In this issue:
I. NeuroShell Trader release 5.0 status
II. Converting to release 5.0
III. Editorial Comment by Steve Ward, CEO
IV. Release 5.0 features – Portfolio Management
VI. One way to stop this newsletter
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I. NeuroShell Trader release 5.0 status
We have now shipped out our backlog of Release 5.0 updates on CD. The entire staff here worked on it. If you don’t get yours by April 15, it will be time to call or email to see where it is. If you didn’t order yours yet, this web site will describe what the update is about and how you can get it:
www.ward.net/trader50.asp
Of course we are now busy fixing bugs that the beta testers didn’t find. As you report them, and we reproduce and fix them, we will be preparing release 5.1. That release will be free via download to all who updated to release 5.0.
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II. Converting to release 5.0
If you aren’t worried about saving charts and data that you created in release 4.0, then you needn’t worry about “converting”. Just deactivate release 4.x, and then install release 5.0, activating with the new serial number and password we sent you in an email. You must deactivate release 4 before release 5 will activate.
If you have charts and data you want to move over to release 5.0, then you can read about it on www.ward.net. Look under “NeuroShell Trader Release News, Upgrade Information and Beta Tests” at the article called “Updating and Migrating from 4.x to 5.x”.
Obviously we will help you if you get in a big jam, but you can imagine how busy we’ll get if everyone gets in a jam all around the same time. So we urge you to carefully read about the methods, and evaluate what needs to be done in light of your own abilities. If you are somebody who is unsure about copying data files – you are definitely one of the ones who should use the conversion program!
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III. Editorial Comment by Steve Ward, CEO
1. I am very happy that NeuroShell Trader release 5.0 has been accepted so well with the vast majority of our users. There have been a handful of installation problems, and maybe a dozen or so bugs found within the first two weeks, but overall release 5 was successful in my view. We have fixed those bugs and we are working on 5.1 already. Several of those reporting bugs have already received modifed EXEs to test those bug fixes.
2. Along with release 5 we installed different forum software. The old forum was difficult to navigate, and many users rightly complained about it. The “new” forum is one we used for our online classes, not a really commercial looking one that we had hoped to have ready. However, at least the posts in each thread can now be viewed together in a linear fashion. We now only have one forum, because the ones specific to our non-trading products didn’t get enough traffic to warrant them being separate.
3. I like using Bowfort’s new IB feed, which gets data from my Interactive Brokers account. I like that prices on my chart now have almost no lag compared to prices on my IB Trader’s Workstation. One user emailed us and basically said “Why didn’t you guys do that?” The answer is we didn’t think about it, and we were too busy with release 5.0 anyway. So if you think we should do something in the future, email us and tell us. That doesn’t mean we’ll do it right away or at all, but at least we will have the benefit of your foresight.
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IV. Release 5.0 features – Portfolio Management
NeuroShell has some powerful portfolio management capabilities when you make use of the indicators in the Chart Page Indicators category. We explore just one of the many possibilities in our new example 18.
In our portfolio management example we build a portfolio trading strategy based upon the RSI indicator, but obviously any indicator or neural net prediction signal could be used instead. The idea is that the trading strategy buys stocks in the chart that have the lowest RSI values, and sells those same stocks when the RSI is no longer among the lowest in the chart.
For such a determination we use the new indicator Chart Page Lower Rank. If you inspect the portfolio view you will see that a stock has a rank of 1 whenever the RSI is the lowest of all stocks in the portfolio. Therefore if we buy whenever the Chart Page Lower Rank is <2, which we did, we will be buying the stock when its RSI is the lowest of all in the chart. Note that if we had used rank<3 we would be buying two stocks at once. Our exit condition is simple too. We exit when the rank is >3, in other words when at least three stocks have higher rank (lower RSIs).
To top everything off, we used the Chart Page Sum indicator to sum the equity curves of all stocks for both the trading strategy and the buy and hold strategy.
It should be noted that there are several other Chart Page indicators that can be used in place of the Lower rank, like the Percentile for instance.
In example 19 we used the Chart Page Upper Rank to make short entries and exits, as well as the Chart Page Lower Rank to make long entries and exits. It only took a slight adjustment to turn example 19 into a nicely hedged system in example 22. At all times it is long one stock and short one stock. Since the strategy always invests $10,000 in each stock, the hedge is maintained on a dollar basis too, which would not have happened if we were always buying and selling a fixed number of shares. All we did was adjust the rules so that an exit occurs as soon as the rank drops below one. We called that strategy Hedge1 because there is always one long and one short.
Then we build Hedge2, which always has two stocks long and two short. Obviously Hedge3, 4, etc. are possibilities. Clearly the best use of such hedging strategies would be to pick a portfolio of stocks in the same sector, say, so that they are likely to move together when news hits.
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V. One way to stop this newsletter from coming
It is really easy. Just change your email address and don’t tell us.
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