Trader

Documentation & User Manual

Eli Shalom & Moshe Greenfeld

17/09/2008
 Trader
Sep.
Oct. 10
17

Table of Contents
Introduction .................................................................................................................................................. 4
Technical-Analysis ......................................................................................................................................... 5
History ....................................................................................................................................................... 5
Principles ................................................................................................................................................... 5
Market action discounts everything ......................................................................................................... 5
Prices move in trends................................................................................................................................ 5
History tends to repeat itself .................................................................................................................... 6
Trading .......................................................................................................................................................... 7
Concepts ................................................................................................................................................... 7
Signal ..................................................................................................................................................... 7
Scenario................................................................................................................................................. 7
History analyzing ................................................................................................................................... 8
Commissions ......................................................................................................................................... 9
No risk interest ...................................................................................................................................... 9
Risk ........................................................................................................................................................ 9
Profit throughput ................................................................................................................................ 10
Algorithm .................................................................................................................................................... 10
Analyzing ................................................................................................................................................. 10
Trading .................................................................................................................................................... 10
User Manual ................................................................................................................................................ 12
Code Review................................................................................................................................................ 17
Classes diagrams ..................................................................................................................................... 17
Analyze layer ....................................................................................................................................... 17
Business objects layer ......................................................................................................................... 18
Data provider layer ............................................................................................................................. 18
Trading layer ....................................................................................................................................... 20
Sequence Diagram .................................................................................................................................. 21
Analyzing and Trading ......................................................................................................................... 21
Database diagram ................................................................................................................................... 22
Extending the Trader .................................................................................................................................. 23
Adding stocks .......................................................................................................................................... 23

2
 Trader
Sep.
Oct. 10
17

Adding quotes ......................................................................................................................................... 23

Adding signals ......................................................................................................................................... 23
Implementing new signal .................................................................................................................... 23
Listing new signals............................................................................................................................... 24
Appendix ..................................................................................................................................................... 25
Signals ..................................................................................................................................................... 25
Rectangle............................................................................................................................................. 25
Symmetrical Triangle .......................................................................................................................... 27
Flag ...................................................................................................................................................... 30
Head and shoulders ............................................................................................................................ 32
Web Hits & Web Hits Inverse.............................................................................................................. 34

3
 Trader
Sep.
Oct. 10
17

Introduction
Trader is an automated system for stocks trading. In general, the Trader system analyzes the stocks
according to the behavior in the past and assumes that patterns which repeated themselves in the past
will repeat in future. The patterns are being tracked by signals generators, each signal generator looks
for a prefix of a pattern and when it's found it signals back to the system. Most of the signals used in the
Trader are based on Technical-Analysis.

4
 Trader
Sep.
Oct. 10
17

Technical-Analysis
(Wikipedia)

History
The principles of technical analysis derive from the observation of financial markets over hundreds of
years. The oldest known example of technical analysis was a method developed by Homma
Munehisa during early 18th century which evolved into the use of candlestick techniques, and is today a
main charting tool.[16][17]

Dow Theory is based on the collected writings of Dow Jones co-founder and editor Charles Dow, and
inspired the use and development of modern technical analysis from the end of the 19th century. Other
pioneers of analysis techniques include Ralph Nelson Elliott and William Delbert Gann who developed
their respective techniques in the early 20th century.

Many more technical tools and theories have been developed and enhanced in recent decades, with an
increasing emphasis on computer-assisted techniques.

Principles
Technicians say that a market's price reflects all relevant information, so their analysis looks more at
"internals" than at "externals" such as news events. Price action also tends to repeat itself because
investors collectively tend toward patterned behavior hence technicians' focus on identifiable trends
and conditions.

Market action discounts everything

Based on the premise that all relevant information is already reflected by prices, pure technical analysts
believe it is redundant to do fundamental analysis they say news and news events do not significantly
influence price, and cite supporting research such as the study by Cutler, Poterba, and Summers titled
"What Moves Stock Prices?"

On most of the sizable return days [large market moves]...the information that the press cites as the
cause of the market move is not particularly important. Press reports on adjacent days also fail to reveal
any convincing accounts of why future profits or discount rates might have changed. Our inability to
identify the fundamental shocks that accounted for these significant market moves is difficult to
reconcile with the view that such shocks account for most of the variation in stock returns.[18]

Prices move in trends

Technical analysts believe that prices trend. Technicians say that markets trend up, down, or sideways
(flat). This basic definition of price trends is the one put forward by Dow Theory.[15]

An example of a security that had an apparent trend is AOL from November 2001 through August 2002.
A technical analyst or trend follower recognizing this trend would look for opportunities to sell this
security. AOL consistently moves downward in price. Each time the stock rose, sellers would enter the
market and sell the stock; hence the "zig-zag" movement in the price. The series of "lower highs" and
"lower lows" is a tell tale sign of a stock in a down trend.[19] In other words, each time the stock edged

5
 Trader
Sep.
Oct. 10
17

lower, it fell below its previous relative low price. Each time the stock moved higher, it could not reach
the level of its previous relative high price.

Note that the sequence of lower lows and lower highs did not begin until August. Then AOL makes a low
price that doesn't pierce the relative low set earlier in the month. Later in the same month, the stock
makes a relative high equal to the most recent relative high. In this a technician sees strong indications
that the down trend is at least pausing and possibly ending, and would likely stop actively selling the
stock at that point.

History tends to repeat itself

Technical analysts believe that investors collectively repeat the behavior of the investors that preceded
them. "Everyone wants in on the next Microsoft," "If this stock ever gets to $50 again, I will buy it," "This
company's technology will revolutionize its industry, therefore this stock will skyrocket" these are all
examples of investor sentiment repeating itself. To a technician, the emotions in the market may be
irrational, but they exist. Because investor behavior repeats itself so often, technicians believe that
recognizable (and predictable) price patterns will develop on a chart.[15]

Technical analysis is not limited to charting, but it always considers price trends. For example, many
technicians monitor surveys of investor sentiment. These surveys gauge the attitude of market
participants, specifically whether they are bearish or bullish. Technicians use these surveys to help
determine whether a trend will continue or if a reversal could develop; they are most likely to anticipate
a change when the surveys report extreme investor sentiment. Surveys that show overwhelming
bullishness, for example, are evidence that an uptrend may reverse the premise being that if most
investors are bullish they have already bought the market (anticipating higher prices). And because most
investors are bullish and invested, one assumes that few buyers remain. This leaves more potential
sellers than buyers, despite the bullish sentiment. This suggests that prices will trend down, and is an
example of contrarian trading.

6
 Trader
Sep.
Oct. 10
17

Trading

Concepts

Signal

Signal is the basic part which the system uses that indicates that a suffix of a pattern has been matched.

Since patterns in stocks might not be simple to explain, we'll use an abstract example:

Let's assume we're observing a stream of numbers and looking for the next pattern - five even numbers
followed by the number 1. Let's assume that there's a high confidence that after five even numbers the
number 1 will appear. Now, if every time we see five even numbers we'll raise a signal that we're
matching the whole pattern (using it's prefix only) we'll be right most of the times.

In general, trading signals can be used by pattern prefix which is expressed by mathematical predicates.

Scenario

Scenario is a set of ranges, where every range represents a specific day. Each range covers an interval of
percent change in closing quote compared to a start quote. A scenario has duration measured by days,
where each to each day has its own range.

For example:

Define a scenario with 3 days length, and give a range to each day:

Day Range
0 [-1%,1%]
1 [1%,3%]
2 [5%,7%]
3 [3%,5%]
In order to see whether specific stock fits the scenario on a specific dates range, its value change must
be in the ranges on every day.

For example, let's take a look at a stock with the following values:

Day Value Change

0 100$ 0%
1 102$ 2%
2 105$ 5%
3 104$ 4%
This period fits the scenario since each day change falls in the day range.

The Trader system builds the scenarios ranges using all buy signals generated by a signal generator on a
specific stock. Using the buy signals, the system observe all the following periods and looks for the

7
 Trader
Sep.
Oct. 10
17

maximal positive change and the maximal negative change. After finding them, the ranges are defined
by dividing the area between the negative and positive changes to five ranges.

If m is the maximal negative change M is the maximal positive change then the set of ranges is defined

as: + 5
, + 5
+ 1 |0 < 5 .

Noting: = + 5
, + 5
+ 1 , the set of all possible scenarios of length n is:
= 1 , 1 , , |0 1 , 2 , , < 5 .

In order to avoid misunderstandings - Trader system does not use scenarios to define patterns.
Scenarios are used to track price changes after a signal has been raised.

History analyzing

In order to measure the strength of each signal we need to analyze its behavior in the past. Before
starting trade period, we let the signals point all the matching dates on every stock. For each stock, we
build a collection of scenarios that represents the general behavior of the stock after the signal spots.

The result of the analyzing is a set of stocks, where for each stock we have a scenarios collection for
each signal.

We can note analysis result as a set of pairs, where the each pair is built of a scenario and the number
periods the fit the scenario: , | ,

For example, is a specific signals generator signaled 3 times to buy Google stock

First time Second time Third time

Day Value Change Day Value Change Day Value Change
0 100$ 0% 0 200$ 0% 0 100$ 0%
1 97$ -3% 1 190$ -5% 1 96$ -4%
2 105$ 5% 2 184$ -8% 2 104$ 4%
3 109$ 9% 3 280$ -10% 3 110$ 10%

Changes are between -10% (maximal negative change) to 10% (maximal positive change).

The ranges that can build the scenarios are:

10%, 6% , 6%, 2% , 2%, 2% , 2%, 6% 6%, 10%

In this example we have only two relevant scenarios (of 54 possible scenarios).

Scenario A:

Day Range
0 [-2%,2%]
1 [-6%,-2%]

8
 Trader
Sep.
Oct. 10
17

2 [2%,6%]
3 [6%,10%]

Scenario B:

Day Range
0 [-2%,2%]
1 [-6%,-2%]
2 [-6%,-10%]
3 [-6%,-10%]

As we can see, the first and third time fits Scenario A, and the second time fits scenario B. In this case
the analysis result for the specific signal and Google stock will be { , 2 , , 1 }.

Commissions

Commissions are charged whenever a trading action that is being done.

For example:

When commission is set to 0.5%, a buy or sell of a stock with total value of 1000$ will be charged for 5$.

No risk interest

This is an interest which can be promised. In the Trader system this is the yearly interest that can be
given for sure with no risk. The Trader does not invest the money in it, but the Trader won't buy a stock
in case it predicts it'll get lower profit including commissions.

For example:

Assuming we can get 10% of no risk interest, and we're charged 0.5% of every action. The Trader will
buy a stock, which should reach its top price in 10 days, only if the total profit will be -

10%
0.5% 2 + 10 1.27%
365

Risk

Maximal risk in Trader is a function based on the maximal loss of a stock in an observed scenario. The
loss is calculated by comparison to the previous day. Risk is normalized to 0,1 interval using the
function 1 /5.77 . As can be seen from the formula 0 is low risk, 1 is high risk.

For example:

9
 Trader
Sep.
Oct. 10
17

To block trading of stocks that have lost 4% in one day in any observed scenarios, risk should be set to
0.5.

Profit throughput

Profit throughput is a simple outcome of profit gain and the time it takes. The throughput is the total
profit divided by the number of days the stock has been help. Each scenario can calculate an expected
throughput on every day.

For example:

Using the example of the scenario where every day gains 1% compared to day 0, up to the 10th day from
which the stock value doesn't change. On day 0, the time to the top is 10 days and the max profit is 10%,
therefore the throughput will be 1%. Expected throughput can be calculated on every day (not only day
0). In this case the change will be compared to the calculated day and the period to top will be from this
day too instead of day 0.

Algorithm
Analyzing
First step which is being performed before trading starts is building scenarios for each stock and signal.
In order to build the scenarios, the signal is simulated against all past data up to trading date. For every
date signaled, a period of the 30 following days is observed and all periods are aggregated into
collection of scenarios. Every scenarios collection includes the occurrences count of each scenario.

The result of the first step creates a scenarios collection for each signal and stock pair. The next step is
filtering the pairs and omitting those whose expectation is less than minimal requested profit
(commissions + no risk profit).

Trading
Trading works in daily iteration, at the end of every day the followings are performed:

1. Scanning stocks which are already in the portfolio. Using the behavior of the stock since the day
it has been bought, the scenarios collection is searching for the expected profit (or loss). This is a
simple conditional expectation calculation.
Every stock that has shown a negative profit expectation (loss) is automatically sold.
2. Signal generators are checked against all stocks and those of signaled at this date are filtered.
3. A union of all signaled stocks is created (stocks in portfolio which were not sold and new signals
from previous step).
4. Top two thirds of the stocks (sorted by expected profit throughput) selected to the portfolio.
5. All stocks are rearranged in the portfolio, where every stock weight in the portfolio is set
according to its expected profit throughput.

10
 Trader
Sep.
Oct. 10
17

Every fixed period the signals scenarios are rebuilt. Since more data is being added during
trading time and can be used to future trading it is important to rebuild the scenarios.

11
 Trader
Sep.
Oct. 10
17

User Manual
The shortcut to the program is found under "Ziv, Moshe & Eli" in "All Programs" folder from start menu.

The first screen that loads is the trading configuration screen. This screen defined all the parameters
which we'd like to set, with which the trader takes its decisions on.

The left of this screen shows a list of the stocks which can be traded:

This is a simple selection list. Each line shows a stock name and the stock exchange where it's traded.

The right side of the screen shows parameters on which the Trader takes decisions:

12
 Trader
Sep.
Oct. 10
17

The parameters are:

Trading period dates

Initial cash that the Trader start with
Commission rate for each action
The rate of interest which can be used with no risk
Maximal risk to take

In order to execute the Trader click on "Trader!". The screen will show the progress of analyzing and
trading.

When the Trader finished analyzing and trading the "Results" tab will become visible. The results tab
contains on the top a graph that shows the portfolio value during the Trading period, on the middle a

13
 Trader
Sep.
Oct. 10
17

table that shows for each day the portfolio members and the cash and on the bottom a graph that
shows the commissions that were charged up to every date.

The portfolio value graph shows for every day to total value of the stocks and the cash left in the
portfolio. The value shown of the graph already takes into considerations the commissions that were
charged from the portfolio.

In order to view the state of the portfolio at a specific day, double click on the graph on the requested
day. The stocks list and the cash will appear in the table. The stocks will show also the number of units
was owned and the total value of it.

14
 Trader
Sep.
Oct. 10
17

It's also possible to view the single stock value during the period of its holding. In order to view it,
double click on the stock line in the table and a new window with a graph will appear, this graph marks
the period of time where the signal checked for pattern prefix, the hold period and the week after the
stock has been sold.

Below the graph you can see the signal by which the stock has been bought. In order to see details
about the signal, double click the graph and its documentation will appear near the graph.

15
 Trader
Sep.
Oct. 10
17

The computer must be online in order to show the documentation.

16
 Trader
Sep.
Oct. 10
17

Code Review

Classes diagrams

Analyze layer

The analyze layer is responsible on building the scenarios which are relevant to each signal. This layer is
responsible on evaluating the results of trading using each signal. The simulator finds all the dates
(ActionsPoints) where the signal pointed to buy. The scenarios generator creates a scenarios collection
that represents a signal past performance on a stock. The max risk checker filters pairs that are too risky
to trade by.

17
 Trader
Sep.
Oct. 10
17

Business objects layer

Data provider layer

The data provider layer is main responsibility on managing the in the SQL server. The secondary
responsibility is to import data from Yahoo! finance server. The SQL server on which the layer based is
compact SQL server. In addition to loading quotes, splits and keeping the stocks and exchange rates
repository, it is also responsible on the cache of the signals.

18
 Trader
Sep.
Oct. 10
17

19
 Trader
Sep.
Oct. 10
17

Trading layer

The trading layer is responsible on executing analysis commands and trading commands. The Trade
Decider is the main class that encapsulates all the logic of decisions taking. The decider class is
referencing the data layer and the analysis layer, using those layers it implements the logic which is
described about the algorithm earlier in this document.

20
 Trader
Sep.
Oct. 10
17

Sequence Diagram

Analyzing and Trading

TradeDecider StockSignalScenariosGenerator Signal signalsFactory StockSignalSimulator scenariosGenerator Protfolio

Trade()

GenerateScenraios()

CreateAllIndicators()

Simulate()

Generate()

Foreach indicator

Foreach stock

GenerateRecommendation()

Foreach signaled indicator

recomendation

SellDrainedQuotes()

RearrangeUsingRecomendations()

Message1

SellAll()

21
 Trader
Sep.
Oct. 10
17

Database diagram

All the data with the table relations is placed in Data services project in the file
"HistoricalDataClasses.dbml".

The "Search Result" table is pre-loaded by the system and it contains all the number of weekly search
results count in Google over since 1/1/2000.

The Signal tables are used to cache the results of previous analysis in order to avoid re-computing the
whole signals all over the time.

22
 Trader
Sep.
Oct. 10
17

Extending the Trader

Adding stocks
The database is located in Runner project and named HistoricalData.sdf.

If the new stock is traded in a new stock exchange its stock exchange should be added first. The symbol
of the stock exchange must be the same as it appears in Yahoo. For example, Teva stock is traded in Tel-
Aviv stock exchange, so its representation in Yahoo is TEVA.TA meaning TA is the stock exchange
symbol.

Factor to currency is used to adjust quotes that appear in Yahoo as a factor of the currency. For example,
Tel-Aviv stock exchange quotes appear as NIS/100, so it should have 100 factor to make it NIS.

The stock symbol must be the same as in Yahoo too, without the stock exchange symbol. TEVA.TA stock
symbol will be TEVA.

Adding quotes
The trader system has an implemented class that can download quotes from Yahoo automatically. The
code in not used by the GUI since it has no error handling on network failures.

On Yahoo data provider class you can find the next static method:

public static void UpdateStocksQuotes()

This method automatically goes over all the stocks, look for the last date where it had quote and
updates the database with new quotes up to current date. If the stock has no quotes the system
downloads all the stocks from 1/1/2000 up to current date.

Adding signals

Implementing new signal

All signals implements the ISignal interface.

public interface ISignal

{
int TestDays { get; }
Guid ID { get; }
string Name { get; }
Uri URL { get; }
Recommendation GenerateRecommendation(IStock stock,
DateTime date);
}

TestDays Used to report how many days before the date are used to decide if the signal can generate a
recommendation.

23
 Trader
Sep.
Oct. 10
17

ID Used for identifying the signal in database. Currently used for caching signals recommendation.

Name A friendly display name.

URL A link to signal documentation.

GenerateRecommendation Decides on a specific date (treat as end of day) whether the stock should
be bought, short or do nothing. Currently short actions are ignored. The stock parameter contains all the
data relevant to the stock:

All quotes information closing, high and low quotes.

Trading volumes.
Search results count from Google of the stock.

The class can be placed anywhere visible to the signals factory.

Listing new signals

The signals are visible to the SignalsFactory only.

In order to make the TradeDecider use the signals it has to be added to the Signals property of the
SignalsFactory class. All signals are singletons.

24
 Trader
Sep.
Oct. 10
17

Appendix

Signals

Rectangle

Rectangles should generally be traded as continuation patterns. They are indecision areas that are
usually resolved in the direction of the trend. Research has shown that this is true far more often than
not. Of course, the trendlines run parallel in a rectangle. Supply and demand seems evenly balanced at
the moment. Buyers and sellers also seem equally matched. The same 'highs' are constantly tested as
are the same 'lows'. The market vacillates between two clearly set parameters. (While volume doesn't
seem to suffer like it does in other patterns, there usually is a lessening of activity within the
pattern. But like the others, volume should noticeably increase on the breakout.)

25
 Trader
Sep.
Oct. 10
17

RECTANGLE IN AN UPTREND (BULLISH)

Rectangle pattern in an uptrend. The market goes into roughly a three week consolidation before it
finds its resolve and pushes higher. There is a general lessening and sort of balance to volume during
the formation, but there is a clear increase on the breakout. (It's interesting to note that the volume
seems erratic prior to the consolidation, kind of balanced during, and while still generally balanced as
the market moves away from the rectangle, noticeably heavier.)

RECTANGLE IN THE BEGINNING AN UPTREND (BULLISH)

26
 Trader
Sep.
Oct. 10
17

This rectangle in the beginning of an uptrend kept the market guessing for a month before resuming
what it had started (uptrend.) This lengthy indecision saw volume dive. But the breakout seemed to
wake everybody up. As you can see it was made on heavy volume. (By the way, a line chart was used in
this example for easier viewing.)

Taken from: http://www.chartpatterns.com/rectangles.htm

Symmetrical Triangle

Symmetrical triangles can be characterized as areas of indecision. A market pauses and future direction
is questioned. Typically, the forces of supply and demand at that moment are considered nearly
equal. Attempts to push higher are quickly met by selling, while dips are seen as bargains. Each new
lower top and higher bottom becomes more shallow than the last, taking on the shape of a sideways
triangle. (It's interesting to note that there is a tendency for volume to diminish during this
period.) Eventually, this indecision is met with resolve and usually explodes out of this formation (often
on heavy volume.) Research has shown that symmetrical triangles overwhelmingly resolve themselves
in the direction of the trend. With this in mind, symmetrical triangles in my opinion, are great patterns
to use and should be traded as continuation patterns.

27
 Trader
Sep.
Oct. 10
17

SYMMETRICAL TRIANGLE IN A NEW UPTREND (BULLISH)

Symmetrical triangle in an uptrend (bullish). Measure the base, add it to the breakout point and
calculate your target. It doesn't get much easier than this.

28
 Trader
Sep.
Oct. 10
17

SYMMETRICAL TRIANGLE IN AN UPTREND (BULLISH)

This was probably the biggest "gimme" I've seen all year (2001). Perfect Symmetrical Triangle in an
uptrend. While I doubt anybody could have accurately predicted the date of the Government's
announcement to stop issuing 30 Year Bonds, being in and getting "lucky" was a pretty good bet. Notice
the enormous jump in volume too! This just goes to show that you don't have to know the news to take
advantage of the markets. Just read the charts. Like the commercial says, ..."it's in there".

Taken from: http://www.chartpatterns.com/symmetricaltrianglecharts.htm

29
 Trader
Sep.
Oct. 10
17

Flag

Flags and pennants can be categorized as continuation patterns. They usually represent only brief
pauses in a dynamic market. They are typically seen right after a big, quick move. The market then
usually takes off again in the same direction. Research has shown that these patterns are some of the
most reliable continuation patterns.

Bullish flags are characterized by lower tops and lower bottoms, with the pattern slanting against the
trend. But unlike wedges, their trendlines run parallel.

Bearish flags are comprised of higher tops and higher bottoms. "Bear" flags also have a tendency to
slope against the trend. Their trendlines run parallel as well.

30
 Trader
Sep.
Oct. 10
17

"BULL" FLAG IN AN UPTREND (BULLISH)

After a sharp rally, this "bull" flag served as a breather before running off again in the same direction.
You can see the volume ease up a bit in the beginning of the flag, but then pick up as it nears the top of
the formation and blows through it.

"BEAR" FLAG IN A DOWNTREND (BEARISH)

"Bear" flag in a downtrend. After a big rout, the flag seemingly presents a chance to re-group before
continuing in the same direction (down.) Volume diminishes during the pause and then rapidly expands
on the continuation.

Taken from: http://www.chartpatterns.com/flagandpennantcharts.htm

31
 Trader
Sep.
Oct. 10
17

Head and shoulders

The head and shoulders pattern is generally regarded as a reversal pattern and it is most often seen in
uptrends. It is also most reliable when found in an uptrend as well. Eventually, the market begins to slow
down and the forces of supply and demand are generally considered in balance. Sellers come in at the
highs (left shoulder) and the downside is probed (beginning neckline.) Buyers soon return to the market
and ultimately push through to new highs (head.) However, the new highs are quickly turned back and
the downside is tested again (continuing neckline.) Tentative buying re-emerges and the market rallies
once more, but fails to take out the previous high. (This last top is considered the right
shoulder.) Buying dries up and the market tests the downside yet again. Your trendline for this pattern
should be drawn from the beginning neckline to the continuing neckline. (Volume has a greater
importance in the head and shoulders pattern in comparison to other patterns. Volume generally
follows the price higher on the left shoulder. However, the head is formed on diminished volume
indicating the buyers aren't as aggressive as they once were. And on the last rallying attempt-the left
shoulder-volume is even lighter than on the head, signaling that the buyers may have exhausted
themselves.) New selling comes in and previous buyers get out. The pattern is complete when the
market breaks the neckline. (Volume should increase on the breakout.)

32
 Trader
Sep.
Oct. 10
17

The head and shoulders pattern can sometimes be inverted. The inverted head and shoulders is
typically seen in downtrends. (What's noteworthy about the inverted head and shoulders is the volume
aspect. The inverted left shoulder should be accompanied by an increase in volume. The inverted head
should be made on lighter volume. The rally from the head however, should show greater volume than
the rally from the left shoulder. Ultimately, the inverted right shoulder should register the lightest
volume of all. When the market then rallies through the neckline, a big increase in volume should be
seen.)

Taken from: http://www.chartpatterns.com/headandshoulders.htm

33
 Trader
Sep.
Oct. 10
17

Web Hits & Web Hits Inverse

This pattern searches the web for number of search results of every stock in every week from the
beginning of the data.

When the Trader begin to analyze each stock for each date it compares the web hits for this date against
the week before and if the number of hits increased in 300% or more, it check whether the stock price
is higher than the last periods average and if the trade volume is also larger than the last period average.

If all of those conditions are met, the proper recommendation is sent back according to if its the regular
Web Hits signal or the inverse one.

Regular:

300% more hits && price > average (last period) && volume > average (last period) BUY

300% more hits && price < average (last period) && volume > average (last period) SHORT

Inverse:

300% more hits && price > average (last period) && volume > average (last period) SHORT

300% more hits && price < average (last period) && volume > average (last period) BUY

34