January 16, 2017
IN THIS ISSUE
ADJUST YOUR PORTFOLIO FOR SUCCESS
WHERE ARE THE TASC TRADERS’ TIPS AND DISCUSSION FORUM?
Adjust Your Portfolio for Success
Rank Indicators to Balance Your Portfolio
NeuroShell Trader includes a number of example charts that range from beginner to expert level that just begin to explore what is possible with the software. We were able to take one of those examples and found out it is still profitable in 2018, three years after the chart was optimized.
Here’s the Backstory
In 2015 we were working on some charts for an upcoming webinar. We added current data to theTrader’s Portfolio Management Example 19 but it was not as successful as the original chart. We experimented with the chart and found out that substituting the ADX (Average Directional Movement) indicator for the RSI (Relative Strength Index) as the basis to rank the portfolio resulted in a profitable Trading System. Additional changes included adding Duke Energy and Southern Company to the portfolio and removing Hewlett Packard.
Note that most trading models need to be adjusted to keep pace with changing markets.
Below are the trading rules for the 2015 chart that rank a stock portfolio based on the value of ADX among the stocks in the portfolio:
We use the indicator Chart Page Lower Rank for the Long conditions. If you inspect the portfolio view you will see that a stock has a rank of 1 whenever the ADX is the lowest of all stocks in the portfolio. Therefore the Long Entry occurs whenever the Chart Page Lower Rank is < 2, which buys the stock when its ADX is the lowest of all in the chart. Note that if we had used rank < 3 we would be buying two stocks at once.
The Trading Strategy exits when the rank is > 3, in other words when at least three stocks have higher rank (lower ADXs).
The Short side flipped the conditions by substituting the Upper Rank indicators in the relational indicators.
2018 Update
We decided to add recent data to the chart without reoptimizing the model. We were pleasantly surprised to see the chart was still profitable in January 2018.
We added data up to January 2018 to the 2015 chart and it continued to be profitable for three years in the out of sample period.
For costs, we used a $10,000 fixed dollar amount of each stock, and assumed commissions of $5 each trade.
Click here to download the chart.
Check out the other example charts included in NeuroShell Trader to see which one could be adjusted to match your trading style.
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WHERE ARE THE TASC TRADERS’ TIPS AND DISCUSSION FORUM?
The monthly Traders’ Tips from Technical Analysis of STOCKS & COMMODITIES magazine as well as the Ward Systems Group newsletters and example charts are now being posted on nstsupport.wardsystemsgroup.com. You can search the entire web site with one query and you don’t have to log in to access the site.
The discussion forum now appears on the new site.
If you want to download the latest release of NeuroShell Trader or ChaosHunter, visit www.ward.net.