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Market Skill-Builder
Financial Markets & Financial Software The Skill-Builder for Financial Trading - Financial Training Software.

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Customising the Display and Trading Parameters.

The "Customise" Menu.

The individual Commands, associated Tools and Hot-Keys are shown below together with relevant notes and explanations where appropriate.

          Alt + C

To make detailed chart-layout changes.

Notes:

• Number of periods (Long / Medium / Short-Term charts) : As the vertical grid-line intervals are defined as 7, 12, and 15 respectively, these are the minimum parameters, and whatever periods are defined are rounded to a multiple of the relevant number plus 1. This ensures that the latest bar is always situated immediately to the right of the last vertical grid-line, and the current date or time displayed at bottom-right of the short-term chart. If "999" is entered the entire available price-history will be displayed.

• Width Expansion / Compression (positive or negative number) : Chart-width is computed by an algorithm. This parameter can be used to expand or compress each chart laterally by the number of screen-points specified. In Excel 4 charts can be expanded so that their width exceeds the display area, but not in later versions.

• Bar-Chart Height (Number of screen-points). Sets the vertical height of the bar-charts, minimum 75.

• Bar-Chart Overlap hides unnecessary space at the top of the charts.

• Statistics Window Height (Number of screen-points) default 90: Increase if the ToolBar at the bottom of the statistics window is partially obscured, which can occur on some systems.

• Indicator-Chart Height (Number of screen-points), minimum & default : 75

• Right Edge Corner co-ordinate (in screen-points). Default-value : Automatically set to the width of the current display area.

• Overlap (expressed in screen-points), Hides window title-bars (below the window above) and unnecessary blank space. Default value varies with different Excel versions.

     (No Tool)     (No Hot-Key)

Saves the current display as one of the four re-callable "Custom" layouts. Normally used after defining a layout using the "Edit Chart Dimensions" command described above. This permanently replaces the pre-defined layouts (provided that the "Save changes to program file" option is selected when the application is closed). If one of these four commands is selected, the program requests confirmation before carrying it out.

          Alt + i

To edit the Indicator parameters

The following indicators are available directly on the bar-charts:

• 2 Moving-Averages (either Simple or Weighted) : If S is entered in the first edit-box, all averages are arithmetic, computed by totalling the last N last-of-period prices and dividing by N. Weighted moving-averages, if selected, split the total period into three and weight the latest / middle / earliest thirds 3 / 2 / 1 respectively. If the period is not divisible by three the latest (and middle) sections receive the "remainder" period(s). The next four lines of edit boxes are used to define the length of each average's reference-period and whether or not they are to be displayed.

• High / Low range, N periods preceding the current period. The fifth and sixth line of edit-boxes are used to define the reference-period lengths and whether or not they are to be displayed. (used to highlight trading-range break-outs).

• Relative Strength Index ("RSI") : The formula used to compute the RSI is:

  RSI = 100 - ( 100 / ( 1 + RS ) ) where :

  RS =(Total points gained during up-periods / No. of reference-periods) /
  (Total points lost during down periods / No. of reference-periods).

  The parameter to be selected by the user is the number of periods to be used. 9 and 14 are popular numbers.

• Stochastics ("Slowed") : Computed as follows :

  Raw Stochastic" = 100 / ( Last - Lo ) / ( Hi - Lo ) ) where :

  • Last = Latest Price
  • Lo = Lowest Low during the reference-period
  • Hi = Highest High during the reference period

    The two plotted lines are (a) the three-period average of the Raw Stochastic, and (b) the three-period average of (a).

• Momentum : Computed as follows : If the "Total Period" = 10 and the "Smoothing Factor" = 3 then Momentum = average of the last three period-end prices (including the current period) Minus the average of the prices of the ninth, eighth, and seventh preceding periods. Note that this indicator is not constrained within a 0 - 100 range as are the others.

          Alt + T

To edit the Trading parameters

Sets the parameters listed below. Changes become effective the next time trading starts at the beginning of a trading file (ie immediately if new data has just been loaded or if the current file is re-set to its starting position using the "Re-Start" command, "Utility" menu), otherwise changes are recorded and implemented the next time one of those events occurs (provided that the "Save changes to program file" option is selected when the application is closed).

• : Default value is US $ 1,000,000, any other value (for example capital brought forward from previous trading) may be entered, but display problems may arise in the statistics window if amounts over $ 10,000,000 are used. Individual traders / investors may prefer to set a value in line with their own available risk-capital.

• : Loaded automatically from the data-reference file, but can be changed here.

• : Can be either flat-rate (eg $12.5 / transaction = $ 25 per round-turn, which is a reasonable retail rate for futures contracts) or a percentage of the total nominal value of the transaction (as is usual for stocks & shares etc.). The program determines the method to be used depending on whether the commission is entered as a number greater or less than 1 : eg .01 is interpreted as "1% of transaction value" whereas 12.5 is interpreted as "$12.5 per contract".

• : Default value is one point (tick) to take the bid/offer spread and execution inefficiency into account. This is a reasonable average in most markets although an illiquid market will tend to worsen this spread. If the default value is used a total of two ticks will be effectively be charged to the trading results for slippage on a single-contract "round-turn" (ie opening and closing of the position).

• : Default value : one point. A limit order is an instruction to Buy or Sell only if a more attractive price (lower or higher respectively) is reached. On a strict limit order no slippage would therefore occur (since by definition no execution occurs at a price worse than the limit price). However, if the limit price is the extreme price of a given market move, there is no guarantee that the order would have been executed (brokers cannot be held responsible for a failure to execute an order at a price which is reached but not penetrated). This program therefore assumes all limit orders to be "MIT" ("Market-if-Touched"), ie the order automatically becomes an "at Market" order (and therefore subject to slippage) if the price is reached.

• : Default value : 2 points. A Stop order is an instruction to Buy or Sell only if a less attractive price (higher or lower respectively) is reached. Slippage tends to be more severe when the market is moving "against the trade" which it is, by definition, when stop orders are hit. Traders use "Stop" orders both to exit existing trades when the market is moving against the trade (either to limit losses or to capture profits before they have entirely disappeared) and to enter new trades - eg when the price has carried above a narrow trading-range, indicating the probability that a new significant move has started.

  • All the above types of order can, of course, be used to open, close, increase or decrease position-size, or reverse from long to short or vice-versa.

  • Slippage may result in order-executions being filled outside the actual historical trading-range. This is not unrealistic since the existence of additional orders in the market at that time may have caused such an extension of the trading-range.

• : (Must be either zero or 1). Specifies whether orders are to be effective immediately or after a one-period delay. Set automatically by the program at 1 when trading intra-day data using one-minute charts is loaded, 0 for longer time-frames (in which case slippage should be increased).

  • If set at 1 : "Market" orders are executed at the last price of the next time-period (plus or minus slippage), "Limit" and "Stop" orders become effective and liable to be executed as from the first tick of the period after that. This simulates the average time necessary for a trader to pick up his 'phone and get his order transmitted to the floor once he has taken his trading decision.

  • If set at 0 : "Market" orders are executed immediately (ie at the price currently displayed plus or minus slippage). This is analogous to a trader entering a "Market-On-Close" order. NB market order slippage should be re-set higher (say to 3 points) since slippage tends to be higher for MOC orders. "Limit" and "Stop" orders become effective and liable to be executed as from the first tick of the period immediately following order-entry. This is analogous to a trader entering an order at some time between one day's close and the next day's opening.

• The rules governing the prices at which Limit and Stop orders are executed are:

  • If the market has moved beyond the defined price by the time the order becomes effective, it will be executed at the price of the first tick (plus or minus slippage). This is advantageous for limit orders and disadvantageous for stop orders (eg buy-limit set at 6347, first tick when order becomes effective 6340, order filled at 6340 plus slippage, ie cheaper than the limit. Conversely, buy-stop set at 6366, first effective tick 6370, order filled at 6370 plus slippage, ie more expensive than the stop-price). The converse naturally applies to Sell orders.

  • If the market has not yet reached the defined price before the first tick of the period in which the order becomes effective (or traded beyond it during the "delay period" but moved back) and then touches or moves through the price during the first "effective period" the order is executed at the order-price plus or minus slippage.

  • If neither of the above occurs, the order remains in force until it is executed during a subsequent period (applying the same rules) or it is cancelled or replaced.

  • Note that slippage is always added to buy-order execution prices and deducted from sell-order prices.

• : sets the maximum position-size (ie the nominal value of the open position, long or short) as a multiple of total current equity as follows:

  • (a) Total Current Equity = Opening Equity plus or minus Net Trading Profit / Loss to date (realised and unrealised).

  • (b) Nominal Value of One Contract = Market price X $ per Point

  • (c) Nominal Position Value = (b) X Number of contracts open

  • (d) Leverage limit = User-defined positive integer : The appropriate limit depends on the volatility of the instrument being traded. We recommend an absolute limit of 5 (for currencies and intra-day data), 2 for stocks, which are much more volatile.

  • (e) Maximum Number of Open Contracts = (a) X (d) / (b) (rounded down to the nearest whole number).

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• Other Notes:

  • Limit-Days : When trading daily data the program now checks whether Open=High=Low=Close, which may mean that the market was locked limit up or down. If there is a limit or stop order which would have been hit, you are offered the option to cancel it (as it would not have been executed if the market was indeed limit-locked). Similarly, if you attempt to enter a market order an additional confirmation is requested.

  • The program does not check when orders are entered whether their execution would take the nominal value of the open position above the leverage limit, however it does check, at the end of every period, whether the limit has been exceeded. If it has, it enters a market order to reduce the position to the maximum permitted, charging the normal commission and slippage. This is expensive since commission and slippage are also, naturally, charged on the initial orders. (These procedures are analogous to lazy brokers accepting any order which is 'phoned in, followed by a back-office computer rigorously enforcing margin-discipline).

  • If a leveraged position is losing money progressively, the program will close-out part of the position if the loss-reduced equity becomes insufficient to support the size of position being carried.

  • Many traders and institutions carry positions leveraged by more than the recommended 5-times, which explains many of the disasters which occur in the markets. It is both foolish and unnecessary. In a word : Don't.