|Replying to message 9489|
Q: How do I use OmniTrader?
OmniTrader is a prospecting tool. It is designed to be used to find good opportunities to trade. As such OmniTrader will not find signals on every symbol in your list all the time since we are looking for good entry points.
You will see a number of different signals in the column 'Sig' after running your To-Do List. A blank in the signal column indicates that OmniTrader has generated signals in the Backtest period but there is no current signal. The historical signals can be viewed by scrolling out to a larger timeframe in your chart. The Sig column in the focus list will only show signals that are on the most current bar of data.
When you have a signal in the focus list the color of the signal indicates the direction. Green is always long and red is always short. The first signal we are going to discuss is the solid triangle. A solid triangle indicates a new position. This means OmniTrader found an opportunity on the most recent bar. Once an OmniTrader strategy has fired a new signal there are set exit rules, also defined by the strategy it will use to exit. While OT is in a trade waiting for the exit you will see an arrow in the focus list. If the OmniTrader strategy finds another system in agreement with the original system that generated the signal, you will see a hollow triangle. This is a re-enforced signal.
OmniTrader will show you the best trading candidates from the list of symbols you provide. However, you do not want to place trades solely on the signals generated. You never want to trade just because you see a signal unless otherwise stated. Remember, OmniTrader is a prospecting tool, it is not a mechanical trading system and should not be used as such. You should always use further confirmation before entering a trade. The optimized systems in OT fire signals based on what has happened in the past. History is all we know at this time. However, what happened in the past is probably a good indication of what is likely to happen in the future.
Consider basic confirmation techniques such as reviewing the chart for trendlines or support and resistance. Does the chart trade smoothly, with identifiable patterns? You can also use the ADV (advisor rating) and the BTHR (back test hit rate) columns in your focus list. The ADV gives you an overall strength of the signal it is generating. The BTHR tells you the percentage of profitable signals that fired in the backtest. These statistics give you an idea how well the strategy preformed in the testing. Be sure to consider the number of trades that are being measured. If you are viewing a large number of stocks, the ADV and BTHR are good columns to use to filter the list down. One more confirmation technique to consider is indicators or systems plots. You can apply indicators or systems you have used successfully in your trading experience to the chart by clicking on Chart Options. You can view detailed descriptions of all the indicators & systems in your Chart Options by clicking Help then Indicators and Systems.
A few tips:
You will have lesser performance on extremely volatile symbols rather than better trending stocks.
Are there any chart patterns present? Do they confirm the OmniTrader signal?
Pick a few indicators that you are comfortable with, that you know how to read, and that apply to your market. Do they tell you this stock has a reasonable potential to go for or against this signal?
You can look at the index. What is the overall index doing? Am I trading with the trend?
The more confirmation you do the better your trading will be.
Once OmniTrader has generated a signal, it's done its job. It is now time for you to use confirmation and your own discretion to enter and manage the trade. OT provides tools such as various stops and money management options to help you. If one day you see a long signal and you confirm using confirmation tactics that it is a good signal you take a trade. It does not matter if the very next day you see a short signal. They reason you got in the long position is still valid. Ignore the short signal and continue to manage your trade. After you have exited your position. Then start looking for a new entry point. We have also tried to help automate this process with trade plans. Set up a trade plan that follows a exit strategy you like to follow. Confirm and enter a trade and let the trade plan get you out. This is not always a sure fire way to make money but it should help take some of the emotions out of your trading.
[Edited by Barry Cohen on 3/21/2006 4:45 PM]