PointsAhead! 2.0 (Mouse Optional) DEMONSTRATION Diskette User's Guide This DEMO has been optimized for 286, 386, and 486 CPUs This DEMO will not work on any IBM XT or any other computer using a 8088 or 8086 chip. (c) Copyright 1991, 1992 All Rights Reserved The Small Investor's Software Company Preface More investors worldwide are taking charge of their investment decisions. Where other products help organize and track your profits and losses, PointsAhead! is different by contributing actively to your pre-investment decision making process. PointsAhead! should be used before you call your broker or trade desk to buy or sell any investment. By graphically displaying the historical prices, you can see what the "PROs" use when they decide to invest; hence you can benefit from better timing and make more money. Another unique quality which adds value to PointsAhead! is in its ability to integrate data from varying sources. PointsAhead! was designed to make acquiring and processing price data a simple process. We believe that your time should be spent on the most important aspect of investing which is looking for investment opportunities and not on the mundane daily tasks of getting and storing the data. PointsAhead! contains a number of "easy to use" programs which allow you to collect, store, graph, study, analyze, and edit end-of-day information for any stock, warrant, future, index, stock & future options, mutual funds, and money market funds transmitted by various data sources. These sources allow you to create data files which are stored in ASCII format so that you can use MS-DOS commands. PointsAhead! has 6 sections: Parameters, Symbols, Directories, Data, Graphics, and Utilitities. Four of these sections perform secondary functions like setting parameters, user-defined symbols, and type of data source, while other functions help you fix mistakes. However, the most powerful section of the program allows you to graphically display the daily price information and perform many studies and statistics on each ticker symbol. The daily prices can be displayed in one of three chart types: Bar chart, Equivolume chart, and the Candlebar chart. The prices are automatically graphically displayed in accordance with the Japanese Candlestick format using our proprietary display called the Candlebar chart. We developed this new display format which captures the graphical content of Candlesticks and the compactness of bars through the use of color. This new display makes it easier for you to identify the prominent Japanese patterns, or see how strong or weak the market's price action was for the day. For an indepth understanding of Japanese Candlesticks, please refer to any of the books available on the subject. PointsAhead! has packaged 36 of the most commonly used technical analysis tools and ideas in an effort to automate your investment data and enhance your trading skills. We hope that these ideas will help you to make more profitable trades. But it in no way is providing you with a trading system. Education and a thirst for knowledge are the root of frequent successful trades. Our aim is to provide you both of these; in your successful pursuit towards investing. Abbreviations used throughout PointsAhead!'s User Guide: - PA! = PointsAhead! - SISCO = The Small Investor's Software Company - The carrot ( ^ ) or represents the control key. - represents the ESCAPE key. - represents either the ENTER or RETURN key. - represents the Alternate key. - Combinations of keystrokes are written like this: +d This means press the Alternate key and the lowercase "d" key simultaneously. Notes regarding this Manual and PointsAhead!: - Throughout the User's Guide, any keystrokes that are required from you will be CAPITALIZED. - To accommodate different keyboards and hundreds of additional studies, PointsAhead! requires that both the CAPITAL & NUMERIC LOCKS ARE OFF. Please note that Capital letters are recognized as different from lowercase letters. - Downloading data is a daily task, the computer cannot automatically retrieve prices out of thin air. You must turn on your computer and press a few buttons every night in order to maintain complete data. Remember to download data after the market closes. - PointsAhead! needs 7 days of data before anything useful can be displayed on screen. - Please check the packing list to make sure that all of the programs are included on your disk. - The Key is used to exit from each section of the program. - Please readjust the contrast on your monitor to maximize visibility of the gray lines. - The Equivolume graph has a different scale than the studies. This is normal. - If there is no opening price then PointsAhead! uses the previous days closing price as todays opening price. - MS-DOS commands are referenced throughout this manual, please use the MS-DOS User's Guide for a better understanding of these functions. Hardware Requirements: IBM or Compatible - EGA or VGA color monitor required MS - DOS 3.0 or higher Hard disk drive is strongly recommended for improving the speed in retrieving and storing numerous data files. Example, if you have 400 Symbols that you follow; each symbol will need approximately 50 bytes of storage space which works out to be approximately 20k per day. Capacities and Limitations: Maximum number of symbols that can be graphed individually: unlimited Maximum number of symbols downloaded from Signal per collection file: 800 Maximum number of days that can be graphed: 400 trading days Maximum number of months of weekly data that can be graphed: 84 Maximum number of symbols for Manual Data Entry: 300 The program requires at least 7 days of data in order for the functions to operate properly. You must download and collect data for 7 trading days to get access to the statistics. You can graph the data after collecting one days data, however, most of the studies are based on statictical averages, so you will not have access to all of the functions at first. This program is equipped to handle Indices, Futures, Future Options, Stocks, Stock Options, Warrants, Mutual Funds, and Money Market Funds symbols downloaded from various data sources. Customer Support: Phone: (516) 798-9368 MON-FRI 10:00AM - 6:00PM EST Electronic Mail: Bulletin Board Service: (212) 752-8660 for 2400 Baud Modems (212) 752-8662 9600 or higher Modems (No Parity, 8 Data bits, 1 Stop Bit) Messages retreived daily Compuserve: User ID: 71165,2776 Messages retreived weekly Genie: Mail ID: J.Kellndorf1 Messages retreived weekly US Mail: The Small Investor's Software Company 138 Ocean Ave Amityville, NY 11701 Packing List: These are the files and data that you should have unpacked. PADEMO.TXT - DEMO Instructions PAMDEMO.EXE - Activates program PADEMO20.EXE - Graphs Sample Data SP_U.DC - SP 500 September Futures data T.DC - AT&T Stock data $INDU.DC - Dow Jones Industrial Average data Introduction to PointsAhead! DEMONSTRATION Diskette PointsAhead! has numerous functions and features to help you analyze the prices of your investments and better time the entry and exit of these transactions. In an effort to make it easier for you to understand the different aspects to computerizing and automating your investment decision making process, we have divided the User's Guide into several sections. The first section describes and explains all of the functions and keystrokes necessary to use all of the various statistics and charting styles. The second section is really Appendix A which describes all of the studies and statistics available. The third section pertains to explaining how PA! interfaces with all of the carying data sources (Appendix F through Q). We at SISCO are bringing to you the tools that are used by the professionals in the world of finance and trading. We anticipate that there are many new concepts and insights presented within these pages that require the patience of learning something new. If at times you do not understand a particular study or how it affects your ability to make money. Please use all the available means to contact us or to use other free sources such as your Library, Business related programs on TV or Cable, or contact your broker. We know that spending a little time learning how to time the markets will yield huge benefits for many years ahead. Before you move on, here is a global overview of what is involved in tracking and charting your investments. Please remember that before you can use PA! you need 7 days of price data and that these prices should be retrieved on a daily basis. Unfortunately, there are a number of steps required before you can perform the primary function of PA! and that is to analyze the price data and better time the entry and exit of your transactions. Step one is to retrieve the data and save it to your hard drive. Step two is to identify what the data contains and in what form the data is in. And the last step is to display it. Retrieving the data can be accomplished in a number of ways using either a Newspaper, Modem, FM Reciever, or Satellite. The transferring of the price data usually involves other software besides PA! such as Procomm (a telecommunication program), a program named Online software (a program provided free from the data source), or FUTURELINK's Exporter program (another program provided by another data source). As mentioned above, retrieving the data is not one of the functions of PA!. Retrieving data is best left to the data source for the most reliable and error free transfer of information. However, once the information is retrieved and stored, PA! can identify and classify the data. This easy step is explained in the section on how to use the data. Lastly, displaying and analyzing the data is explained in the section how to use PA!'s functions and features. In most cases, it is simply a matter of pressing a key to accomplish what you wanted in the first place - a graph or chart of the prices to help you identify profitable patterns. Getting A Quick Look at PointsAhead! ----------------------------------- First of all, Capital letters are recognized as being different from lowercase letters, so check both the capital and numeric lock to make sure that they are off before using any of the studies. Secondly, This program does more than just display price information, it also collects and stores it for you. However, this is not done automatically. You must press the required keys to download, convert, and store the information every trading day to keep your symbols' prices accurate and complete. The program is quite easy to use and become familiar with, however it is recommended that you read this manual before starting the program. For those of you inclined to jump right into things; you can run the program and sample data immediately. For those of you with a mouse just click in the appropriate areas to activate the buttons. Just type PAMDEMO . You are now in the program. Press to erase the Title Window and then Type ALT+G for graphics. The SP500 future contract will appear on the screen. Press +h simultaneously to display the study listing, or refer the Study Listing in this manual, and select which study you would like to display. At this point, you can analyze the SP500 36 different ways. When you are done, press to quit and you will return to DOS. Using PointsAhead!: ================== You only need to type in the letters PAMDEMO from either the PAS directory on your hard drive or from the current directory to activate the program. The rest of the program is menu driven. This means follow the choices that are available on the screen. Here is a brief summary of the features available to you with PointsAhead! There are interactive keys so that you can either move the cursor, pick one of the 36 studies to analyze the market, or select any of the user defined hot keys. The computer monitor will display three graphs simultaneously, allowing you to compare the price action with two of your favorite studies. Some of the other functions included are: 1. Parameter- Setting standard values for your preferences. 2. Symbols- Setting the user defined hot keys with your favorite ticker symbols. 3. Directories - Setting Multiple data directories. Allows you to separate classes of investments and store them in different directories. 4. Data- getting and storing data into ASCII data files. 5. Utilities- Fixing mistakes and archiving the ASCII data files. 6. Manual Entry- Creating and Entering your own data to make history files and charts. Main Menu: 1. Type PAMDEMO and the program will begin by showing you a title window. Press to erase it and at the top of screen will appear a menubar which contains several choices. 2. The choices are quite simple. You can change the program PARAMETERS; set which DIRECTORY the data resides in; or convert DATA; or preset which ticker SYMBOLS the program should keep ready to display; or analyze and display the GRAPHICS; or use one the UTILITIES to modify the data; or QUIT the program. All you need to do is press ALT and various letters will highlight in red. At this point you could modify the standard values for different moving averages by pressing the "P" key; or you could activate hot keys with your favorite symbols by pressing the "S" key; or simply graphically display a ticker symbol by pressing the "G" key. Due to the nature of this DEMO disk, the program is designed limit your access to the various functions. You will be able to make changes to the standard values however you will not be able to save any changes made to the standard values preset within the program. Continue by selecting the "G" key and press to graph the sample SP500 futures contract. Also, included are data for the stock AT&T and the Dow Jones Industrial Average. These data can be accessed by pressing the function keys F2 & F3 once a graph appears. The program will load in these data automatically after pressing one of these keys. 3. Once a graph appears you now have the ability to analyze it 36 different ways. You can practice with any of the keys to see what will happen. Just press the control key simultaneously with any letter of the alphabet to activate a function. Or press CTRL+h to display the help menu. If you get into trouble, or think that you have made a mistake; just press F1, F2, or F3 to redraw the graph or exit the program. (see the next paragraph below) 4. Exiting the program is simple; just press the key and the graph disappears and you are now back to DOS. A purchased copy of PA! would return to the menubar so that you could make changes and then redraw the graphs. Interactive keys: A tour of the Keyboard Keys used by PointsAhead! There are a few keys that are used by the program. However, for the interactive keys to work properly, make sure that the numeric and capital locks are off (disabled). The escape, the return/enter, the 4 arrows and all 10 function keys are used. All letters of the alphabet in conjunction with the control key are used to perform the 36 studies, plus toggling the moving average on/off screen, and stopping the program. A hot key is a combination of keystrokes that trigger the program to do something. Most hot keys in this program require two keys. The control key (the symbol used in this manual for the control key is the carrot (^) ) must be used simultaneously with the other key. Generally, it is the alpha-numeric keys that are used with the control key. GREY - Key (on numeric keypad) Decreases size of indicators while simultaneously increasing the size of the Chart. GREY + Key (on numeric keypad) Increases size of indicators while simultaneously shrinking the size of the Chart. ENTER KEY changes Moving Average The Enter/Return key when pressed changes the moving average value used by the program. This facilitates easy comparisons. For example, the standard setting is for 14 days, however maybe you would like to see the 20 day moving average. All you would do is press the enter key and answer the question on the screen. Then the program redraws the graph with the new moving average recalculated. Nothing appears different because the moving average is only visible after you press CRTL+y. Try it. HELP MENU - (Control + H) A blue display will list the studies that are available. Press any to continue. The program has a limited help menu. It is really a listing of all the current studies available. There are no on screen instructions explaining the use of this program. For any instructions, please refer to this manual. Press any key to return to the graph. ( ` ) - Chart Types The accent key is used to select one of the three different types of charts available. A pull down window will appear in the upper left hand corner. Just use the arrow keys to select the type of chart you wish to view - then press . This chart type will remain active until you change it. If you want to abort this function; just press . Please refer to Appendix B for descriptions of the chart types. CONTROL + Y The "^Y" keys are used to toggle on/off the statistics. This allows you the option of looking at the Japanese Candlesticks alone or with the moving average and Bollinger Bands overlaid on the screen simultaneously. CONTROL + F10 The "^F10" (control + F10) is used to enter any ticker symbol you want displayed. There are user defined keys for your favorite symbols. But when you want any other symbol graphed you need to use these keys to analyze these data. DEMO - ACCESS TO THIS FUNCTION IS DISABLED! TRENDLINE KEY (/) The "/" forward slash line is used to draw trendlines. Note that the control key is not needed for this function. The program draws trendlines by marking 2 points. After using the arrows to move the line markers to isolate a point, press "/" once. Now one point is stored. Then move the arrows to mark the other point and then press "/" again. Now on the screen should appear a white line between the 2 points that you isolated. If not, then move the line markers again and press "/" again; a line should appear. If you accidently make a mistake with the 2 points, all you have to do is erase the line. The only way to erase a line is to clear the entire screen. There are two ways to do this. First, press the control + Y and the price graph is redrawn. Secondly, press the hot key for the same ticker symbol again. FUNCTION KEYS & CONTROL plus (DIGITS 1-9) The function keys 1- 10 "F1-F10" and control + function keys " ^F1 - ^F9 " allow you to graph and switch between 19 of your favorite symbols without entering the ticker symbol. These keys are user defined symbol keys. Please refer to the User Guide's section on Ticker. Also, refer to Setting User defined Hot Keys section in this manual. Remember, both the numeric and capital locks should be off. EXITING PROGRAM (ESC) There are two keys to press to exit the program. Each key is different depending on where you are in the program. Pressing ALT+Q to activate the mainbar and then pressing E returns you to DOS - your operating system. Pressing the key when you are in the graphics area returns you to DOS. SHELLING to DOS (ALT + s) This feature allows you to exit PointsAhead! to use DOS functions, like checking a directory for a file or looking for a ticker symbol, and then return to PointsAhead! without rereading in data. Returning to PointsAhead! is easy; just type the word EXIT and your graph will be redrawn. This function requires more memory, so if you are running out of memory please do not use this feature. USING MULTIPLE DIRECTORIES: ALT + d & ALT + #'s This feature allows you to do is change from one directory to another without having you to go to the parameter section of the program and change the pathname, extension name, or data order. For most users using one data source, you will not need this feature because all of your data is stored in one directory with one extension name and one data order. DEMO - THIS FUNCTION HAS BEEN DISABLED! CURSOR CONTROL: Arrow Keys The Up and Down arrows move the horizontal marker and displays the price at that level. The Left and Right arrows move the vertical marker to show past daily price information. These keys can be used at any time. When using the right and left arrows, the screen will display the information for that given day along with its statistics. Also, at the end of the top line of information is something called "DATA#". This is simply the number of days data you have collected. This feature is also useful for counting days between cycles. Just substract the "DATA#" from each peak and you now have the number of days for that cycle. When using the up and down arrows, the screen will display a horizontal green line. This marks the price level, and the price value is displayed in green off to the lower right of the top graph. This feature quickly identifies price ranges. It is helpful to find a 50% retracement, or identify Fibonacci targets. Just have a calculator handy, and after marking the top and bottom, you can calculate the areas of resistance. Please note that the arrow keys are also used to draw trendlines. Note that these arrow keys can be used at any time to identify a previous price. MONTHLY ARROWS CTRL+ arrows This combination of keys allows to move the cursors in monthly increments instead of daily increments. This is only useful when you have collected more than one years worth of data. CONTROLLING INDICATOR SIZE (keypad + -) The half screen price charts always display two indictors. At times you may want to change the size of these windows. Increasing the size of the indicator bar is through the use of the "+" key on the numeric keypad while decreasing the size is through the use of the "-" key on the numeric keypad. CALCULATOR ? This simple calculator allows you to quickly figure the percent change and the point difference between to periods. Activating this function is simple. Just select a day by moving the left/right arrows to the day you wish to view. Press the "?" (shift+/) key and then move the cursor to the next day for comparison. Press "?" again. Off to the right will appear the percent change in yellow and the number points between the two days. These numbers are based on the closing prices of the days selected. Also, please note that the order of the days you select will determine if the noted change will be a positive or negative value. SCAN SYMBOLS PGUP / PGDN / HOME / END These four keys will allow you instant access to those data files listed in the directory as defined in the Parameters Menu using the specified Data Pathname and Extension Name. The Page Down (PGDN) key will bring cause the next symbol in the directory to be graphed. Using this function the first time will cause the first symbol in the directory to be graphed, when pressed a second the second file will be graphed, etc. PA! does not alphabetize the symbols in the directory, it uses the order that exists on your hard drive. The Page Up (PGUP) key does the opposite. It causes the previous graph to be drawn. If you graphed the first symbol in the directory, then this key will redraw the symbol. The HOME key causes the first symbol in the directory to be displayed while the END key causes the last symbol in the directory to be displayed. GRAPHICS ======== Main Graph Explanation ---------------------- After Pressing the "G" from the mainbar of PAMDEMO, you should see three graphs. This program displays the price history in the top graph with accordance to the Japanese Candlestick format. The red portion designates the daily trading range. The white portion shows strength with the closing price higher than the opening price. The light blue portion shows weakness. The closing price is lower than the opening price. Just below the graph is the ticker symbol along with the last days price history: "C"= close, "H"= high, "L"= low, and "MID"= the midpoint of the days range. Underneath that information is the "STD=" which is the standard deviation based on the preset moving average. The "AVERAGE=" is the preset moving average. The "2+/- =" are the second standard deviations numbers which when graphed are yellow dots. These yellow bands are also known as "Bollinger Bands". Explanation of Main Graphs use of Color --------------------------------------- * Red = Daily Trading Range Gray dash = Standard Deviation * White = Higher Close than Open Yellow dot = Double Standard Deviation * Light Blue = Higher Open than Close Gray vertical dashes = Monthly Marker * Green dot = Closing price Blue = Moving Average NOTE: Press Control+Y to display the Bollinger bands and preset moving average Those colors indicated by (*) can be changed to the color of your choice. DEMO - ACCESS TO CUSTOM COLOR IS DENIED! Lower Graph Explanation ----------------------- The lower graphs are dedicated to displaying the various functions and studies available to you. Each Graph is labeled and the current graph activated is highlighted in white and the other graph is outlined in yellow. PointsAhead! uses colored lines to differentiate between the multi-lined graphs. The label above the graph is the same color to help identify the function. Performing Technical Studies and Statistics =========================================== Remember, both the capital and numeric keyboard locks should be off. Use the arrows to move the cursor and price markers. Once you have displayed the prices on the computer screen using the graphics program "G", there are 36 studies you can use to analyze the prices. Bear in mind that the program has preset values, and if you wish to change them, then exit the graphics section and enter the parameters section to change these values. You would press then press ALT+P and the standard values will be on screen. In addition, you can with one key stroke change from one symbol to another (Please refer to the section on user-defined symbols). Also, you can insert the current days price information to update all studies intraday (control+a). There is a help menu to show you the hot-keys necessary to perform the different studies (control+h). STUDY LISTING ============= The control key ( ^ ) must be pressed simultaneously with the lowercase letter to activate these studies: ^a - Allows you to add a new last, high, low, open to add the next trading days price action. It does not store the added data to the permanent file. ^b - Plots 1, 5, & 10 day buying pressure ^c - Midpoint Rule: Shows frequency of market to follow through on closing price. If closing price is in top 50% daily range then the study determines if the next days trading range was higher than the closing price. ^d - Displays the net change in price from previous close to current close. It also shows the net change from the previous close to opening price. ^e - Shows the size of the daily range. It gives an indication of volatility. Also, it provides you the average daily range (based on preset open/close moving average). ^f - Shows daily range relative to closing price. Price action below center line is lower than close. (based on preset open/close moving average) ^g - Frequency histogram of past 20 days trading ranges ^h - Help Menu ^i - RSI relative strength index both 5 & 10 day (based on preset moving average) ^j - RSI daily range: shows highest to lowest buying pressure for the day. The closing Buying Pressure is also graphed. ^k - Shows daily range midpoint to next days midpoint. Identifies real change in price to prevent whipsawing. (based on preset moving average) ^l - Plots a spread: you select the other ticker symbol to create the spread. Once plotted there is no cursor control nor can any of the indicators be accessed. ^m - Changes moving average value ^n - Shows how many times the opening price was repeated from ten days ago. If the graph shows only 0, this means that the opening price from tens days ago never repeated itself. As a trader, it also means that if you placed a trade on the open. You either made a great trade because the price moved higher; or you are losing money, and you could not break even for ten days. ^o - Rate of change (indicator based on preset moving average) ^p - It prints the last Close, High, Low, Open, Midpoint, Standard Deviation bands, & Moving Average price to printer (refer to printing statistics for explanation of AH,AL,OH,OL) ^q - Shows the open to close range for each day ^r - Shows price action relative to opening price. Below center line, price lower than open (based on preset open/close Moving average) ^s - Stochastic (based on moving average preset) ^t - MACD (Moving Average Convergence/Divergence) Oscillator: ^u - Plots up-down volatility (based on preset moving average) ^v - Plots volume and open interest with a 3 day moving average of the volume. ^w - William's on Balance Volume (WoBV) ^x - Volatility Plot - Plots the standard deviation for each day ^y - Toggles statistics on/off from main graph (no average or standard deviation bands) ^z - 2 day Buying Pressure: takes the buying pressure of 2 days at a time. It uses the open, high, and low of the past 2 days and uses the second days price for the last price. ^\ - limits the number of days data on the computer screen. NO CONTROL KEY IS REQUIRED for the following studies - use only lower case letters. a - ADX - Average Directional Movement Index w - converts daily data into weekly data i - Random Walk Index o - Price volatility relative to the opening price r - Answers the question, How did the past 5 weekdays (mondays) trade relative to the open? f - Answers the question, How did the past 5 weekdays (mondays) trade relative to the close? / - Draws Trendlines (see Interactive keys in this manual) ` - Selects chart type: Candlebar, Bar, or Equivolume (use arrow keys then ) SHIFT KEY IS REQUIRED for the following studies - CAPITALS only. C - Chaikin's Indicator % - William's % R P - Parabolics: Stop and Reverse (SAR) X - Triple Moving Average Crossover System ? - Calculator: % change and difference > - Fibonacci retracement lines ALTernate KEY IS REQUIRED for the following functions. (@=ALT) @s - Shells to DOS @d - Edits directory listing DEMO - FUNCTION DISABLED! @1 through @7 - Selects Multiple Directories DEMO - FUNCTION DISABLED! @arrows - Monthly cursor NO OTHER KEYS REQUIRED GREY - Decreases size of indicators GREY + Increases size of indicators PGUP - instantly graph previous symbol PGDN - instantly graph next symbol HOME - instantly graph first symbol END - instantly graph last symbol **Note: For a more comprehensive explanation of these studies and statistics please refer to the other sections of this manual. PARAMETERS ========== Setting User Defined PointsAhead! Variables Here is a listing of the variables that you can set when using PointsAhead!. 1. Moving Average- set the time frame you wish to use in days 2. Type of moving average- Mathematically, there are many ways to average numbers. This setting allows you to choose your favorite type. S. The Simple moving average is just the average of the closing prices based on the number of days set by the moving average setting. M. The median moving average calculates the daily midpoint of the days trading range and uses this value for averaging. W. The weighted moving average calculates the average by weighting each days price differently. This method essentially states that the current price is more important than the price of 5 days ago. So, the program will weight the current price more than the next day, and the next, etc. With a 5 day moving average, the current price would be multiplied by 5, the previous days close would be multiplied by 4, etc. then the sum of the past five days would be divided by 15 (=5+4+3+2+1). E. The exponential moving average is similar to the weighted MA in that they both consider the most recent data more important than older data. However it is calculated with an exponential decay rather than a fixed proportional decrease each day. 3. MACD lag- the period in days to determine the MACD oscillator 4. MACD moving average 1- the long term moving average in days (usually 3X short term) 5. MACD moving average 2- the short term moving average in days 6. Stochastic - sets the time frame you wish to use in days 7. RSI- sets the time frame for the first RSI; the longer term RSI is automaticly 2 times the number set by you. 8. Rate of change- sets the time frame you wish to use in days 9. Set opening/closing average- sets the time frame you wish to use in days. This is used by three studies. The size of the Daily Range (^E), The Range Relative to the Opening Price (^R), and the Range Relative to the Closing Price (^F). 10. Set Communication Port- this allows you to to choose which serial port the computer will use for downloading data. 11. Set Data File Extension- this parameter allows you to choose from different data files. Here are some commonly used Extensions - Signal: DC Bonneville: MC Metastock: DOP CSI: DTA Futurelink/Globalink: PRN 12. Set Date Format - ASCII data is delivered in various forms. PointsAhead! attempts to provide with a universal ASCII data converter. The date can be sent in one of three ways: 10/4/91, 100491, or 911004. The first way uses slashes. This variable would then be set with an S. Only Futurelink and Globalink users need to set this variable to S. All other data sources use the I setting. 13. Set ASCII data order - PointsAhead! you to specify the data order. If your data is in this order: (D)ate, (O)pen, (H)igh, (L)ow, (C)lose or Current Price, (V)olume, Open (I)nterest then you would take the letter of each category and enter this as the variable for PointsAhead!: DOHLCVI. This seven letter code tells PointAhead! how to rearrange the prices so that PointsAhead! can graph these data properly. If any one of these data are missing then leave out that identifier ie: if open interest is missing then just type in DOHLCV. However, if anything other than a number appears in a column, then use a Z for (Z)ero data. Also, Tick Data users can use intra-day data by inserting a (T) for time. Any other data that has a time field in this form ( HH:MM H=hour M=minute ) may also use the T. Remember only 400 bars can be displayed, so tick data will be limited to the last 400 ticks (hardly useful) while 400 15 minute bars represent 26 hours of trading or 4 days. Please check the Appendicies for your data source's data order. 14. Set Data Pathname- if the current directory is where both the program and data files are located then you do not need to insert a pathname. However, if the data is in another directory (different from the program), enter the name of that directory along with its root directory. In other words, type in the MS-DOS pathname. 15. Set Backup Drive- this allows you to set the disk drive that you would like to use for making copies of the data files created by the program. All you have to do is type the letter A-E to indicate which drive is to be used. 16. Set Password - after the first month, you will need a password to continue using PointsAhead!. Please call us when PointsAhead! asks for a password. 17. Set Drive & Path for Daily Data Files- this is the pathname to store the raw output from Signal. These data are not neccessary for viewing graphs however they are useful for recovering lost data and having a second copy of these data. Also, this is used to locate DTN, Radio Exchange, and Bonneville files. DEMO NOTE: You may changes these values, however they will not be stored or used. Standard Preset Values for User Defined Variables: 1. Moving Average 14 2. Type of Moving Average M 3. MACD lag 7 4. MACD moving average 1 21 5. MACD moving average 2 7 6. Stochastic 7 7. RSI 5 8. Rate of change 9 9. Opening/Closing average: 5 10. Communication Port: 1 11. Datafile Extension DC 12. Data order: DCHLOVI 13. Date Format: (S or I) I 14. Data Pathname: 15. Backup disk drive: 16. Password 17. Daily Datafile Path DEMO NOTE: These are the values preset within the program. SYMBOLS ======= DEMO NOTE: You may view and change these preset symbols but you may not save any changes. Setting User Defined Hot Keys (refer to Appendix D) This feature of PointsAhead! is optional, except for ticker symbol #1, and is intended for those of you who view the same symbols every day. The most frequently used stocks, indices, and/or futures should be entered to make switching between symbols easier and quicker. The program comes with the first four functions keys set (F1-S&P future, F2-AT&T stock, F3- Dow Jones Industrial Average F4- US Bonds future). The 19 user defined symbols are stored in the the file called "DCSYMBOL". This means that if for some reason this file is not present in the same directory as PointsAhead!; then PointsAhead! will not work. To change these symbols just press ALT+S from the Mainbar and press . The symbol table should appear on the screen. DEMO Note: These user defined keys will not work if the numeric or capital lock is on. THIS FUNCTION IS DISABLED! TICKER SYMBOLS ============== Due to the fact that there is no standardization within the industry, each data source can have its own naming system. This presents discrepancies between the symbol names perhaps printed in the newspapers from those used by your data source. PA! can use any legal DOS name to read a file so it is not dependent on a specific ticker symbol. Please check with your data source for proper symbol designation. MANUAL DATA ENTRY ================= Maximum number of symbols = 300 DEMO NOTE - THIS FUNCTION IS DISABLED! PointsAhead! allows you to enter data from the newspaper, for those of you who do not use any electronic quote system. For those of you who do have an electronic data source, please skip this section. We recommend that you use the same newspaper when possible everyday so that the order of the symbols remains the same and that the same information can be entered each day. Otherwise, the files will be incomplete and your efforts will be of limited use. Remember to enter price data each day so that you will have meaningful data files. PointsAhead! makes the chore of recording data easier and lets you generate your own price charts. PointsAhead! stores your favorite symbols in the order you read them from the newspaper with whatever symbol you wish to call them. There are exceptions for commodities but the details will be discussed later. PointsAhead! also converts eighths and 32nds for you saving you time entering numbers. PointsAhead! also allows you to take a break from entering data and resume the list at a later time: basicly PointsAhead! allow you to start where you left off. UTILITIES ========= refer to Appendix D for menu listing DEMO NOTE - THESE FUNCTIONS ARE DISABLED! You have just read how to graph these data and collect it, but sometimes problems arise when collecting data and you need to edit it, and store it for some future reference. This is why this section exists. There are 6 utilities provided. Please refer to Appendix D for the listing of utilities. Selecting a utility is easy, all you need to do is press ALT+U from the Mainbar and then press either the up or down arrow keys to highlight the utility you wish to use and then press enter. The descriptions and functions of the utilities are outlined below. Saving Data Files to Floppy Disk: -------------------------------- If you are not a Signal user, you should use the MS-DOS BACKUP command for making hard disk back ups. You can also use the MS-DOS COPY command to transfer your data files to floppy disk. This means that you need to quit PointsAhead! and return to the DOS prompt. Please refer to the MS-DOS manual for details regarding BACKUP. Removing & Copying Expired Data Files ------------------------------------- This utility removes from your data diectory the data files that have not been updated with the current date and copies the data files to floppy disk. After you begin tracking some symbols, from time to time you add new symbols and delete others which no longer interest you. However, there is no need to keep all of these older unupdated data files in your current data directory. So, to save time and disk space, these files are saved to floppy disk and then deleted from the data directory. In order to do this, two variables need to be set in the Parameter section of the program before executing this utility. The Data Pathname and the Backup Pathname needs to be set. Please refer to the Parameter section of the program to change these variables. Basicly, this utility weeds out the old dead wood from the pile. This utility is particularly useful if you track futures and options which constantly expire and roll over to the next contract. You will end up deleting the old contract then you will need to replace it with a new contract. Just highlight this utility and press , then wait for the Main Menu to appear on the screen. INSERT DATA: Adding Data ------------------------ If you could not download information for a particular day then that information can only be inserted manually. That is, open the data file and type the numbers in the proper order as described earlier, please refer to Appendix E (use 2 spaces between numbers). If you want to, you could forget that days data and the program will graph the existing data without showing a space in the graph. Of course this means that these data are incomplete. In an effort to keep the historical data accurate you can insert a marker in the file that shows the date only but all other data is recorded as zero. The following example will explain. You recorded data for SP_Z up to 901011 (10/11/90) but you couldn't download on 901012 (10/12/90) but you started again saving data 901013. If you would like to insert the data from the 12th, you would have to insert it manually for each symbol in the collection file. However, you might not have the time to do that immediately. In the Utilities section of PA, just select the utility INSERT DATA. It inserts the date to mark the line of data in the file so you can change it at a later date. This date marker is inserted into all data files in the data directory. The data inserted looks like this: 901012 0 0 0 0 0 0 0 . The graphing program will replace those zeros with the previous days data until you edit the file. The reason for this is to maintain the moving averages and other statistics. Remember that all data files will be changed in the directory where the data is stored. You cannot just add a date marker to 2 or 3 symbols; all of the symbols in the directory with the proper extension will get a date marker. These two variables are set by you in the Parameter section of the program. Follow these steps to insert a date marker into all of your data files: 1. If its your first time using this utility, you need to change two program parameters a. from the Main Menu press P b. set the data pathname - enter the directory in which the data files are stored c. set the extension name - enter the extension name for all data files d. press Escape to exit Parameter section of program 2. From the Main Menu press U 3. Use the arrow keys to select the INSERT DATA utility, then press enter 4. Wait for the Main Menu to return to the screen - your finished. Removing Duplicate Data: ----------------------- Every now and then you might forget that you had already downloaded data for a particular day and you do it again. Needless to say, deleting one line of information from hundreds of symbols could take you a long time to fix. Accidents to happen, and with that said, this utility will remove any duplicate dates in your data files. Like the other utilities, certain parameters need to be set before this utility will operate correctly. Please set the Data Pathname and the extension name in the Parameter section of the program. Please refer to the Parameter section of the program to change these variables. Just highlight this utility and press enter, then wait for the Main Menu to appear on the screen - your finished. Removing the Last Data Entry: ---------------------------- Another type of problem that can arise is that your computer clock is not set properly and you saved data with the wrong date. This can be fixed by deleting the entry and re-downloading data again after the date has been reset. Of course, other problems could make you want to delete the last line of data, but for now when you wnat to delete the last line of data all you need to do is hightlight this utility and wait for the Main Menu to appear. Like the other utilities, certain parameters need to be set before this utility will operate correctly. Please set the Data. Pathname and the Extension Name in the Parameter section of the program. Please refer to the Parameter section of the program to change these variables. Just highlight this utility and press enter, then wait for the Main Menu to appear on the screen - your finished. User Defined Main Graph Display Colors -------------------------------------- You can change the Main Graph display colors by just selecting the change color option from the Utility section of PointsAhead! and follow the instructions on the screen. Change one color or all four colors, PointsAhead! will save your changes until you change your mind again. The colors are stored in the file named SCREEN.DIS. If this file is missing PointsAhead! will use the standard preset colors as described in this manual under the section Main Graph. PRINTING DATA FILES =================== There is no menu listing for printing Printing data files in numerical form can only be accomplished by using the print command from DOS. For example, printing the Dow Jones Industral Index would look like this: Print $INDU.DC . This is provided that you are in the same directory as the data file; otherwise, include the pathname to the data file such as: PRINT C:\PAS\DATA\$INDU.DC Printing Statistics: (^P) ------------------- The (^P) hot key will print the last trading days information plus the moving average and the standard deviation bands. It also will print the expected high and low for the day if the current trading days opening price is inserted (press ^A) and the following 2 studies are performed. The (^R) and the (^F) functions need to be pressed for these values to be printed. Once these functions have been executed, PointsAhead! will print the expected opening high (OH), opening low (OL), the average high (AH), and the average low (AL) (refer to Appendix A for futher discussion of AH, AL, OH, OL under Daily Range Relative to Closing Price (^F) and Daily Range Relative to Opening Price (^R) ). Printing Graphs: --------------- Graphs can not be printed with this version of PointsAhead!. However you can purchase this (Printing Graphs: price charts and indicators) as an option. Please call for details. Reading CSI data files ---------------------- DEMO NOTE - THIS FUNCTION IS DESABLED! PointsAhead! has the ability to read these data files with out altering their structure. The process is easy. All you need to do is print a symbol listing and then set a few parameters within PointsAhead! . First, exit PointsAhead! and run the LISTCSI.EXE program. This program cross references the F number.DTA file with the actual symbol name and description. This program will create a file called LISTING.CSI. This listing can be printed so that you can have a permanent record. REMEMBER, in order to get the listing you must quit PointsAhead! and then from the DOS prompt; type in LISTCSI . Follow the instructions on the screen and when you have exited the program, you can print the LISTING.CSI file using the DOS PRINT command. Next, type PA . Press ALT+P to go to the Parameters section of the program and change these parameters: Set extension name - DTA Set data pathname - the directory name that contains the data files (ie: F001.DTA) (The two types of files required are: QMaster, *.DTA) Go to the Symbols section of the program: Set the first Ticker Symbol: Enter Symbol name The Symbol Name can be entered in one of two ways because of the way CSI indexes filenames. The first way is to simply enter the symbol name which should be less than 8 characters long. The second way involves using the cross reference file LISTING.CSI explained just above. You could access the data by using the CSI file name F022.DTA. For example, you would only type in F022 for the symbol name. Reading Metastock and Computrac data files ------------------------------------------ DEMO NOTE - THIS FUNCTION IS DESABLED! PointsAhead! has the ability to read these data files with out altering their structure. The process is easy. All you need to do is print a symbol listing and then set a few parameters within PointsAhead! . First, exit PointsAhead! and run the LISTMETA.EXE program. This program cross references the F number.DOP file with the actual symbol name and description. This program will create a file called LISTING.MS. This listing can be printed so that you can have a permanent record. REMEMBER, in order to get the listing you must quit PointsAhead! and then from the DOS prompt; type in LISTMETA . Follow the instructions on the screen and when you have exited the program, you can print the LISTING.MS file using the DOS PRINT command. Next, type PA . Press ALT+P to go to the Parameters section of the program and change these parameters: Set extension name - DOP Set data pathname - the directory name that contains the data files (ie: F1.DOP) (The three types of files required are: Master, *.DOP, *.DAT) Go to the Symbols section of the program: Set the first Ticker Symbol: Enter Symbol name The Symbol Name can be entered in one of two ways because of the way Metastock indexes filenames. The first way is to simply enter the symbol name which should be less than 9 characters long. The second way involves using the cross reference file LISTING.MS explained just above. You could access the data by using the Metastock file name F22.DOP. For example, you would only type in F22 for the symbol name. Getting Help & Additional Information: ======================================= If you would like to have these programs customized, that is have an additional study added or make any other changes, like expanding any of the limits imposed by PointsAhead!, please contact: The Small Investor's Software Co. 138 Ocean Ave Amityville, NY 11701-3611 (516) 789 - 9368 The minimum charge is $30.00 to add one study, for other changes please call for prices. Closing Comments: ================ PointsAhead! is intended to provide quick access to graphical and statistical analysis for any symbol. It is a tool from which you can learn to identify patterns in prices. It can also help you develop trading strategies. It provides you the most commonly used indicators and studies to teach yourself technical analysis and removes the drudgery of collecting, maintaining, calculating, and graphing data. This allows you to concentrate on the task of identifying profitable trades. So, PointsAhead! is not designed to be a trading system providing you rules on when to enter or exit trades but rather it provides you a source of information from which you can assess the nature of the market, and helps you develop your own trading system. Appendix A: Explanation of Program Studies and Functions. -------------------------------------------- Adding Current Prices: (^A) This feature allows you to add the current days prices so that you can see how the graph and other statistics change throughout the trading day. For all symbols, type in the last current price, the daily high, the daily low, and the opening price ( for stocks and indices the opening price can be the previous days closing price). However, when entering prices for T- Bond futures, Ten year Notes, Mid American T- Bonds, and the FYter five year future contract (all other Bonds contracts are n decmal form); just enter the price in 32nds. This feature eliminates the conversion of bond prices in 32nds to decimal. Unfortunately, stock prices still need to be converted from eighths to decimal. For example, last price for IBM is 107 3/8; enter 107.375 -last price for the US Dollar Index is 82.14; enter 82.14 -last price for T-bond future is 93 14/32; enter 93.14. After entering the prices, and you find a mistake, no problem, you can change them again by pressing the "^A" again. However, when changing prices for the current trading day, or for "what if" analysis, there is a shortcut. Just enter the last price. You only have to enter the last price after entering the open, high, and low once for the day. The other prices are stored until you change the daily high/low, or when you switch to another symbol (this erases the current intradays data) . Please note that once you switch symbols the quote entered manually will be lost. This function does not have any memory. ADX (a) Average Directional Movement Index The ADX measures how far the price moves past the previous days trading range. A strong trending market will have higher highs from day to day and so the ADX will also be increasing. In weak markets, lower lows will also cause the ADX to be increasing. This occurs simply because the ADX measures trends whether they are up or down. The ADX also has sub-functions called the +DM and the -DM. These are components of the ADX and can be used separately to determine buy and sell points. One simple example of how to use these +DM and -DM is to buy when the +DM crosses above the - DM and conversely, sell when the +DM crosses below the -DM. The ADX makes use of the trading concept of inside verses outside trading days. Whereas inside trading days do not contribute to the trend, neither does the ADX increase nor decrease in value. Outside trading days are the important days to the ADX. An outside trading day is when the price makes both higher highs and lower lows as compared to the previous trading days high and low. Inside trading days are just the opposite. The high and low are inside or equal to the previous trading days high and low. Trending days are when either, but not both, a new high or new low has been made compared with the previous trading day. So outside and trending days cause the ADX to increase in value because these days contribute toward developing a trend. Buying Pressure (^B) Mathematical formula: (high-open)+(close-low) BP = ----------------------- X 100 2 x (high-low) This indicator shows the buying power for the day. The amount of buying throughout the day is represented by two events. The first is the rise in price above the opening price (or the previous day's closing price) to the high of the day. The second is the rise in price above the low to the closing price. Combined, this is the total buying for the day. Selling is the opposite price action which is the price below the open to the low of the day plus the selling from the high to the close. Buying pressure is represented as a percentage 0 to 100. So, if there is 88% BP then 12% is selling. The moving average of BP is just a simple average of the past 5 & 10 days of BP. CALCULATOR ? (shift+/) This simple calculator allows you to quickly figure the percent change and the point difference between to periods. Activating this function is simple. Just select a day by moving the left/right arrows to the day you wish to view. Press the "?" (shift+/) key and then move the cursor to the next day for comparison. Press "?" again. Off to the right will appear the percent change in yellow and the number points between the two days. These numbers are based on the closing prices of the days selected. Also, please note that the order of the days you select will determine if the noted change will be a positive or negative value. Chaikin's Indicator: (C) This study combines volatility and the rate of change to produce a variation of the ADX as a trend detector. This indicator has two lines. The red line is represents the moving average of the daily range. This moving average value is set by the OPENING/CLOSE MA in the Parameter Menu. The green line is the Rate of Change of the red line. This value can be changed by the Rate of Change value in the Parameter Menu. The minimum and maximum values are shown for your own reference. Differenced Data: (^D) This graph shows you the price change from the previous close to the current closing price in red. Above the center line is a positive change in price. Below the center is negative. Also, for comparison, in blue is the change in price from the previous close to opening price. This graph allows you to understand the dynamics of the ticker symbol. Small red lines mean little price change. Large red lines indicate strong moves. Daily range relative to the closing price: (^F) This graph uses the center line to represent the closing price. So any line above the center is the price action above the closing price. Any line below the center is the price action below the closing price. The graph displays the 5 day average above and below the close. This is useful for projecting the next days average trading range for a stock in which Lotus does not broadcast an opening price or for those of you that prefer to base decisions on the closing price. (ie: stock closed at 14.00 the average up is 0.38 and down is -0.54. The expected range for the next day would be 14.38 to 13.46) The program prints the expected range as "AH" and "AL". This is actually the average expected high because the program uses the expected high based on the opening price and averages it with the expected high from the closing price; the result is "AH". The same process is used for the expected low "AL". If the study (^R- Relative Open) wasn't used then the "AH" and "AL" are based on the closing price only. You must press a key to continue with the program, however when you do, the information will be erased. Of course, you can perform the study again at any time to get the information back. Daily range relative to the opening price: (^R) This graph is similar to the graph explained above. This graph uses the center line to represent the opening price. So any line above the center is the price action above the opening price. Any line below the center is the price action below the opening price. The graph displays the 5 day average above and below the close. This is useful for projecting the next days average trading range for a future contract in which Lotus does broadcast an opening price or for those of you that prefer to base decisions on the opening price. (ie: SP_Z opened at 314.00 the average up is 3.58 and down is -2.34. The expected trading range for the day would be 317.58 to 311.66). Remember that you need the opening price to determine the range. The program prints the expected range as "OH" and "OL". "OH" is the opening expected high and "OL" is the opening expected low. These numbers are derived from simple addition and subtraction of the average up and down values next to the graph from the opening price. The yellow line is a three day Moving Average of the price movement. This helps show the detrended high frequencies that are in the market. Basicly, short term cycles can be identified from these data. Fibonacci Retracement Lines (>) Pressing this key allows you to automatically draw Fibonacci retracement lines that are 38.2%, 50%, and 61.8% of the total range that you identified. Selecting the range to be identified is through pressing the (>) key. Pressing it once selects either the top or bottom of the range and pressing it a second time marks the opposite end of the range. After selecting a top and bottom, 5 lines will appear. The top and bottom lines (white) identify the top and bottom you selected while the three middle lines (purple) correspond to the 38.2%, 50%, and 61.8% retracement levels. Marking the top and bottom is through the use of the arrow keys. Use both the up/down and the left/right arrows to select a price level then press (>) to save that point. Then repeat these key strokes to save the second point. After it is selected the lines will appear. Frequency Histogram of trading ranges: (^G) This graph is for those of you that do not have a strong background in statistics. This graph groups the last 20 trading days trading ranges and shows you what the most likely trading range is going to be. This could be represented by an average price with a standard deviation, however this might be simpler to understand. Intraday Action: (^Q) This graph shows just the opening price to the closing price of the same day. This shows the strength of the price action. This is different from the other graph (^D) which shows the previous close to opening price. Limit Data on Screen (^\) At some point after you have been storing information on numerous stocks and futures you will have collected hundreds of trading days information. This can be good for weekly charts and for historical purposes, but the range on the screen might get so large that it becomes difficult to identify small price levels or even see small trading ranges. Also, for future traders collecting prices for a particular month from year to year creates gaps in prices besides gaps in ranges and indicators. These problems can be solved with this function because you can limit the amount of data to be graphed. Each day is numbered. To view the data number just use the right or left cursor keys and the DATA# will be located just below the main graph. For example, the last trading day might be labeled DATA#= 238 and you only want the last 100 trading days on the screen. Just press both the control + backslash simultaneously and enter the data# 138 . This tells the program to start graphing from the 138 day and graph up to the last day 238. You basicly can zoom in on just a smaller portion of the prices in the data file. MACD (Moving Average Convergence/Divergence) indicator: (^T) This indicator takes the difference between two Moving Averages which are preset (by you in the Parameter program - to change values, goto Main Menu (press ^C) and then type "P" and then takes a moving average of the difference. Now, this can get confusing, however, the oscillator is based on the value determined by the difference between the 2 moving averages and the moving average of the difference. For example, if you subtracted the value of the 7 day moving average (top graph blue line) from the 20 day moving average (top graph green line) that number is the difference of the two moving averages. That number can be positive or negative, and we will call it the 7/20 number (bottom graph light blue line). The next step is to average the 7/20 number (bottom graph yellow dots). This average is now subtracted from the 7/20 number. The result of this subtraction is called the MACD Oscillator (bottom graph red lines). Its purpose is to identify cycles. Above the center line is a buy signal and below the center line is a sell signal. Midpoint to Midpoint: (^K) This graph was produced to help eliminate getting whipsawed (This means getting stopped out of the market to soon). What this graph shows you is the midpoint of the trading range from the previous day to the midpoint of the trading range of the current day. If you see large red lines then the market is making real price changes from day to day small red lines show that the market is in a trading range. The yellow line is the average of the midpoint to midpoint changes (this average is set by the open/close moving average). Midpoint Rule: (^C) This graph answers the question, how many times did the price follow through the next day and became profitable? If the closing price is in the top 50% of the the days trading range, or if the the closing price is in the bottom 50% of the days trading range, the program draws a line above the center when the price action continues in the same direction the next day and draws a line down when the price action does not follow through. The program only analyzes the last 20 trading days. The red lines indicate whether or not the price action followed the rules. Above the center is a profitable trade, meaning had you sold on the close if the price was in the lower half of the days range; the next day prices were lower than the close at some time in the trading day. If prices were in the top half, then the price went higher the next day in keeping with the rule. Below the centerline, the line indicates that the price action did not continue in the same direction the next day - had you entered a trade, it would of been a loss. The yellow line is the last line. It does not indicate a profitable nor a loosing trade, it just indicates whether the last price is above the midpoint of the day or below the midpoint for easy market assessment near the markets close. (Use the "^A" function to add the prices for the day near the markets close to assess your chances of profitability) The avg gain is computed from the close to next days high/low whichever is profitable. The loss is computed from close to high/low to minimize the loss. Parabolics: SAR- Stop and Reverse (P) This is sometimes called the SAR short for stop and reverse system developed by Welles Wilder. It is designed to always keep you inthe market because when it generates a signal (when the price crosses the trailing stop) you are to exit your position and initiate a new one in the opposite direction. The parabolics are simply trailing stops that accelerate as the number days in the same direction increases. Price Volatility relative to the opening price (o) This proprietary indicator attempts to identify which side of the market to be on - buy or sell. It does this by first calculating the average price above and below the opening price. With this information, it now compares the high and low of the day with the expected high and low from the open. The indicator is simply a ratio. With a value greater than one (the grey line on the graph), you should be on that side of the market, or if you were on the opposite side of the market then you should now find the best price to exit a losing trade because the market has now changed direction short term. There are four graphs on the bottom half of the screen for this indicator. The top two lower graphs are the HPVO (high price volatility from opening) and the LPVO (low price volatility from opening). These two graphs are for a short term period as labeled on the screen. The HPVO is based on the high of the day and the LPVO is based on the low of the day. The bottom two graphs are similar to the upper two graphs with the exception that they are for a longer time frame. This is automatically set for three times the short term graphs. The short term graphs are preset by the opening/closing parameter in the parameter portion of the program. You can change this value at any time by going back to the main menu and pressing "P". Typically if the short term HPVO (light blue line) is greater than one (above the grey line) than the LPVO (dark blue line) will be less one (below the grey line) - indicating a buy. The opposite is true for when the LPVO is above one and the HPVO is less than one - indicating a sell. Only on wild trading days will both the HPVO and the LPVO be above one on the same day. When this occurs, no useful information regarding direction can be ascertained. The short term PVOs are meant to provide you with daily trading points, while the long term PVOs are help you establish intermediate trends. Rate of Change: (^O) The rate of change indicator is a classic momentum indicator. It simply subtracts the current price from the price of 7 days ago (this number can be changed by you and is preset) and produces a percentage change. It can help indentify intermediate trends. The center line represents 100% and the other two lines represent 99% and 101%. Generally, if a market can move through these three lines the trend will continue either up or down. RSI daily range: (^J) (Relative Strength Index) This might be confusing, but a one day RSI is also similar to buying pressure, because the one day RSI is comparing the up price to the total daily range. So, this graph shows you the days theoretical greatest and weakest buying pressure with the closing buying pressure shown as a white dot. The yellow line just connects the midpoint of all of the days ranges. This graph helps spot shifts in buying and selling. RSI - Relative Strength Index (^I) Mathematical formula too complex for this manual The RSI shows you the amount of upward price movement compared to downward price movement. For example, if the RSI is based on 5 days, then those days when the price moved up is compared to the total price move for the past 5 days. With this indicator, the accepted rule is if the RSI is above 70% then it is overbought, while if the RSI is below 30% then it is oversold. RWI (i) Random Walk Index This indicator really takes advantage of your computers power due to the heavy number crunching required to generate these data. This also means that it is slow to appear on the screen because of the massive amount of repetition required. The Index is contingent on a number of factors however volatility is the main component. This indicator adjusts itself to the varying amount of volatility in the market being analyzed. It essentially is a trend following indicator which tends to be more objective because it does account for volatility. The results on the screen consist of four graphs. The top two graphs are for the Short term RWI (SRWI) and the bottom two graphs are for the long term RWI (LRWI). Both the SRWI and the LRWI analyze the highs and the lows to generate complimentary graphs which when combined can be used to to develop trading rules. The peaks of the SRWI of highs tend to correspond to short term tops in prices while peaks of the SRWI of lows tend to correspond to the short term lows in prices. The LRWI is for trend following and peaks do not correspond to highs or lows but rather a rise above the grey line which represents the value of one is a buy and a decline below the grey line is a sell. The typical senario would be in a strongly uptrending market the HRWI would go above the grey line while the LRWI would be below the grey line - this is a buy. If the HRWI should go below the grey line and the LRWI is also below the grey line then this could be interpreted as either a hold signal or an accumulation signal since the trend has not been violated. It just has stalled, so this can represent a buying opportunity or it could mean you should hold positions without adding new ones in case the market breaks in the opposite direction. Deciding which strategy applies is determined by combining other indicators and understanding how strongly the market in changing direction. Autolookback is a term used here because the calculation requires that todays volatility is recalculated so that the maximum random walk value can be recalculated. The Random Walk Index it quantifying how far has the price moved from yesterday and correlating it to the current state of volatility. This is then calculated to find the largest change in price relative to volatility for the last 70 days. The index auto seeks the maximum value for the past 70 days and then calculates the values based on the number of days which presented the maximum random walk value. For example, if the market made a tremendous price move it might prove to be only relevant because the percentage difference between today's price and 10 days ago is now greater than can predicted mathematically due to normal price drift. This means that due to the current state of volatility the random walk values would now be calculated using a 10 day period because it generated the greatest values. This calculation is performed on all 4 components. So it is conceivable that all 4 components could have 4 different autolookback periods. Unlike other indicators in which time determines how long one would expect to hold a trade. With this indicator, time is not particularly important but the values generated are the relevant aspect of this indicator. This implies that you do not have a preconceived expectation of when you can expect to exit the trade. You are just waiting for the numbers to fall below the grey line. Size of daily range: (^E) This is simply the high minus the low of the day. The graph centers the daily range and shows you how big or small the range was compared to the past. The MA (moving average) is simply an average of the past days daily range (the number of days is preset by the open/close Moving Average in the Parameter program). Spreads: (^L) Just enter the name of the ticker symbol which you want to create the spread with and the program will show closing prices and plot spread on the lower graph. The program converts data into percentage changes to compare relative performance between the two symbols. The actual price changes might be larger or smaller than that shown on the graph, however in percentage terms the price change is proportional from one graph to the other. Meaning, a 1% move is the same change on the graph for each market however a 1% move might be 20 points in one market and 80 points in the other market. The program identifies the ticker by color, and shows you the median price of each symbol from which the percentage change is based upon. For example, median1=300 and median2=2600, it is from numbers that the percentage change is determined and not simply the last prices from each symbol. Stochastic Indicator: (^S) Mathematical formula for 5 days: last price - 5 day Low Stochastic = ------------------------ X 100 5 day High - 5 day low The resulting number is a percentage ranging from 0 to 100. It shows you where the current price is relative to the range of prices of the past 5 days. It is generally accepted that if the stochastic indicator is above 80% then the price is overbought (too expensive). Conversely, if the stochastic indicator is below 20% then the price is oversold (too cheap). Trend Follower: (^N) This graph answers the question, how many times (or days) will the opening price reoccur? It searches ahead 10 days and keeps track if the opening price occurred the following day. A value of ten would mean that in the following ten trading days the opening price was within the daily range of each of the ten days; essentially a trendless market for ten days. Conversely, a value of 0 would indicate a trending market. If case of a loosing trade, you would not have been able to get out of the trade for ten days at the same price you entered the trade. By nature of the program design, the program looks ahead and not behind. Consequently, the last trading day with ten trading days is the last value to be considered by the program. That is why the graph does not produce any results for the last ten trading days (there is not enough information). Triple Moving Average Crossover (X) This is simply three different moving averages (MA) overlaid one on top of the other. The way you set the moving averages is by using the Parameter section of the program. The long term MA is set through the MACD Long Term value. The intermediate MA is set through the ROC value. The short term MA is set through the Opening/Close range value. This is perhaps the simplest and most widely used system to make trades. Toggles Statistics (on/off): (^Y) This function simply eliminates the statistics from the main graph. This allows you to view only the prices as represented by the Japanese candlesticks without any other lines on the screen. All other studies and arrow keys work normally. If you would like the statistics to be displayed again; simply press the "Y" key once again. The "Y" key toggles the statistics on and off. Two Day Buying Pressure: (^Z) This graph is like the buying pressure graph (^B) however this graph uses the open from two days ago and the current last price. The high used is the high of the past two days and low is the low of the past two days. This graph was designed to help analyze the first 2 hours of the new trading day. So, when the trading day begins use the (^A) function to add the new days prices, then use the (^Z) function to now display the buying pressure in context with the previous days price action. Up-Down Volatility: (^U) Mathematical Formula: example: Moving average = 5 Up line= sum of 5 days (absolute(High - Previous close)) Down line=sum of 5 days (absolute(Low - Previous Close)) This graph shows both the buying and selling power of the market simultaneously. This differs from buying pressure which is one sided. This allows for spotting trends in buying or selling. The crossover points are short term directional changes and are frequently tradable. (the moving average is set by the open/close moving average) Volume and Open Interest: (^V) This is simply a graph of the volume and open interest. The gray line is a simple 3 day average of the volume (this is not variable). ***Note: For indices which have no volume, this graph can not be displayed. Volatility: (^X) This graph is represents volatility as the size of the standard deviation bands computed by the moving average used by you. The taller the blue line, the larger the standard deviation and hence the more volatility. When the moving average is changed from 7 to 20 days, for example, the volatility changes also. Rising volatility usually dicates continuing trends, while decreasing volatility, usually indicates trendless, or sideways price action for a while. Weekday statistics relative to open (r) Based on the preset opening/closing average parameter, this graphs the past weekdays trading range relative to the opening price. For example, the past 5 Mondays will be graphed with the center grey line representing the opening price. The blue portion above the grey line shows you if the trading days prices above the opening price and the blue portion below the center line represents the prices below the opening price. The red line is the average of the portion above the open and below the open. All five weekdays are displayed. Note: you can only use this function with daily information - weekly charts eliminate daily information. Weekday statistics relative to close (f) Based on the preset opening/closing average parameter, this graphs the past weekdays trading range relative to the closing price. For example, the past 5 Mondays will be graphed with the center grey line representing the closing price. The blue portion above the grey line shows you if the trading days prices above the closing price and the blue portion below the center line represents the prices below the closing price. The red line is the average of the portion above the close and below the close. All five weekdays are displayed. Note: you can only use this function with daily information - weekly charts eliminate daily information. Weekly charts (w) The daily information will be converted into weekly charts. All other functions will work with this graph except for the Weekday statistics. If you would like the daily information back on the screen, all you need to do is press the appropriate function key, if it was one of the 19 user defined graphs, or press both the control-zero keys to type in the name of the ticker symbol. William's % R (%) This is really the same as the Stochastic except that it is exactly opposite in value. It is the inverse of the Stochastic. It is to be used in the same way as the Stochastic. The scale however is reverse also 0 to -100 instead of 0 to +100. William's on Balance Volume (WoBV): (^W) This graph relates price with volume to give a indication of whether or not the price change is associated with strength or weakness. If the peaks are rising and the price is rising the market is strong. The opposite is true for declining prices with decling WoBV. However, the best use of this indicator is for indentifying positive or negative divergences. This usually occurs with market tops and bottoms. Basicly, the volume pattern changes and the WoBV identifies this change. The classic positive divergence is when then price declines but the WoBV is rising. This would indicate a trend change is in the works. ***Note: Those symbols without volume information can not use this indicator. HOW TO STAY OUT OF TROUBLE ========================== There are as many styles to investing as there are people. However, whether you believe in reading the news for gaining your insight into when to buy and sell or whether you believe in letting the price dictate your actions, gaining a graphical view of the past prices can demonstrate profitable patterns that should not be ignored. The art to investing is in the blending of a number of disciplines. Although this manual cannot emunerate in detail all of the available techniques and strategies, we will provide you with some additional thoughts to help you gain perspective and stay focused on the task of making more money from every investment. First, most of the time the investment that you plan to buy will be stagnant in price. We ask when should you attempt to purchase and sell this investment? Second, prices vary daily and have a range of prices. How can you use this range to your advantage? Third, Everybody has the right opinion of market but does it match your time frame for making money? This states that somebody might think the stock will go up and someone else feels it will go down. If at first it drops and goes higher, these opinions are both right. If the first invested for the short haul and the other invested for the long haul they both made money. So timing is everything. Determine when it is that you expect a profit and stick to your plan. Fourth, you will loose money. Did you ever think about the fact that you will loose money? What is your contingency plan? How can you institute damage control? Fifth, which "hot inside tip" is worthy of your money? You will have to decide on some other critierion besides friendship, past experience, and luck. Try doing some analysis. Sixth, will the market tell you how to invest? Yes. Look for the signs every day. They exist. All you need to do is your homework; there ain't no free lunch. Seventh, how good are your instincts? Statistics show that most investors loose money. We ask why? Eighth, successful investors are confident. PA! has those tools which show you statistically when you are taking a high risk or a low risk. Stay with the low risk - high reward trades and watch your confidence and your profits rise. HOW TO PUT IT ALL TOGETHER ========================== Here are a few sample charts that we will analyze to demonstrate how to use the various studies and function. Insert example graphs here. Insert exmple text here. There is no way that professionals use all of these tools on each investment. PA! has 90% of what all professionals use to analyze their investments, however they only use 5 to 8 items out of the 36 studies available themselves to make a decision. You should test all of these indicators to learn how reliable they are and to determine which ones produce signals that make you comfortable in identifying low risk opportunities. Try using different time periods, different combinations of rules, and finally combine different techniques to produce a trading strategy. One last thought, PA! very existence is because traders can make money routinely based on trends and price movements. However, traders realize that there are times when the numbers alone are not enough in formulating the trading plan. For instance, the recent political environment during September of 1992 created an unstable currency market. Indicators were of some value, but no indicator could predict what the the English Chancellor was going to say and when he opened his mouth the price dropped 400 points in the British Pound. So don't bury your head in the sand, there are periods when technical trading is the best way and then there times when you can throw the charts out the window. Good trades will become more the rule than the exception with some diligence, analysis, and common sense. Appendix B: Different Chart types Candlebar Chart This is a new display format representative of the Japanese Candlesticks. This format uses color to identify strong and weak days. It has the graphical content of Candlesticks but has the advantage of allowing you to view more data per screen. The colors can be changed, just go to the Utility section of the program and select the user defined Main Graph display colors. Bar Chart This chart is the traditional Bar Chart. The opening price is the dash to the left of the bar and the close is the dash to the right of the bar. The color of the bars is the same as the total range color. So , to change this color just go to Utility section the program and select the user defined Main Graph display colors. Just set the total range color to what you want. Equivolume Chart This chart is a two dimensional graph. It shows you volume and price at the same time. The width represents volume and height represents the total trading range for the day. We have enhanced the original chart design by including the closing price as a green horizontal line. The colors can be changed by going to the Utility section of the program and select the user defined Main Graph display colors. Up days color is defined by the up range and Down days color is defined by the down range. An up day is defined by having today's close higher than yesterday's close. The opposite is true for down days. FSCandlebar = Full Screen Candlebar FSBar = Full Screen Bar FSEquivolume = Full Screen Equivolume Please take note that the scale of the Equivolume price graph does not match the studies. The days can be different widths due to different volumes. PointsAhead! cursor is also set for these different scaling factors. Please use the cursor to match the price information to the statistic. Appendix C: The MENUBAR Parameter Menu: this section stores and sets your frequently used variables Variable Name Standard Value set initially by PointsAhead! 1. Moving Average 14 2. Type of Moving Average M 3. MACD lag 7 4. MACD moving average 1 21 5. MACD moving average 2 7 6. Stochastic 7 7. RSI 5 8. Rate of change 9 9. Opening/Closing average 5 10. Communication Port 1 11. Datafile Extension DC 12. Enter Date Format (S or I) I 13.Enter Data Record Order DCHLOVI 14. Data Pathname 15. Backup disk drive 16. Password 17. Daily Datafile Pathname Symbol Menu: this section stores up to 19 symbols and activates function keys Only four symbols are set initially by PointsAhead! 1. Ticker Symbol: SP_U 2. Ticker Symbol: T 3. Ticker Symbol: $INDU 4. Ticker Symbol: US_U Directory Menu: allows for multiple directories Data Menu: this section lets you convert or download data of your choice The following services listed below require conversion or downloading. Many other services not listed here are compatible with PA! however they only require a few settings to be changed. - Prodigy - Download SIGNAL - Set Parameters for FUTURELINK / GLOBALINK (Oster Communications) Data Files - Separate Market Center Daily Data (Bonneville) - Separate DTN LDC data Files - Separate Quote Monitor historical data files (for Radio Exchange) - Separate Personal Gains historical DIF data files (for Radio Exchange) - Warner Computer Services - modem required - Convert MX data (Track Data) - Manual Data Entry Graphics: This part of PointsAhead! goes directly to graphing these data and performs all technical studies. Utilities Menu: this section helps you store and fix data files -Remove & Copy expired futures/options data files from current list -Insert Data (Insert Missing data with blank line) -Remove Duplicate Data (fixes mistake of downloading twice) -Remove Last Data Entries (deletes last line of data) -User Defined Main Graph Display Colors Quit: Exits PointsAhead! and returns you to MS-DOS