Topics for April
Copyright (c) 1999 Commodity Systems Inc. (CSI). All rights are reserved.
Topics discussed in this month's journal.
CSI will be
closed for voice communication on Friday, April 21st for the Good Friday
holiday. Although US exchanges will be closed, the CSI host computer will be
accessible as usual. Those markets that remain open will be available for
updates at their normal posting times.
Breaking Out of the Mold for Better Trading
If you took the time to investigate various technical trading approaches by consulting with successful, seasoned traders, you would inevitably find that the combination of impeccable market data and one particular type of trading system regularly outpaces all others. That trading system is? You guessed it - the simple breakout system.
The breakout system calculates the high-low range for a given time (typically, just a few days) and uses penetrations above or below the range as triggers to establish a new market direction. This simple model might be enhanced in many ways, such as setting stops or by looking for percentage penetration above or below that high or low, or other variations.
Without question, the enemy of the breakout system is bad data, which may involve errors or just poor presentation. Obscure bad prices can occur at any time, but flawed presentation, which refers to the use of settlements as substitutes for unachieved highs or lows, is an avoidable form of database corruption perpetuated by most other data vendors. These corrupted data points are your enemies because they represent trades that did not occur. Clearly, only false results can be achieved if they should be used as entry or reversal triggers.
The results of bad data can be varied. Breakouts caused by historical errors in highs or lows could force unfounded changes in your market direction, thereby cutting your potential gains short.' Those faulty reports (errors) might also trigger trading signals to be taken at the next day's open, above or below the prior day's false close, only to find that the market resumed its previous direction in morning trading. Regardless of your particular market direction, a bad data point could easily trigger a false buy or sell that could take you out of a good position and into a losing one.
Sheldon Knight's "How Clean Is Your Data" article in the September '99 Futures illustrated in a very positive way how good data leads to profits. In his example, data from three competitive firms were used to feed the same Breakout trading system. The chart demonstrated that the CSI-fed system easily whipped the competition of Omega Research's Historybankcom and Bridge/CRB with very superior performance. Mr. Knight's illustration helps prove the point that intelligent presentation and scrupulously clean data can easily contribute to stellar performance beyond the mundane produced by the ill-conceived data convention of the competition.
One could argue that, relying strictly on CSI's superior data accuracy, CSI's results could have been less than the two competitors, which is true. It should be mentioned, however, that if the results using CSI's data had turned out to be less than those competitors' (Omega and Bridge committed between 311% and 385%. more errors and omissions thin CSI), then their performance could not have been achieved. This is because flawed data cannot, in any way, prove a system's performance.
Our caution on data presentation is something every trader should consider Traders should be aware that the exchanges' settlement mechanism., which may base settlement prices upon the activity of a more liquid adjacent contract, is often used as proxy (plus interest and other carrying charges factored in) for a "close" or last price. In fact, all data vendors we know about (except CSI) routinely adjust highs and lows to conform to adjusted settlement values. When an adjusted settlement is outside the day's trading range and the high or low is adjusted to encompass the settlement price, traders can be trapped into relying on falsely presented highs and lows that never actually occurred. Basing trading decisions on this type of distorted data can result in unpleasant surprises.
Unfair Advantage® reports market data with actual opens, highs, lows and settlement prices, leaving it to the user to decide how best to analyze and present the data, Unfair Advantage users are the only ones who have the option of presenting data in actual exchange form, uncompromised by high/low distortion. CSI's competitors, on the other hand, have forever lost the ability to present their data in virgin exchange-released form. Virtually every CSI competitor vends data in compromised form, but the excuse that it "has always been done that way" does not justify the perpetuation of a flawed technique.
I urge you
to take the time to investigate the Breakout System approach to trading.
Consult with seasoned traders about the tools that have worked for them.
I'm sure you will find that the importance of BOTH impeccable data and a great
system cannot be overemphasized Successful traders will tell you again and
again that bad data cannot be used for backtesting a trading system. The
subtlest error will throw everything off, leaving your system mired in
doubt. Distortions caused by improperly applying settlement adjustments
are an unnecessary hardship, and CSI is the only company that hasn't stubbornly
held onto this data convention. When seeking a data vendor to drive your
trading system, CSI is the obvious choice.
A CSI Customer Reveals Omega's "UnfairBurdens"
I received the current newsletter in yesterday's mail and could hardly believe the timeliness of the lead article.
Last week I was forced to buy Omega's Supercharts® end of day (in order to run another trading program -with plug in - I am testing). After I placed the order I realized that I had not checked data compatibility. I called and asked the salesman if I could use CSI data. [He] just repeated over and over "Dial-Data.®" Having zero confidence in his reply, I hit the redial button and the next salesman also said "Dial-Data." Still not believing, I called another time and received the salesperson who took my order. He was calm, and without hesitation stated CSI data would be fine.
As if that were not bad enough, I had tech problems with setup. I called and asked why I could not get the program to read my data. the tech encouraged me to use ASCII and said he would email the instructions. Fortunately for me, their email took 24 hours to reach me. By then I realized that the CSI data was being read JUST FINE without following their confusing directions.
Omega should call their products "UnfairBurdens." Thanks for being there...keep up the great work."
Name withheld. Printed with
Notice of Price Change for UA World Futures Data
The service fee for updating World Futures markets has increased to $59 per month for new Unfair Advantage subscribers. All Current UA World Futures subscribers will continue at the $49 rate through the end of their prepaid subscriptions, at which time the new price will apply to renewals. As a courtesy to our current subscribers, we are offering the option of renewing annual subscriptions early to lock in the $49/month rate for one additional year. This offer is effective through April 30th, 2000.
The UA World Markets license fee has increased to a one-time $300 charge, but current UA North America data subscribers may upgrade for $100 (the balance of a $250 charge) on or before April 30th. The license fee increase will not affect current UA World Futures subscribers.
contact CSI bookkeeping at (561) 392-8663, or 274-4727 (toll free) or (561)
392-7761 (fax) before May 1st to upgrade or renew your subscription at the
Quickly Charting Thousands of Stocks with UA
Unfair Advantage users have been sampling CSI stock market data resources for two years now, giving our stock database plenty of exercise. We have made great strides toward our goal of creating a stock data delivery system on par with our premium futures service.
To get acquainted with UA for stock market use, we put UA through the paces of quickly loading a large list of stocks into a portfolio for quick review. A portfolio of stocks may be any size, but we will restrict this example to NASDAQ stocks in the current UA inventory. This 14-step procedure will show you how to easily define a portfolio of stocks and chart each individually.
1. From the main menu of UA,
click on "Portfolio."
delete these portfolio additions by repeating the selection process. (Click the
first OTC stock, then click the last while pressing <Shift>.) After
selecting the stocks, pull down the "Portfolio" menu and click "Delete." Repeat
the above procedure with other exchanges to view all stocks in your database.
You will be amazed at the capability of this tool.
Automatic E-Mail Billing and Technical Journals Now Available
Would you like to help save a tree? Request the CSI Technical Journal and future Invoices by e-mail. Contact CSI bookkeeping and tell us your CSI User ID, along with your preferred e-mail address, to begin this new environmentally friendly procedure.