrate as much useful information as possible into the chart so you can make timely trading decisions. To the newbie trader, this may appear to be confusing and artificial. To the seasoned professional, trying to determine what information is truly valuable for profitable trading is a vital concern.

Although financial charts can be vivid and attractive, they do tend to have contradictions with modern statistics. The charts can introduce dubious and unstable measures, which in turn become the basis of popular trading strategies. This could increase the risk of your trading operations.

In this article, I will identify the shortcomings of typical charting from a simple mathematical viewpoint and offer some easy indicators and techniques that you can apply to unravel the mystery of common charting data.

Checkout my recent paper in Stocks & Commodities, March 2010
http://www.traders.com/Documentation/FEEDbk_Docs/2010/03/Zinchenko.htm
http://store.traders.com/stcov281unmy.html

Lag correlation analysis

StockFusion Studio includes the powerful lag correlation matrix for discovery of symbol dependencies. It calculates cross correlation of selected symbol with other symbols over a range of time lags. If strong correlation exists, then correlated symbol can serve as a sort of predictor.

For example, we see that EKK for some reason correlates with EVO on lag 16. This means that if EVO has some price change, it is 42% likely that EKK will have very same price change in 16 trading days after that. Similar dependencies should exist intraday also.

Portfolio correlation matrix

Portfolio correlation matrix is the powerful tool for your portfolio optimization. It allows optimal portfolio balancing be excluding from it closely correlated symbols. If you have several closely correlated symbols in portfolio, they similarly behave on market changes and do not add any stability to your portfolio. You must try to keep in portfolio only poorly related symbols. This generally increases portfolio stability because it will increase probability of some symbols growing when the others are on down slump.


StockFusion Studio gives you powerful option of optimizing your portfolio through correlation matrix analysis, which will highlight optimal combination of symbols in your portfolio.

Adding new symbols to symbol lookup list

It may eventually happen that your favorite symbol is not present in our Yahoo symbol lookup database, for example, due to a lag in database update. In this case, it is very easy to add symbol to lookup list, happen it is valid symbol existing on Yahoo Finance.

Go to "Home & Basics > Symbol" and simply enter proper symbol into search box. Then hit "Search" button. Symbol will be permanently added to lookup list and show up on chart.