home
***
CD-ROM
|
disk
|
FTP
|
other
***
search
/
Business Assistant
/
Business Assistant.iso
/
stock
/
mktstrat
/
creatsys.hlp
(
.txt
)
< prev
next >
Wrap
Microsoft Windows Help File Content
|
1992-04-27
|
15KB
|
213 lines
Create From Scratch allows you to build a brand new set of rules or 'system'
for buying and selling stocks.
Copy and Modify Existing will display all the systems that have been previ-
ously built and saved. You will then select a system and be able to add, de-
lete, or modify rules. Market Strategist will first make a copy of the system
you select and all changes you make will be made to the copy. This is essen-
tially the same function as selecting Modify from the main menu, except in
that case, a copy of your system is not made.
This selection determines the action that the rule will trigger.
For example, choose 'Buy Long' to build a rule that will evaluated on every
stock not already owned to determine whether it should be bought. If you want
to use the same rule for two different actions such as to Sell and to Sell
Short, you must build the rule twice. When you are finished building the en-
tire system, select 'Finished'. You will then be asked to supply a title
for the system, and the system will be saved and available for testing at
anytime.
Choices 1-4 determine the data item, or Primary Variable, that will be used as
a base for the current rule. Each rule uses only one Primary Variable, but
you may build as many rules (up to 10 of each action-type) as you wish. In
the menus that follow, you will specify how to manipulate this variable.
PRICE refers to the weekly closing price of the stock. It also utilizes the
high and low values for the week when appropriate.
VOLUME refers to the average daily number of shares traded for the week.
EARNINGS includes items such as Price/Earnings ratio and Earnings per Share.
DIVIDENDS includes Annualized Dividend Yield and Amount of Weekly Dividend.
CAPITALIZATION is the market value of the company expressed as the number
of shares outstanding times the current price of the stock.
EXIT RULE is a shortcut to specifying how to exit an open position. It is ac-
tive only when building SELL or COVER SHORT rules.
This selection determines whether to apply calculations to the stock itself,
the market or industry group average, or a ratio of the the stock to the mar-
ket or its industry group. By selecting one of the RATIOS, you are able to
base the rule on how the stock performs COMPARED TO the overall market or to
other stocks in its industry group. The "overall market" is the average of
the 500 stocks contained in Western Database's 5-by-500 database (essentially
the S&P 500) unless your Primary Variable is PRICE -- you will then have a
choice of indicators including the S&P 500 index and the three Dow Jones
popular indexes.
Example 1: If your Primary Variable is PRICE and you select choice 2 here,
then all calculations will be performed on the RATIO of the price of the stock
to the market index rather than the price of the actual stock.
Example 2: If you select choice 4 then the rule will be based on the behavior
of the overall market rather than the behavior of the stock.
This selection allows you to choose a common method of deciding when to exit
(SELL or COVER SHORT) a position in a stock. In the next menu you will
further define your exit rule.
'Time Limit' can mean two things depending on how you answer the SUPER rule
question later. If you make it SUPER, allowing it to trigger action by it-
self, then it becomes a MAXIMUM time for which to hold the position. If you
make it NORMAL then it becomes a MINUMUM time.
'Trailing Stop Loss' is a stop loss that adjusts to any profit achieved in the
position. The stop target that you set will be based on the HIGHEST PROFIT
OBTAINED rather than the actual loss.
NOTE: Stop loss rules do not guarantee that the trade will be executed at
the target price. The order will take place at the CLOSING PRICE of the week
that the price crosses the stop loss target.
Stop Losses and Target Profits can be based on either a dollar amount or a
percent change. If selecting Dollar Amount, enter a value consistent with
your initial bankroll and target investment in each stock. Dollar Amounts in-
clude commissions while Percent Change does not. Percent Change only looks at
the closing price of the stock and how it has changed.
NOTE: Stop loss rules do not guarantee that the trade will be executed at
the target price. The order will take place at the CLOSING PRICE of the week
that the price crosses the stop loss target.
This selection determines the type of calculation to perform on your Primary
Variable (Price, Earnings, etc.) and your Object (stock, stock vs. industry
group, etc.) Each choice contains many further choices for calculation types.
In the next set of menus you will define the specifics of the calculation.
Trend: A trend is a direction of movement. The choices of methods for trend
detection are Percent Change, Consecutive Points in the Same Direction, and
Moving Average.
Past Hi's and Lo's: Looks for achievement of a new high or low of the
Primary Variable OR compares the current value to its previous high or low.
Stability: The lack of trend or fluctuation over time in the Primary Vari-
able.
Current vs. Moving Avg (% Difference): You want the current (this week's)
value of the data item to be more or less than a certain percent from the mov-
ing average of the Primary Variable.
Current vs. Moving Avg (Crossover): When the current value crosses down
through its moving average, some believe that it may be an indication of a
downward trend. You will specify whether to take action when the crossover is
in the up or down direction.
Crossover of 2 moving avgs: Similar to second choice, except that you are
looking at a second moving average in place of the current value.
Annualized Yield: The estimated annual dividend per share divided by the cur-
rent price of the stock. The annual dividend is determined from the dividends
paid over the last 6 months.
Amount of Weekly Dividend: The actual dividend paid ($/share) (ex-dividend
amount) during the current week. If a stock is BOUGHT at the end of a week
that it went "ex-dividend" the dividend is NOT credited to your account. If
it is SOLD at the end of that week, the dividend IS credited.
Achieves new HI or LO: The rule will be satsified when the Primary Variable
(price, yield, etc.) of the Object (stock, stock vs. DJIA, etc.) achieves a
new high or low. You will be asked for the number of weeks (or quarters) to
look back to determine the previous high or low.
Approaches a previous HI or LO: Similar to choice 1, but allows action when
the current value comes within a percent of a PREVIOUS hi or lo without neces-
sarily achieving a NEW hi or lo.
P/E Ratio: The most recent price of the stock divided by the last reported
quarterly earnings per share. This is especially useful when using the Stock
to Industry Group ratio as the Object. Negative earnings result in a P/E
ratio of 99999.
Earnings per Share (12 mos.): The most recently reported quarterly earnings
per share for the past 4 quarters. Expressed as $/share. Used mainly to
determine earnings growth. Values can be negative--caution is advised if
using rules involving percent change calculations. Negative values also make
it impossible to calculate a RATIO of the stock to its industry group or stock
to the market. In this case, a value of ZERO is used for the ratio.
Amount of Earnings (12 mos.): Same as choice 2 except expressed as total $ in
millions.
Choices 1 and 2 are very similar: Choice 1 is a "price-weighted" average of
all stocks in the Western Database 5-by-500 database. The 500 stocks are es-
sentially the same 500 stocks making up the S&P 500. Choice 2 is the actual
reported value of the S&P 500 index. This index is a "capitalization
weighted" index, meaning that companies with more net worth contribute more to
the index than smaller companies.
The remaining choices are the popular Dow Jones averages which are
price-weighted.
Lack of Trend: Specifies the TOTAL maximum change allowed over a specified
length of time. The change allowed is stated in terms of percent differ