Barry
In response to your questions:
`How do I determine "favorite" indicator? Most of my back test
reveals either Williams of EFI to be the most profitable.'
If WMS and EFI are delivering greatest profitability during back-test
across a large number of stocks, then it might be reasonable to trade
using their signals. However, personally I would feel more
comfortable if these signals were also supported by (a) some of the
other indicators, (b) the longer term trends of the candidate stock,
and/or (c) trends displayed by other stocks in the same industry
sector, and the market as a whole.
`Do I change the parameter numbers - for Williams or EFI for example -
for each stock to be tested'
The following applies for any single stock you are considering
trading. You can use Multi-AIO to try 8 different entries, and
therefore determine the best entry for the `Number of quotes for BT
and AIO' parameter (set when you click the BT toolbar button). Once
you have this established this, running a standard AIO will re-chart
the stock with the parameters for WMS, EFI and any other indicators
that are giving maximum profit.
`How do I find and use the default parameters?'
Do this:
a) Delete the file C:\M-C\param4321.txt (this will reset Parameter
Set 1 to its default settings).
b) Menu option `Stocks > Options...' : change the second option
(Indicator parameter set) to `Parameter Set 1'.
c) Perform a TA WITHOUT running an AIO. Check that BC
shows `Parameters: Set 1' in lavender typeface on the right of the
screen
NOTE � You can change the parameters for any stock, by doing the
following �
a) Running an AIO sets the parameters (e.g. WMS(x,y,z) with the
values of x,y,z that deliver maximum profit for WMS on the stock
being TA'd).
b) If you don't like the result given by any indicators (e.g.. too
many signals, poor profitability, lack of correlation with the price
charts), run another AIO with these indicators UNCHECKED on
the `Indicator Optimization' panel.
c) When you are happy with the result, save the indicators for this
stock (menu option: Stocks > All Indicator Optimization > Save
optimal parameters...) in the opd.txt file. These parameters will
then be used whenever this stock is TA'd in future.
d) You should consider re-running an AIO on the stock every few days
to ensure that these parameter settings are continuing to generate
maximum profitability, i.e. repeat steps a,b,c to re-optimize and
save the parameters.
See Essay # 1.4 in
http://www.stock-anal.com/ubb/Forum1/HTML/000684.html
for more info on parameter settings.
To respond to your final points:
`The proper application of parameters should be more fully explained
in the manual section.'
There is no `proper application' as such, other than experimenting
with different AIOs and using your own judgement, as described above.
The whole purpose of :
Multi-AIO � is to find the optimum number of quotes (price bars) over
which to run the back-tests
BT � is to provide head-to-head comparison of indicator profitability
AIO � is to optimize the parameters for each indicator, by way of
further profitability back-testing
TA � to show the buy/sell signals for each indicator, and
Bullish/Bearish counts, based on the current (optimized or
unoptimized) parameters
For more info, see the following essays in
http://www.stock-anal.com/ubb/Forum1/HTML/000684.html
Essay 1.1 � gives suggestions for initial BT / AIO settings, and how
to run BT / AIO
Essays 1.3, 1.8 � more information on how the indicators work, and
what they are measuring
Essay 1.4 � how to use, and change, the parameter settings
Essay 1.7 � how AIO works
`Last question: How do you determine what numbers to put in the
parameter boxes opposite your favorite indicators?'
Same answer: by running AIOs, and the other facilities that BC
offers, and using your own judgement.
The `confusing' aspect of BC stems largely from the fact that there
are so many parameters you can experiment with. (Multi-AIO is the
latest of these). That is what makes it such a powerful tool. It is
important to know how each of BC's indicators works, and what it is
measuring.
Because the markets are driven by crowd emotion, technical analysis
is not a precise science. There is no set of parameters or indicators
that will forever deliver more profitable results than the others.
The best you can do is experiment with different AIOs and BTs in the
hope that maximum back-testing profitability will shift the odds as
much a possible into your favor for your current candidate trade. How
you size positions and manage risk will ultimately determine your
bottom line.
Good luck
David
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