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My opinion is none of the plug-ins, with the exception of one, is
worth much.
There just isn't a trading system in a box that is going to
consistently make money. What's more there isn't any hard core
rational scientific test evidence to back up any of the plug-ins as
having any value, and that includes the so called "new" RMO system. A
lot of "traders" and guru's base their opinions on shoddy test methods
or empirical evidence, which in the world of trading will get you killed.
If you want to get a good understanding of the kind of data I'm
refering to and why you just aren't going to buy a system in a box for
a few bucks, you can read Evidence-Based Technical Analysis: Applying
the Scientific Method and Statistical Inference to Trading Signals by
David Aronson. I don't generally recommend this book because it's very
difficult reading and most newbie's don't care about facts, they just
want to keep doing what they're doing until they run out of money, or
they want to keep believing TA is going give them a way to beat the
market. They may think they've tested their system, but they don't
understand randomness, statistical inference, or data mining.
Basically the only plug-in I use from Equis and have found effective
in nearly every system I've tested it in is the plug-in that used to
be called SpyGlass and is now named Fire (don't ask me why Fire, it's
totally the wrong name for the product).
Fire has two extremely useful functions. One is the External Relative
Strength calculation. This is a comparison of the strength of one
stock to every other stock in a user specified universe (or against an
index, if you want). In other words it's a momentum comparison and
ranking tool. Investors Business Daily uses essentially the same
method as part of it's ranking formula. Each stock is rated from 1 to 100.
Unlike other momentum methods this one calculates values which
actually mean something. If a stock is ranked 90 then for the chosen
look back period it is outperforming 90% of all the stocks it is being
compared against.
I've tested every ranking method I could find, and unlike other
methods this one is consistent, produces values which mean something
and is easy to use and understand. In other words, almost every
ranking method generates a numberical ranking that is meaningless. If
magical ranking tool 1 says that a stock is the top ranked with a
value of 3.245, next time you run the magical ranking tool the best
performing stock may have a value of 6.789, so what's the difference
between that stock this week and the one from last week. I don't know
and you won't either. All you will know is both were supposedly the
best performing that week according to magical ranking tool.
With the ERS calculation, if a stock is outperforming 95% of all other
stocks this week, and next week it is only outperforming 80% of all
other stocks, then you know exactly where it is on the performance
grid, how much momentum it has lost and what that 20% of all other
stocks from your universe are now ahead of it performance wise. In
addition, I can plug the value 95 or greater into my test equation and
it means the same thing every week. If I plug-in 3.245 or greater,
then I could be left with not the top performing stock, but half the
stocks might have a score higher than 3.245, which was the highest
score last week. The numerical value of the magical ranking tool means
nothing.
When I have added the ERS calculation as a filter it has improved the
performance of just about every trading system I've applied it to. It
takes time to learn to use it and figure out the best look back
periods and ranking thresholds for whatever you are doing, but once
you know those, it's a powerful filter.
The other feature of Fire that is value is its ability to make custom
indexes from the symbols in any folder. That means you can see how
stocks in a group, like sectors or the value line list, are performing
as a whole. For example, you can set up stocks in folders that match
the stocks that make up the ETFs you like to trade. You can then find
the ETF with the best ranked momentum and chart performance, and then
identify the stocks that are ranked with the highest momentum from the
group of stocks that make up the ETF. You can then buy the best
performing stocks that make up the ETF, rather than the whole ETF (or
group of stocks). Give this some thought!
These two tools are two of the most powerful tools in both their
performance and their consistency.
My favorite method of trading is to use a prescreened group of stocks
that are screened on fundamentals and quants. Value Line, IBD, S&P and
AAII have such groups. If you have access to the track record of a
prescreened group, then you know what you can expect from that group
under different market conditions. Using the list, I apply a little
very simple TA, and I mean a little and very simple to the group to
decide what to buy and what to sell.
>From these groups, there are only two methods of trading that make
much sense. One method is trend following. There are a whole lot of
methods of trend following someone can use, and the other method is to
watch for these strong stocks to pullback (not pullback for a day or
two but for weeks) and then buy them when they retrace and they almost
always do, even in crummy years like 2000, 2001 and 2002.
I'm not going to get into details of this kind of trading. If you want
to learn about it you can read Roy's Newsletter
http://www.metastocktips.co.nz/
You'll need to read all of the back issues. From there you'll get
enough information and ideas to trade from these groups very
successfully.
Outside of Roy's Newsletter and Fire, nothing Equis sells is of much
value outside of MS itself. They wish they had a good system that made
money consistently. Can you imagine what that would do for sales of MS!
This is my opinion. Make of it whatever you would like.
Have fun newbie's. The tuition for this educations is really expensive!
Super
--- In equismetastock@xxxxxxxxxxxxxxx, "csbro" <csbro@xxx> wrote:
>
> Thank you superfragalist for your unemotional breakdown of the "plug-
> ins" for Metastock. Metastock was recommended to me through AAII. I
> purchased the EOD version around the 1st of December, studied it for a
> couple weeks, then began using it for ETF's. In two weeks I was able to
> either save or profit enough from it's use (specifically) to pay for it
> better than four times over. I broke it down on a spreadsheet,
> comparing what would have been made normally vs. by using Metastock. As
> a retired program analyst I'm enjoying it's use and was considering a
> plug-in that would get me away from what I perceive as tedious and
> boring programming chores. (No doubt that will offend some thin skinned
> programmer)Trade Oracle sounds interesting, though a bit on the pricey
> side. Do you feel that it would serve well in that capacity?
>
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