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Table of Contents

Introduction 2

Getting Started 3 Charts 4 List Mgmt Tools 5

Analysis

Display

6

Preset

8

Layouts

11

Chart Suite

13

How It Works

14

Hot Trio

15

Ticker Tape 15 Alerts & Positions 17 Sorting & Ranking 17

Headlines and News Stories 18 News Search 18 MarketPulse Reports 19 QuickQuote 20 Viewing Information 21 Creating Charts 21

Chart Appearance

24

Point & Click Interface

25

Preference Dialogs

27

Drop Lines

33

AutoRun 33 Quote Monitor Revisited 34 Data Management 35 Adding & Deleting From Your List 35 The Dialog 36 Adding an Option Series… 37

Adding a Series of Futures Contracts… 38 Organizing your List 39 Keyboard Data Entry 40 Editing Data 40 Deleting Data 40

Deleting

Securities

41

Stock Splits & Futures' Rollovers

43

Special Features

45

Layouts

45

Chart Suite

46

Candle Pattern Identification & Alerts

46

Pivot Point Alerts 47 Trade Tracking 47 Automatic Alerts 48 Alert Sounds 48 Calculator 49 Trader's Journal 50 Time & Sale 50 Online Versus Offline 51

Maintaining Multiple Lists 51

Technical Analysis and Charting

52

Introduction to Technical

Analysis

52

Bar Charts and Trend Identification 54 Pattern Identification 58 Gaps and Other Major Reversal Patterns 58 Continuation and Indecision Patterns 61 Japanese Candle Charts 61 Point & Figure 62 Technical Tools 65

Momentum Studies 65 Volatility Studies 77

Directional Studies 80

Trend Studies

84

Volume Studies

91

Reference Section

97

File Menu 97 Edit 99

Charts

101

Analysis

101

Windows

102

List Mgmt

103

Special 104

Special Keys and Key Combinations 105

Appendix A Glossary

Appendix B Suggested Reading List 111 Appendix C Futures Contract Information 112

Appendix D Index and Other Special Symbols 113

Appendix E Support

Index 116

114

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Introduction

About Professional Analyst

Turn Your Mac Into a Professional Trading Station

Pro Analyst brings each market to life with an easy-to-read quote monitor, personal ticker tape, headline news, and easy-to-follow graphics. Custom layouts "remember" every aspect of your personal design. With unlimited charts per layout and dozens of indicators per chart, the combinations are endless. Shift from one layout to another instantly. Pro Analyst will get you from point A to B to C before the competition has even warmed up.

What good is real-time data if you have to wait to display it? Fast, reliable, precise intraday charts that update as the market moves, regardless of time frame, allowing you to react as conditions change. Over 30 technical studies, custom layouts, news, personal ticker tape and more. Track your choice of symbols, stocks, futures and options, trade by trade, minute by minute as the action happens, like having your own personal seat on the exchange!

The Sophisticated Simplicity You Need

Designed by traders for traders, Pro Analyst provides utility beyond comparison. Beyond simple charting, Pro Analyst includes intelligence features like our DayTrader system,

automatic trend identification and candle pattern recognition. No other program with this

much power and sophistication has ever been this easy to set up and use and makes real time really affordable.

Easy to use, fast, reliable and precise, everything you'd expect from a package developed exclusively for the Macintosh. Whatever trading objectives you'd like to reach, Pro Analyst puts them firmly within your grasp

Secured Ordering

Order online at http:// www.trendsoft.com or give us a call, 800-825-1852.

Pro Analyst

How is the Demo Version Different?

The most significant difference is that data in the demo version is static. We recorded data for a limited period (roughly 30 minutes) then we play back. The software will respond to your menu selections, keyboard strokes and mouse clicks, which allows you to experience using the software during the data playback.

We have disabled the ability to: add securities to our demo watch list; add data to the securities that are included; and edit the data that is included. The full version ships on a CD containing historical data on thousands of stocks, indices, mutual funds, FOREX data, and commodities.

The purpose of this demo is not to demonstrate all of Pro Analyst's features and benefits to you, after all, the full manual contains over 150 pages. We believe we can demonstrate that sophisticated analysis software can be easy to learn and use. We know, if you to take that first step and order Pro Analyst, you will become a more successful trader and the longer you use our software the more you will appreciate its benefits. That's why we back all of our products with a 30 day, money back guarantee.

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1

Getting Started

A Tour

The purpose of this tour is to demonstrate the mechanics of using Pro Analyst on the simplest level as well as highlighting some of our unique features. Additional features are covered in detail elsewhere in this guide. Please feel free to call or e-mail if you have questions or comments.

We have included sample data for you to work with in this tour.

During this tour you will learn to… Create simple charts. Apply analysis tools to the charts. Customize Charts. Create and use custom layouts.

Double click on the Pro Analyst icon to launch the application. The demo version of Pro Analyst will open with a welcome window. When you close the window, it will automatically open our Watch List which looks something like this

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The Watch List contains reference to multiple securities of differing types (i.e., indices, stocks and

The Watch List contains reference to multiple securities of differing types (i.e., indices, stocks and futures). The data contained in these files is real, however, it is not current. This insures that the examples you see on your screen will be virtually the same as those shown in this guide.

Charts

Charts are a tool to analyze an instrument's performance over time. Pro Analyst can display that information in a variety of different forms: bar; line; candle; and point & figure. Most of you are familiar with bar and candle charts. The time frame of a chart refers to the amount of time each bar or candle represents. A daily chart can cover months of market activity where each point in the chart represents one day.

Under the Charts menu, you will see most of these charts listed. During this tour we will create Bar and Candle charts. Double click on the symbol DJI in the Watch List which should open a 5 minute bar chart of the Dow Jones Industrials. Again, the chart covers multiple days where each bar represents 5 minutes of prices.

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Along the top of the chart is a legend displaying the date and numbers relating

Along the top of the chart is a legend displaying the date and numbers relating to the last bar in the chart. Point and click on any other bar. The legend at the top of the chart will change to reflect your selection. Just beneath the legend is a box displaying the current price, the net change and the high, low and opening prices of the day. The type and time-frame of the chart and the symbol appear in the window title.

Along the bottom of the chart is a ticker tape which displays quotes received for this symbol. To the right of the tape is a control that allows you to change the chart type. Virtually all of the display characteristics of our charts are controllable by you. The default view in the demo is a 5 minute bar chart but you can change it to an hourly candle chart or a daily line chart.

While the chart was drawing, Pro Analyst was busy. Take a peek under the Windows menu. The last menu item is new and contains a description of the chart. You can have dozens of charts, all in separate windows or you can reuse a window to view a different security. As new windows are created, their respective menu item will be added to the Windows menu. When selected, that window will be brought to the front. When you close a window, its memory is released and the menu item is removed.

List Mgmt Tools

Lets learn another benefit by example

Next from the List Mgmt menu. Our chart will change from the DJI to the COMPX (i.e., the Nasdaq Composite). Press the up arrow or select Previous from the List Mgmt menu and our chart changes back to the DJI. These List Mgmt features allow you to scroll forwards and

press the down arrow on your keyboard or select

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backwards through your List of securities. Our Watch List is not large enough to demonstrate the real value of our sorting and ranking features, however, as your List of securities grows, this feature will become extremely valuable. For now, pull down the Sort & Rank menus (both are located in the List Mgmt menu) to see the categories. Pro Analyst can change the ordering of your List based on all of these criteria. We bring this up now because the Next and Previous functions work with the ordering of the List. As you become familiar with the variety of features at your fingertips, the flexibility and functionality of our design will become apparent. As you learn to use Pro Analyst you will also discover that there are at least two ways to do just about everything. For example, you can sort and rank your List by clicking on the column headings in the List display. You can also move a single security any place in the List simply by dragging its symbol with your mouse.

Analysis

Lets take a look at the Analysis menu. Since these tools require a chart to be used, they will appear gray unless a chart is the front window. While our chart was drawing, Pro Analyst turned on all the menu items in this menu. Each of the tools in this menu was designed to assist you in analyzing the various charts that Pro Analyst can create. A description of how to use these tools is included in our manual which contains a primer on technical analysis. For now, our purpose is to demonstrate how easy it is to add and remove these studies from your charts.

Select Stochastics from the Analysis menu. Stochastics is a study designed to measure the momentum of price movement. Weakening momentum can point to an impending reversal in price direction, like a car going up a hill. Even though the car continues to move forward we might be concerned if it can make it to the top if its speed is decreasing.

Technical studies, in our software, are overlaid directly on or below the charts and do not use a separate window. The front (or active) window is used for displaying these studies. We designed the software this way because it makes it easier to compare the study to price bars of the chart. Your chart should redraw allowing space for Stochastics underneath. A new color coded legend appears directly above the study. Again, clicking on any point in the chart will adjust the legend to reference your click.

Selections in the Analysis menu above the separator line are added below the chart. The balance of the Analysis tools are overlaid directly on the body of the chart. Select Trend from the Analysis menu. Your chart should now appear as follows…

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While we are on the subject of comparing the study to the price…hold the control

While we are on the subject of comparing the study to the price…hold the control key down and drag your mouse across the chart. The cursor will expand to a giant cross hair, and the price/indicator legends will update to reflect the placement of the cursor. Drop lines (horizontal and vertical) will be left on the chart if the mouse button is released while the cursor is to the left of the scale (i.e., y axis). These lines are automatically stored when you close the chart and may be removed all at once or one set at a time. To remove all drop lines with one command, hold the Control key down and select Clear from the Edit menu.

To remove an indicator, re-select its menu item from the Analysis menu. Try this with Stochastics… re-select Stochastics from the Analysis menu. The chart should redraw without Stochastics. You can also preset your charts to initially draw with your choice of analysis tools. Lets see how this works.

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Preset

Default Studies (Edit menu) allows you to preset which, if any, technical tools will be displayed when you request a specific chart time frame. You can always add and subtract tools from a chart as we have demonstrated. This preference panel allows you to determine how the initial chart will draw. As you develop favorite indicators, this feature will become a tremendous time saver. Virtually every facet of your charts

tremendous time saver. Virtually every facet of your charts Select MACD and Averages , then press

Select MACD and Averages, then press OK. MACD is another study used for measuring momentum. It is an acronym for Moving Average Convergence Divergence (no wonder we use an acronym). Moving averages are a simple mathematical way of measuring the direction of prices. By comparing multiple averages of different time periods we can determine if momentum is growing or declining. This is the theory behind MACD.

Select Watch List Demo from the Windows menu to bring our Quote Monitor to the front. Press the down arrow on your keyboard until SPX is selected. Select Daily from the Charts menu. A Daily bar chart of the SPX, with moving averages and MACD will appear.

In the lower right corner of the chart is a popup menu control that changes the chart view. Select Candle from the control to switch views. The chart will redraw with the same indicators.

Click on this symbol in the lower left of the chart

little more room between data points. Now move your cursor to the area where the x and y

room between data points. Now move your cursor to the area where the x and y

. Candle charts look better if there is a

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axis of the chart meet. The cursor will change to a light bulb (see the picture below) then click your mouse. This turns on our candle pattern ID.

Candles that identify patterns are "painted" in a offsetting color. Hold the mouse down on any of these candles to read a description of the pattern and its meaning. Page numbers are a reference to Steve Nison's book on Candlestick interpretation. Pro Analyst can identify 26 key candle patterns.

Pro Analyst can identify 26 key candle patterns. We can also add and/or remove multiple indicators

We can also add and/or remove multiple indicators once the initial chart has drawn. Select Weekly from the Charts menu. Since the top window is a daily chart, Pro Analyst assumes you want the new chart to be the same symbol. The new chart appears in a new window. Move your cursor horizontally along the date line located at the bottom of the chart.

along the date line located at the bottom of the chart. Note how the cursor changes.

Note how the cursor changes. Clicking on different points within the date line will allow you to change the appearance and/or content of the chart. The cursors change to help you navigate and remember where to click. We call this our point and click interface. More about this in a minute. When the cursor is in the form of a triangle or delta ( ), click your mouse. A dialog will appear that allows you to change the indicators displayed on the chart. The main difference between this dialog and the Preset Chart dialog discussed previously is that these changes may apply to the active chart only. You should also note that you can change chart parameters for indicators that are not displayed.

the active chart only. You should also note that you can change chart parameters for indicators

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Press Cancel. As you move the cursor around the graph you will notice that the

Press Cancel.

As you move the cursor around the graph you will notice that the cursor changes to indicate the function of our point & click interface. Clicking with this cursor active displays the information of that bar or candle at the top of the graph. This cursor should appear in the main body of the chart as well as the main body of sub studies (i.e., Stochastics). Clicking with this cursor active scrolls the chart backwards in accordance with the what you have selected in the Program Defaults dialog. This cursor should appear in far left corner of the date line. Clicking with this cursor active scrolls the chart forwards in accordance with the what you have selected in the Program Defaults dialog. This cursor should appear in far right corner of the date line. Clicking with this cursor active allows you to change the start or end date of the active chart. This cursor should appear towards the right or left side of the date line. Clicking with this cursor active allows you to change zoom levels. This cursor should appear left of center on the date line. Clicking with this cursor active allows you to change indicators, zoom levels, etc., through the Preset Chart Dialog. This cursor should appear right of center on the date line. Clicking with this cursor active allows you to change upper and lower Y-axis scaling. This cursor should appear in the scale area of the main chart.

allows you to change upper and lower Y-axis scaling. This cursor should appear in the scale
allows you to change upper and lower Y-axis scaling. This cursor should appear in the scale
allows you to change upper and lower Y-axis scaling. This cursor should appear in the scale
allows you to change upper and lower Y-axis scaling. This cursor should appear in the scale
allows you to change upper and lower Y-axis scaling. This cursor should appear in the scale
allows you to change upper and lower Y-axis scaling. This cursor should appear in the scale
allows you to change upper and lower Y-axis scaling. This cursor should appear in the scale

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Clicking with this cursor active allows you to change indicator smoothing. This cursor should appear in the scale area of the indicator. Clicking with this cursor active allows you to edit the data used to create the
Clicking with this cursor active allows you to edit the data used to create the chart. This cursor should appear above the main body of the chart on the information line.this cursor active allows you to change indicator smoothing. This cursor should appear in the scale

Pro Analyst's graphic windows may be sized, placed and zoomed through normal Macintosh controls. In addition, we have defined two controls that operate on multiple-windows as menu items. Lets see how this works. Select Tile from the Windows menu. The two graphs will re- draw as a split screen. Tile splits the screen according to the number of active windows. In this case we have two, so each Window occupies half of the screen. Either chart may be made active by clicking on the window or by selection from the Windows menu. Now select Stack from the Windows menu. Window placement and size are changed to allow maximum viewing area while allowing enough space to click on non-active windows. Again, the number of graphic windows will affect size and placement.

Select A Tour List from the Windows menu. This brings the List display back to the front. Select Apple from within the List then select Bar - Daily from the Charts menu. After the chart draws, select Bar - Weekly again.

We have now created four distinct charts. A peek under the Windows menu will remind you which charts are in which window. While you're here, select Tile. This time your screen is split four ways. Click in the Green Zoom control of any of the four windows. The selected window will redraw occupying the full screen. Click the Zoom control again and the Window redraws in its original size and placement.

As you close each window, Analyst will store the size and placement of the window based on the security and the content of the window.

Layouts

As you use the software you are likely to discover that you prefer to view similar securities in a similar way from day to day. Our custom layout and chart suite features were designed to allow you to accomplish this faster and more conveniently. Lets take a look at how these work. Select Save Layout from the Windows menu. The default Save dialog will look like this

Layout from the Windows menu. The default Save dialog will look like this Click on the

Click on the

Layout from the Windows menu. The default Save dialog will look like this Click on the

to expand the default view to

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Just like any other file you create on your Macintosh, layouts must have a unique

Just like any other file you create on your Macintosh, layouts must have a unique name. Name the layout My First and press Save. You have just created your first layout. Just like our Lists, layouts do not contain the charts or even the data necessary to create them. The layout files store aliases of the data file or files used to create the charts. This way, as you update those files with newer data, the layouts will update as well. The layouts also store other window content information like the type and time frame of the charts and what, if any analysis studies were applied to the chart. Finally, the layouts store the windows size and placement on the screen at the time they were created.

Using your layouts is even easier than creating them. Lets clear our screen and imagine that this is a new day. We can close all the open windows at once by using the shift and the option keys to modify the Close Window command. Hold the Shift and Option keys down. The fourth menu item under the File menu reads Close All. Select this menu item. All open windows, except the List, will close. The Tour List window should now be the front window.

Menu Modifiers (such as the Shift and Option keys) are not recognized unless the key or keys are down before pulling down the menu.

Select Default Studies… from the Edit menu. Turn off all of the indicators and press OK. Our daily charts are now set to open without any analysis tools. Now, lets see what happens when we open our Layout.

Select Use Layout from the Windows menu. Double click on My First. The four charts will open, with the same analysis, in the same position and size. These instructions were stored as part of the layout.

The number of layouts is limited only by your disk space and your ability to remember why you created the layout to begin with. With that in mind, descriptive names may become very

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important (e.g., Metals Daily). No data is stored in the layout files. If you have created too many, simply drag them to the trash (from the Finder).

As you open Layouts, they are added to the Recent Layouts menu that appears directly below Use Layout in the Windows menu. This makes switching from layout to layout faster and simpler.

Chart Suite

The Chart Suite is a layout without security names so that it can be used on any symbol in your List with a single keystroke or menu selection.

To use the Chart Suite, select a symbol in your List, then select Chart Suite from the Charts menu or press =

The default Chart Suite brings up a daily, weekly and monthly chart. To change the suite, open the charts you want included in the suite (all charts must be based on one symbol), then select Chart Suite from the charts menu while the charts are the front windows. Analyst will confirm that you want to re-define the suite based on the current charts. You can redefine the suite as many times as you want.

Bring the Apple Bar Daily chart to the front by selecting it from the Windows menu. Move your cursor horizontally along the date line area of the chart until the cursor changes to a magnifying glass. Click the mouse. A small window will appear in the lower left portion of the chart showing the current zoom level. Zoom Levels are one way to control the amount of data displayed in a chart. Level 1 is the most compressed. Higher levels display less data with more detail. The maximum zoom will vary with the size of the window. Candle charts look best on a zoom level of 5 or 6. Enter a higher or lower number and press return.

In addition to changing zoom levels, Analyst can zoom-in on a particular area of the chart. Hold the Shift and Option keys down and drag the mouse over the area of the chart you would like to zoom in on. When you release the mouse, a new chart will open with just that area enlarged.

This concludes our tour. Feel free to experiment with other features of the program using the Tour data. Don't worry about making mistakes. You can always re-download the demo. And

don't forget

e-mail, support@trendsoft.com or give us a call if you need help.

The balance of this guide contains selected segments from the Pro Analyst manual. Not all features described are available in the demo version.

we're here 9 a.m. to 6 p.m. every day the markets are open. Please drop us an

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2

How It Works

Overview

Once connected, Pro Analyst transmits your List of securities to the server. Every trade that occurs on these securities is then sent to the program. What we do with this information and how you can utilize it is the intent of this chapter.

As the information arrives, Pro Analyst updates the quote monitor, the ticker tape, checks your alerts and stores the information for charting and analysis. We begin by discussing the monitor

charting and analysis. We begin by discussing the monitor The dart (delta), appearing to the left

The dart (delta), appearing to the left of the time, indicates the symbol most recently updated. All times are converted to your local time (assuming your date and time control panel is set up properly). This is the time of the trade, not the time it was reported.

The next column of numbers is the price of the last trade. If the last trade price is down from yesterday's close, the entire row is displayed in red. Columns that match the last price are displayed in bold text. A directional arrow appears in between the symbol and the last price indicating whether the last trade was up, down or the same (no arrow) as the previous trade. These first three columns, time, symbol and price, are locked. All other columns can be moved to match your needs.

The column labeled ± represents the net change from the previous day's close. It is possible, even likely, that a security will be trading above its open and still be down for the day.

The next three columns are straight forward

and lowest price traded within the current day. The Open represents the first trade. These

the High and Low represent the highest price

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fields will appear in bold when they match the last trade. This makes it easy to spot securities trading at the high or low of the day.

The column labeled Vol contains the total volume of all trades for that security today in hundreds. Pit-traded futures' markets do not report intraday trading volumes so this column will contain yesterday's total volume for the specific contract.

Bid and Ask contain the best offers to buy and sell. The respective size of the offers appears in the columns labeled BSz and ASz. Again, these numbers are in hundreds so a BSz of 4 means there is an offer to buy 400 shares at that bid. The Size column will reflect the number of shares (in hundreds) of the last trade.

The last column, Rank, will only contain information when you have asked the program to rank your List by some criteria. The use of this column will be covered later in this chapter.

Hot Trio Display

Inspired by the market index display on CNBC, our "Hot Trio" window (bottom right corner of your main screen) displays the net change of the top three symbols in your List. The top three securities are determined when we log on to the server. To affect changes in the middle of a session, log off, then log back on.

The Hot Trio window, and the ticker tape can be "torn off" and placed in other places on your monitor where they won't be covered up by or interfere with other programs. Place your cursor over either display, hold the mouse down and drag. These displays will automatically return to their default positions whenever you log on to the server.

Ticker Tape

At the bottom of your main screen is a split ticker tape window. Last trade and trade size are scrolled continuously as they are received. You can slow the ticker down using several

different methods

and options. You can also turn your ticker tape into a block ticker by defining minimum volumes for stocks and options to appear in the ticker tape. Quotes that are excluded from the ticker tape are still displayed in the quote monitor and stored for analysis. Changing the ticker tape set up affects the tape only. Prices that match the high or the low of the day appear in bold. The price of securities trading down for the day appear in red.

To redefine the ticker tape, select Ticker Tape from the Edit menu. In our example, we have instructed the program to exclude all quotes that are not stocks and to include only trades of at least 5000 shares (50 x 100). Alerts & Positions Only, would send quotes to the ticker tape where you have indicated that you have a position or you have set alerts.

Beneath these settings is a menu for defining the default position of the ticker tape. You can have it at the bottom of your screen or the top of the screen. Dock Aware instructs the program to place the ticker tape where the dock will not interfere with it. We recommend setting the Dock to automatically hide and show which keeps it handy but not intruding on our program (or any others). You'll find this in the Dock Preferences under your Apple menu.

by turning off groups of securities. For example, you can exclude indices

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The lower portion of this dialog allows you to define specific display preferences for the

The lower portion of this dialog allows you to define specific display preferences for the Quote Monitor. Show Darts displays a dart (delta) indicating the most recent quote received. Background and Alt Background color choices allow you to set alternating background colors to help distinguish one row from another. You can also change the default foreground colors used for distinguishing up and down quotes.

The ticker tape, and the Hot Trio window can be "torn off" and placed in other places on your monitor where they won't be covered up by or interfere with other programs. Place your cursor over either display, hold the mouse down and drag. These displays will automatically return to their default positions whenever you log on to the server.

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Alerts & Positions

Since we let the cat out of the bag

position, select a security in your List, then select Alerts from the Edit menu. Fill-in your alerts and/or current position then press Next to move to the next security in your List or Done if you are finished.

In our example, we have instructed the program to alert us if Alcoa trades below 18 and/or if it trades above 25. When Alcoa trades outside of this range, the alert will be displayed in the upper portion of the ticker tape, an audible alert will be triggered in your chosen form and the alert will be reset to zero. Alerts that are not triggered are stored and remain active for subsequent trading days.

We have also indicated that we are holding 1000 shares which we bought at 19. This information can be used to display real-time profit/loss updates. To cancel or close out a position, select No Trade from the pop-up menu in this window and/or zero the number of shares.

to

set alerts and/or inform the program of your current

to set alerts and/or inform the program of your current Sorting & Ranking Our sorting and

Sorting & Ranking

Our sorting and ranking capabilities allow you to quickly organize your List in a variety of ways. These tools have their own sub-menus under the List Mgmt menu and can also be accessed by holding down your mouse on most of the column headings of your List. The Rank column label contains a pop-up menu as well. Some ranking tools will produce a new calculation to be displayed in the Rank column. For example, as mentioned in the previous section, you can rank your List by position size or profits. These calculations will appear in the Rank column and update on a real-time basis. Sorting methods that do not use the Rank column, such as Last Saved, have no effect on the Rank column. This allows you to rank by profit, then re-sort by the last saved order without losing the real-time calculation of profit or loss. Clicking on the far left column heading (Time) will sort by the last saved.

Calculations that update real-time include: percent net change (% Net Change), relationship to 12 month high and low (YTDH, YTDL), price-earning ratio (P/E Ratio), profit or loss (Profits) and the size of your position (Size).

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Individual Placement

You can also drag and drop individual securities to determine their exact placement within the List. Simply hold your mouse down on the symbol you want to move, then drag the gray rectangular outline on top of any other symbol in the List and release.

Headlines and News Stories

Scrolling, real-time headlines are available from the server on demand. To start the headline feature, select Headlines from the Special menu (or press F11). This will open a new window titled Headline News and activate the receipt of headlines. As new headlines are received, they are added to the top of the window. Times accompanying each headline are New York time. This is one of the few areas in the program where times

the p r o g r a m w h e r e t i m
the p r o g r a m w h e r e t i m

are not converted to your local time.

Each headline also contains an identifying 5 digit number. To read the complete story, double click on the identifying number or highlight it. This will open a new window containing the full story.

The contents of full news story windows and headline news windows can be save as text files that can be opened offline by any text editor.

News Search

Did one of your stocks make a surprising move? Select the symbol in your List, then select

surprising move? Select the symbol in your List, then select from the and Pro Analyst will

from the

move? Select the symbol in your List, then select from the and Pro Analyst will request

and Pro Analyst will request today's headlines plus

the last 20 historical headlines related to that symbol. The headlines will be displayed in a new window.

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MarketPulse Reports

MarketPulse is a real-time service supplying information about market leaders and market statistics. The MarketPulse reports are available for each U.S. stock exchange. Reports are also available relating to options, currencies, world markets and futures. There are almost 100 separate reports available. To see current reports, select from the MarketPulse sub menu under the Special menu. The program will display the requested reports in the MarketPulse window. The following Forex currency report is part of the Futures page.

Market Pulse: Spot Forex Prices

as of 1:47pm 11/26/00

Page:

901

Description

Tkr $s_per

per_$

Description

Tkr $s_per

per_$

-------------- ----- ------

------

-------------- ----- ------

------

Australian $

CU.AD .52320

1.9113

Chech Koruna

CU.CZ 40.810

40.810

Belgian Franc

CU.BF .02078

48.132

Eu Spot Rate

CU.EU .83810

1.1931

British Pound

CU.BP 1.4002

.71418

greek Drachma CU.GR 406.04

406.04

Canadian $ CU.CD .64986

1.5388

Irish Punt

CU.IP .94000

.94000

Danish Krone

CU.DK .11243

8.8942

Mauritius

CU.MR .00000

.00000

Deutschemark

CU.DM .42852

2.3336

malaysia Ring CU.MY 3.8000

3.8000

Dutch Guilder

CU.DG .38031

2.6294

Portugal Escud CU.PT 239.21

239.21

Finnish Markka CU.FM 7.0900

.14104

ARGENTINA

CU.AP 1.0000

1.0000

French Franc

CU.FR .12777

7.8267

HUNGARY

CU.HU .00317

315.42

Hong Kong $

CU.HK .12821

7.7998

INDONESIA

CU.ID 9455.0

.00011

Italian Lira

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2310.3

POLAND

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Japanese Yen

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111.28

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44.360

Mexican Peso

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9.4000

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695.90

New Zealand $ CU.NZ 2.5006

.39990

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1189.5

Norwegian Kron CU.NK .10453

9.5663

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49.370

Singapore $ CU.SD .56863

1.7586

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32.860

S African Rand CU.AR .12780

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TURKEY

CU.TU .33333

3.0000

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Swiss Franc

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MarketPulse reports are produced on a real-time basis, however, they do not update continuously. To update the report, request it anew from the Special menu.

To update the report, request it anew from the Special menu. 20 You can change the

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You can change the reports we will request by selecting MarketPulse from the Edit menu. We have chosen Most Up %, Most Down % and % Volume Change as the defaults for each stock exchange. Select the exchange from the popup menu at the top of the dialog

QuickQuote

.

The QuickQuote feature allows you to view a detailed quote on a specific symbol, whether or not that symbol is contained in your current List. To activate the feature, select QuickQuote from the Special menu (or press F10). Enter a symbol and press return.

menu (or press F10). Enter a symbol and press return. Some of this information is not

Some of this information is not available for index and equity options, however, other information like open interest, strike price and days remaining to expiration are. Pro Analyst will automatically adjust the QuickQuote window when you enter an option symbol.

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3

Viewing Information

Quotes, Charts and Analytics

Creating Charts

Pro Analyst is a powerful, intraday, charting and technical analysis program. The program can create traditional bar, Japanese candle, point & figures and line charts in virtually any time frame from tick to monthly. To simplify the interface and operation of the program, the most commonly needed time frames are available as choices under the Charts menu. When selected, the program will create the initial view in the default chart type (i.e., bar, candle, p&f, or line). Like most of the programs defaults, the default view is definable. Once the chart is drawn, you can change virtually all characteristics of the chart including the time frame, the chart type, analytics, colors, patterns, line thickness etc.

By example

from Charts menu. In the lower right of the chart is a control that allows you to change the view from Bar to Candle to Line to P&F.

Along the top of the chart is a legend displaying the date and numbers relating to the last bar in the chart. Point & click on any other bar or candle. The legend at the top of the chart will change to reflect your selection.

The new bar chart was drawn in Window 1. Take a peek under the Windows menu. The last menu item is new and contains an abbreviated description of the chart. Each chart is created in a new window, limited only by the amount of memory allocated to Pro Analyst. As windows are assigned, their respective menu item will be added to the Windows menu. When selected, that window will be brought to the front. When you close a window, its memory is released and the menu item is removed.

Pull down the Analysis menu. While the chart was drawing, Pro Analyst turned on all the menu items in this menu. Each of the tools in this menu was designed to assist you in analyzing the various charts that Pro Analyst can create. A description of how to use these tools is included later in this manual. For now, our purpose is to demonstrate how easy it is to add these studies to your charts.

to create a daily chart, select a symbol in the quote monitor, then select Daily

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Select Stochastics from the Analysis menu. Stochastics is a study designed to measure the momentum of price movement. Weakening momentum can point to an impending reversal in price direction, like a car going up a hill. Even though the car continues to move forward we might be concerned if it can make it to the top if its speed is decreasing.

Technical studies, in our software, are overlaid directly on or below the charts and do not use a separate window. The front (or active) window is used for displaying these studies. We designed the software this way because it makes it easier to compare the study to price bars of the chart. Your chart should re-draw allowing space for Stochastics underneath. A new color coded legend appears directly above the study.

The selections in the Analysis menu above the separator line are added below the chart with less and less space allotted to the chart body. The balance of the Analysis tools are overlaid directly on the body of the chart. When the chart is finished drawing, select Trend from the

Analysis menu.

is finished drawing, select Trend from the Analysis menu. 15 minute chart with trend lines and

15 minute chart with trend lines and stochastics

While we are on the subject of comparing the study to the price…hold the control key down and drag your mouse across the chart. The cursor will expand to a giant cross hair, and the price/indicator legends will update to reflect the placement of the cursor. Drop lines (horizontal and vertical) will be left on the chart if the mouse button is released while the cursor is to the left of the scale. These lines are automatically stored when you close the chart and may be removed all at once or one set at a time. To remove drop lines, one at a time, hold the Option and the Control key down and click on the lines to be removed. To remove all drop lines with one command, hold the Control key down and select Clear from the Edit menu.

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To remove an indicator, re-select its menu item from the Analysis menu. Try this with Stochastics… re-select Stochastics from the Analysis menu. The chart should redraw without Stochastics. Each time-frame of chart can also be preset to initially draw with your choice of analysis tools.

Intraday charts, that is, charts where each bar or candle represents less than one day, are only available when you are online. 1 minute through hourly charts will contain multiple days of data if the data is available. Each day will be separated by a vertical dotted line.

Intraday charts where each bar or candle represents a multiple of 5 minutes (e.g., 10 min, 15 min, et al) are created using data that is stored on your hard disk. When you launch the program after the markets open the program will automatically request missing data. You can not create 1 minute charts while your intraday data is updating. You should also try not to quit during this process. The program will notify you when the update is complete.

The next section of the manual will teach you how to adjust the charts before and after they are drawn to match your personal preferences.

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Chart Appearance

Chart appearance is very flexible in Pro Analyst. Scaling, zoom level (i.e., chart spacing), study smoothing, colors, line thickness, even default studies. Beauty is in the eye of the beholder. When you know how you want to display your charts, Pro Analyst will let you lock in your preferences for each time-frame of chart. Until then, the program will use default settings. In other words, you don't need to be an expert to create useful charts.

Customizing of charts and analysis tools is available through several distinct features: our Set Up dialogs, our point & click interface, our double-click interface and chart controls.

Chart Controls

Under each of the charts you see this control

From left to right; Zoom out, zoom in, controlled zoom, time & sale and the calculator.

Zoom out and zoom in alter the amount of data displayed in the chart. Zooming in reduces the amount of space between each point on the chart allowing more data to be displayed. Zooming out adds more space between bars or candles.

Controlled zoom is a variation of our drag and zoom feature. Clicking on that portion of the control will place a selection rectangle on the chart which can then be resized or moved through normal dragging with the mouse. Drag the rectangle right or left to increase or decrease the size of the rectangle. Drag from inside the rectangle to move it to the right or left without changing its size. When the rectangle covers the horizontal area of the chart you want to zoom in on, press return or double click inside the rectangle and Pro Analyst will create a new window with the selected data. Click outside the rectangle to remove it without creating a new chart. The new chart will update live, like any other chart, if you are online. A delta symbol is added to the end of the window title to remind you that the data may not be continuous.

Time & Sale converts the chart to a mini-spreadsheet where the numbers from each time

period are displayed in rows for review and/or editing. The control changes to on the new control will convert the time & sale display back to a chart.

In the lower right of the chart you'll find a popup menu that allows you to quickly switch the chart view (e.g., change from bar to candle).

find a popup menu that allows you to quickly switch the chart view (e.g., change from

. Clicking

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Point & Click Interface

Clicking the mouse on any bar, candle or point on a chart will display the data (date, time, volume, open, high, low, and close) reflected in that bar. These numbers are displayed directly above the chart. Moving average and analysis study values are also displayed if they appear on the chart.

study values are also displayed if they appear on the chart. Figure 5 Clicking in other

Figure 5

Clicking in other areas of the chart (see Figure 5) will allow temporary changes in chart appearance. As you move the cursor around the graph you will notice that the cursor changes to indicate the function of our Point & Click interface.

Clicking with this cursor active displays the information of that bar or candle at the top of the graph. This cursor should appear in the main body of the chart as well as the main body of sub studies (i.e., Stochastics). Clicking with this cursor active scrolls the chart forwards in accordance with the what you
Clicking with this cursor active scrolls the chart forwards in accordance with the what you have selected in the Program Defaults for end-of-day charts. On intraday charts it will remove one day of data for each click. This cursor should appear in far right corner of the date line. as well as the main body of sub studies (i.e., Stochastics). Clicking with this cursor active
Clicking with this cursor active scrolls the chart backwards in accordance with the what you have selected in the Program Defaults dialog for end-of-day charts. On intraday charts it will restore days removed from the chart (see shift right above). This cursor should appear in far left corner of the date line.charts it will remove one day of data for each click. This cursor should appear in

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Clicking with this cursor active allows you to change the start or end date of the active chart. This cursor should appear towards the right or left side of the date line on daily, weekly and monthly charts. Clicking with this cursor active allows you to change the time-frame of the chart (e.g.
Clicking with this cursor active allows you to change the time-frame of the chart (e.g. turn a 5 minute chart into a 10 minute chart).This cursor should appear towards the right or left side of the time line on 1 minute to 60 minute charts side of the date line on daily, weekly and monthly charts. Clicking with this cursor active
Clicking with this cursor active allows you to change zoom levels. This cursor should appear left of center on the date line. left side of the time line on 1 minute to 60 minute charts Clicking with this
Clicking with this cursor active allows you to change indicators, zoom levels, etc., through the Preset Chart Dialog. This cursor should appear right of center on the date line. This cursor should appear left of center on the date line. Clicking with this cursor active
Clicking with this cursor active allows you to change upper and lower Y-axis scaling. This cursor should appear in the scale area of the main chart. This cursor should appear right of center on the date line. Clicking with this cursor active
Clicking with this cursor active allows you to change indicator smoothing. This cursor should appear in the scale area of the indicator. cursor should appear in the scale area of the main chart. Clicking with this cursor active
Clicking with this cursor active allows you to edit the data used to create the chart. This cursor should appear above the main body of the chart on the information line. cursor should appear in the scale area of the indicator. Clicking with this cursor active allows
Clicking with this cursor active allows you to set alerts and/or positions. This cursor appears in the upper right. It is the same as selecting above the main body of the chart on the information line. Alerts from the Edit menu. Alerts from the Edit menu.
Clicking with this cursor active turns on Candle Pattern analysis and Candle Pattern alerts. This cursor appears to the right of the date line or time line on Candle Charts.alerts and/or positions. This cursor appears in the upper right. It is the same as selecting

The mouse is also used for four other important features…

1. Hold the Shift key down while dragging your mouse to draw trend lines. Trend lines are automatically stored when you close the chart window. To remove trend lines, one at a time, hold the Shift and the Control key down and click on the line to be removed. To remove all trend lines with one command, hold the Shift key down and select Clear from the Edit menu.

2. Hold the Control key down and drag the mouse. The cursor will change to a giant cross hair, stretching from top to bottom and left to right. As you move the cursor across the chart, the data reflected by that point in the chart will update. Horizontal and vertical drop lines will be drawn on release if the cursor is still in the body of the chart. The resulting drop lines are automatically stored when you close the chart window. To remove drop lines, one at a time, hold the Option and the Control key down and click on the lines to be removed. To remove all drop lines with one command, hold the Control key down and select Clear from the Edit menu.

3. Hold the Shift and Option keys down and drag your mouse around an area of the chart body to zoom in on that section of the chart.

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Preference Dialogs

There are several preference dialogs that affect charting and analysis

The Study Smoothings menu selection (Edit menu) will store your personal preferences for each study in our technical toolbox. Smoothings are stored independently for each time-frame of chart.

are stored independently for each time-frame of chart. You may set up to three moving averages.

You may set up to three moving averages. To turn a moving average off, set it to zero. In addition to selecting the period, you can choose Simple, Exponential or Weighted.

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Preset

Default Studies (Edit menu) allows you to preset which, if any, technical tools will be displayed when you request a specific chart time frame. You can always add and subtract tools from a chart. This dialog affects how the initial chart will draw. The zoom level changes the amount of space between each bar or candle on the chart. Higher numbers put more space between bars.

level changes the amount of space between each bar or candle on the chart. Higher numbers

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Program Defaults

This dialog allows you to define global settings that affect all charts. Starting at the top When you double click on a symbol in the Quote Monitor, the default chart type and time frame will be opened. The default type of chart (i.e., Bar, candle, line) is also used to determine the type of chart we will open when you make menu selections from the charts menu. The Font Size affects the legends of the chart.

charts menu. The Font Size affects the legends of the chart. When we initially draw a

When we initially draw a chart, we leave some blank space on the right side of the chart. This next field allows you to define how many periods (e.g., days) will be left blank.

The next popup allows you to define how much we will scroll a chart backwards or forwards when you click in the corners of the chart. This setting affects daily, weekly and monthly charts only. Intraday charts automatically remove a single day from the chart when you click on the right corner and restore the chart to its original view when you click on the left corner.

Two of the studies, MACD and Rate of Change can be set to default to histogram or line charts when they are initially drawn. Both indicators can be toggled to the alternate view after they are drawn.

The next button turns our pivot point alert system on or off. We'll talk about the pivot alert system later.

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Double Click Interface

Our Double Click interface allows deep control over portions of the chart. Double click on any study that displays under a chart (e.g., stochastics).

The following dialog will appear

chart (e.g., stochastics) . The following dialog will appear This dialog allows you to control the

This dialog allows you to control the smoothing, patterns, color choices and line thickness of whatever oscillator you double clicked on. In the case of Stochastics, we can also alter the formulation of the indicator to be Simple or Exponential.

clicked on. In the case of Stochastics, we can also alter the formulation of the indicator

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Double click on the main body of the chart . The following dialog will appear

Double click on the main body of the chart.

The following dialog will appear

main body of the chart . The following dialog will appear This dialog allows you to

This dialog allows you to control the upper and lower scale, grid spacing, patterns, color choices and line thickness of the main chart. The popup menu at the top of the dialog will allow similar changes to indicators overlaid on top of the chart. Menu items for indicators that are not currently on the chart are grayed.

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Analysis tools that depend on a the identification of a significant high and low (i.e.,
Analysis tools that depend on a the identification of a significant high and low (i.e.,

Analysis tools that depend on a the identification of a significant high and low (i.e., fibonacci, Gann, speedlines, and trident) offer the additional ability to change the date on which these two significant numbers were achieved.

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Use the up and down arrow controls to change the dates. When you release the

Use the up and down arrow controls to change the dates. When you release the mouse, the significant high or low will be updated in the dialog. You can also type in any valid date

Drop Lines

Hold the Control key down and drag the mouse. The cursor will change to a giant cross hair, stretching from top to bottom and left to right. As you move the cursor across the chart, the data reflected by that point in the chart will update. Horizontal and vertical drop lines will be drawn on release if the cursor is still in the body of the chart. The resulting drop lines are automatically stored when you close the chart window. To remove drop lines, one at a time, hold the Option and the Control key down and click on the lines to be removed. To remove all drop lines with one command, hold the Control key down and select Clear from the Edit menu.

AutoRun

Our AutoRun feature allows you to view the selected chart for each item in your List sequentially. To use this function, create a chart or charts. Select AutoRun from the List Mgmt menu. Fill-in the AutoRun timer dialog and press Begin. Pro Analyst will re-create the chart with the next symbol in the List every n seconds. The Next and Previous menu items (and up and down keyboard arrows) may be used to override the timer. These keys and menus also work when AutoRun is not active. In other words, you can AutoRun with unlimited time to review each chart. AutoRun may be canceled by pressing . or by selecting AutoRun again.

Whether you are using AutoRun or the arrow keys to shift from chart to chart, all charts are created in the current list order adding another benefit to our sorting and ranking routines.

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Quote Monitor Revisited

The Quote Monitor is always updating (as long as we are online), even if you close the window. To re-open the Quote Monitor after you have closed it, select Quote Monitor from the Windows menu.

The quote monitor will frequently become the center of your attention. You will find that your eyes gravitate to columns that are more important to the way you trade. Adjusting which columns appear where and how wide they are will help you focus. But first, a reminder, clicking on column titles will sort your list. To resize and move columns you will be dragging your mouse which means you will be holding the mouse button down while you move it.

To move a column, hold your mouse down on the column title and drag it right or left. As you drag, an outline of the column will move with the mouse. Drag it where you would like it and let go of the mouse. The first three columns are locked. They can not be moved nor can other columns be moved over them.

To size a column, place your mouse over the line separating the columns until the cursor

looks like this

You can also change the order and size of all columns through our Quote Monitor Set-up dialog. To activate this feature, hold your shift key down and click on any of the column titles.

this feature, hold your shift key down and click on any of the column titles. then

then drag the column wider or narrower.

this feature, hold your shift key down and click on any of the column titles. then

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4

Data Management

Lists, Files and Data Entry

Adding & Deleting From Your List

Pro Analyst works with groups of data files we call Lists. Lists can range in size from one to five hundred symbols. The Pro Analyst CD you received contains historical data on thousands of stocks, futures, mutual funds and indices. Check the CD first as these files contain over 5 years of history. Copy the files from the CD to the Data folder inside the Trendsetter folder of your hard disk. Then use Modify… to add these securities to an existing List or New… to put them in a fresh List. You can add securities to your List while you are online, however, Modify… and New… are only available when you are offline.

To add your own securities that are not on our CD or when you are online…

Step 1

Select Add Security from the List Mgmt menu.

Step 2

The screen will set-up for you to add to the existing list. Enter a security pressing

Step 3

Tab between fields. Press Next if you have more securities to enter or Done if this is the last one. If you are online, Pro Analyst will immediately request today's intraday data. To correct errors in symbol or any of the other information you entered, click on

Step 4

the line (in your Quote Monitor) that needs editing, then select Modify Security from the List Mgmt menu. Correct those fields in error, then press Done. After the intraday histories have been received, select Update Histories from the File menu to retrieve historical end-of-day data on the new securities you entered.

Another feature of our QuickQuote If the QuickQuote window is the front window when you select Add Security, information from the QuickQuote window will be transferred to the Add Security Dialog. Confirm that the information matches your desired input before accepting.

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The Dialog

The Dialog Security Name A file is created to store historical data for each security you

Security Name

A file is created to store historical data for each security you add to the List, therefore,

all security names must be unique. If your List will contain Dec Corn and Mar Corn, you can not call them both Corn.

Symbol

Common Stock and Mutual Fund symbols will be same as those used by the exchange

or listed in Investor's Daily or your local newspaper. Futures' symbols are listed in Appendix C. The most popular Index symbols may be found in Appendix E.

Security Type

Stock, Future, Index, Mutual Fund or Option.

Tick

This is the minimum price fluctuation. Pro Analyst will set the tick for you if it recognizes the symbol, security type combination. Either way, you should confirm that the tick is correct. Indexes and mutual funds are usually .01. Futures vary, see Appendix C of this manual for a list. Stocks should be .125 (1/8) if you want fractional displays or .01 if you want to view their prices in decimal form.

Display Format

The Decimal and Fractions selections affect output display only. Most areas of the program can accept fractions or decimal as input.

Sector #

Sectors are used for sorting purposes only. Assign a number in the Sector # field between 1 and 500. If this number has a definition, the sector name will be displayed. You may use traditional sectors such as Chemical, BioTech, etc., or use this field for definitions like Hot Picks, Inactive, etc. Changing the sector definition affects all securities with that sector number.

The data file is created automatically and the symbol is added to your list when you press Next, Done or Return. When you have input your entire list, press Done or Cancel.

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Adding an Option Series…

You can add Equity and Index options, one at a time, through the Add Security feature or use this special dialog to add related groups of options in one operation. Hold the Option key down and select Add Security from the List Mgmt menu. The following dialog will appear…

the List Mgmt menu. The following dialog will appear… Enter the base symbol. Base symbols are

Enter the base symbol. Base symbols are never more than three characters. NASDAQ symbols are normally converted by dropping the last two characters and adding a Q (e.g., AAPL becomes AAQ). Obviously this can not be true for all NASDAQ symbols as Apple is not the only stock whose symbol begins with AA. It would be wise to confirm the base symbol with your broker.

Select the Call and/or Put buttons, and check the appropriate Expiration Months and Strike Price Codes. The last two digits of the strike price are the only significant digits. In other words, a 105 and a 205 strike price have the same symbol. This does not normally create a problem since options have a limited trading life. However, in rare circumstances, the exchange may use the letters U, V, W, or X to identify duplicate strike prices or odd strike prices such as 22 1/2 after a stock split. It is also common for the exchange to use multiple base symbols for indexes. For example, the base symbol for S&P 500 index options may be SPX, SPU, SPZ or ??? based on need.

Sectors are used for sorting purposes only. You may assign a number in the Sector # field between 1 and 500. If this number has a definition, the sector name will be displayed. You may use traditional sectors such as Chemical, BioTech, etc., or use this field for definitions like Apple Options. Changing the sector definition affects all securities with that sector number.

After pressing OK, Pro Analyst will create a file for each option and assign the appropriate symbol. The new securities will be added to the end of your List. Hold the Option key down

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and select Remove Security from the List Mgmt menu to use this same dialog to remove expired options from your List.

Adding a Series of Futures Contracts…

You can add Futures' contracts, one at a time, through the Add Security dialog described previously or, when you want to add multiple contract months of the same commodity, select hold the shift key down and select Add Security from the List Mgmt menu. The following dialog will appear…

the List Mgmt menu. The following dialog will appear… Futures' symbols are always 1 or 2

Futures' symbols are always 1 or 2 characters. The most commonly requested symbols are listed in Appendix C. As you enter the base symbol, the program will automatically set the Tick if it recognizes the symbol. Sectors are used for sorting purposes only. You may assign a number in the Sector # field between 1 and 500. If this number has a definition, the sector name will be displayed. You may use traditional sectors such as Grains, Meats, etc., or use this field for definitions like Hot Picks, Inactive, etc. Changing the sector definition affects all securities with that sector number.

Backing-up Your Data Files Your data is very valuable. We recommend backing up as frequently as time and patience allow. From the Finder, single click on your data folder, then select Duplicate from the File menu. This will create a folder called Data Copy. This should be done once a day, discarding previous copies before duplicating. Should anything happen to a data file, you have a copy that is at most one day out-of-date. Once a week, copy your data to some alternative medium. If your hard disk should crash, the data on the alternative medium will be at most one week out-of-date.

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Organizing your List

Our sorting and ranking capabilities allow you to quickly organize your List in a variety of ways. These tools have their own sub-menus under the List Mgmt menu and can also be accessed by clicking on the column headings of your List. See the reference section of this manual for an explanation of the various sort and rank categories.

Individual securities can be moved within your List as well. Simply drag the symbol where you want it in the List and drop. If you drag above the top of the List or below the bottom, the List will automatically scroll making it incredibly easy to put things in order. Changed your mind? Drop the symbol above or below the window and it will remain where it was.

Using Sectors to Organize your List

Pro Analyst can sort your List by Sector. The only requirement on defining sectors is that they must range between 1 and 500. This flexibility can be used to organize your Quote Monitor.

Here's one example of how these features could be used.

Suppose we want to separate stocks that we trade from stocks that we hold in our long term account, like an IRA. We'd also like to group stocks that are on our "hot trading list" and stocks that are on our "hot investment list". When you sort by sector, Pro Analyst places the highest sectors at the top of the list. With 500 sectors to define and four basic groupings, we can allow 40 sectors per group and still have 300 left over. We want our trading List to be at the top. We reserve sectors 500-461 for this group.

First, select a stock that falls into this group. Select Modify Security from the List Mgmt menu. Change the sector to fall within the grouping. Multiple stocks can have the same sector number. Remember, when we sort, the higher the sector number, the closer to the top of the group the symbol will appear. We could rank the top 15 stocks, according to their importance, and give them sector numbers from 499 down to 483. The remaining stocks in this group could all be sector number 461.

When we are finished with the first group we would repeat the process for the second group and so on.

The beauty of this method is it is easy to change sector #'s when we sell a stock or enter a new position. Simply modify the security settings, then re-sort your List.

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Keyboard Data Entry

Editing Data

To edit the current record Click on the symbol in the Quote Monitor window. Select Edit Data from the List Mgmt menu. A dialog will be presented for you to type in the data. Changes are automatically stored when you press Next or if return key is pressed. Pro Analyst will then move to the next symbol in the list for editing.

To edit historical data (contained in the active graph). Click on the bar or candle containing the data that needs editing. The line of text at the top of the screen will change to reflect that bar or candle. Click on any of these numbers. A Dialog will appear to allow editing of the data.

Deleting Data

As with editing and most functions in the program, there are multiple ways to delete data. The preferred method will depend on how much data and where, within the file, that data is located.

To delete the last record in any file…highlight the security in the List and select Delete Data from the List Mgmt menu.

To delete one or more records from the end of each file in a single security or the entire List… select Block Delete from the List Mgmt menu. A dialog will appear requesting the number of records to delete. The default is one. Enter the appropriate number, verify whether you want to delete the data from each security in the List or simply the selected security, then press the Delete button.

want to delete the data from each security in the List or simply the selected security,

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To delete extraneous data from various points in a single file…highlight the security in your List. Select Recover from the File menu (offline). This function rebuilds the entire file, deleting all data that does not fall within the valid date ranges. At the same time, it will delete duplicate records, inserting holidays (optional) where data is missing and check the validity of the data. You can instruct Pro Analyst to rebuild the entire List if you hold the shift and option keys down while selecting Recover List from the File menu.

keys down while selecting Recover List from the File menu. Deleting Securities There are several ways

Deleting Securities

There are several ways to remove securities from a List. Which method you use depends on whether you want to permanently delete the data or simply remove the security from the List.

There are two ways to permanently delete the data…

1. Highlight the security in the List. Select Delete from the File menu. Pro Analyst will

request permission to permanently delete the data. This works fine if you only have one or two securities to delete.

2. Select Quit from the File menu. Pro Analyst will return you to the Finder. Open your

data folder and drag the file or files to the trash. When you return to Pro Analyst and open the List, the program checks to see if the associated securities exist. If they do not, they are discarded from the List. This method works best if you have many securities to delete.

There are three ways to remove the security without deleting the historical data…

1. Highlight the security in the List. Select Remove Security from the List Mgmt menu.

2. Select Modify… from the File menu (offline). Select and Open the List needing

modification. The List Modification window will open displaying securities that are in your List on one side and those that are not on the other. Double click on the securities you want removed from the List. They will move to the other side. When you are finished making

modifications, press Save or Use. The List will re-open as modified.

3. Select Quit from the File menu. Pro Analyst will return you to the Finder. Open your

data folder and drag the file or files to another folder. When you return to Pro Analyst and open the List, the program checks to see if the associated securities exist. If they do not, they are discarded from the List.

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Exporting Data

Export… (File menu) creates text files for use with AppleWorks, Excel and other Macintosh products.

for use with AppleWorks, Excel and other Macintosh products. Set the Col # fields to Skip

Set the Col # fields to Skip on information you do not want exported. In our example we have indicated we want the Symbol in the first column, the Date in the second column, Volume in the seventh, and Open, High, Low and Last in the third through sixth columns respectively and we have indicated that we want to skip Open Interest.

Select your personal choices from the Export From, Export To, Date Format and Data Type, and File Type popup menus. Pro Analyst will use the date format of the operating system. The field here is just a reminder of how you have your system set up. We have indicated that we want the last 1 record of daily data exported, from each security in the List, in Tab delimited text (for use with Excel). When Export is pressed, Pro Analyst will request a name and location to store the exported data.

With the expectation that you will want to export to the same format on a normal basis, Pro Analyst will automatically store your setup after completing the export.

Export One (File menu) will export the current day's data from each item in the active List using the format parameters stored on your last export. The data will be stored in a file named "export" which will be created in the same folder as the active List. If the file exists it will automatically be replaced.

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Stock Splits & Futures' Rollovers

A stock split alters the number of shares outstanding and the price of those shares. In a 2 for

1 split, each share of existing stock will become 2 shares and the price will be halved. A reverse split has the opposite effect. Sometimes, if you are not following a stock closely, you will not become aware of the split until after it has taken effect. As such, our Split function contains an effective date field. All data before the effective date will be split in the ratio you select. Highlight the stock in your List. Select Split from the Special menu. Adjust the ratio of the split and the effective date. After setting all fields, press Split. Before adjusting the prices, a copy of the historical data file will be made and left on the disk. After confirming that the new file is correct, you may discard the copy.

that the new file is correct, you may discard the copy. Rollover has two main functions:

Rollover has two main functions: it can be used to adjust Mutual Fund prices after a dividend distribution and it can be used to create and maintain perpetual futures data.

can be used to create and maintain perpetual futures data. For mutual funds … Highlight the

For mutual funds… Highlight the Fund in your List. Select Rollover from the Special menu. A dialog window will appear requesting the adjustment amount and the effective date.

The adjustment should be negative. The New Lead Contract field is for Futures only. If there

is anything in this field, delete it. All data up to and including the effective date will be

adjusted. After setting all fields, press Rollover. Before adjusting the prices, a copy will be

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made and left in your Data folder. After confirming that the new file is correct, you may discard the copy.

For Futures… Highlight the Future in your List. Select Rollover from the Special menu. The adjustment value is calculated by subtracting the current settlement price of the perpetual contract from the settlement price of the contract you are rolling to. If the new contract is lower in value, this will create a negative adjustment value. Enter the expiration of the contract you are rolling into. This date must be in the form MM/YY. The effective date defaults to today and should normally be left unchanged.

A discussion of Perpetual Futures data may be found at the end of Section 8.

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5

Special Features

Advanced Usage

Layouts

As you use the software you are likely to discover that you prefer to view similar securities in

a similar way from day to day. Our custom layout feature was designed to allow you to

accomplish this faster and more conveniently. Lets take a look at how this works

series of charts using different symbols, time frames, and chart types. Size and place the

windows. Select Save Layout from the Windows menu. Just like any other file you create on your Macintosh, layouts must have a unique name. Name the layout My First and press Save. You have just created your first layout.

Just like our Lists, layouts do not contain the charts or even the data necessary to create them. The layout files store the names of the data file or files used to create the charts. This way, as you update those files with newer data, the layouts will update as well. The layouts also store other window content information like the type and time frame of the charts and what, if any analysis studies were applied to the chart. Finally, the layouts store the windows size and placement on the screen at the time they were created.

Using your layouts is even easier than creating them. Lets close all the graphs and imagine that this is a new day. Now, select Use Layout from the Windows menu and open My First.

Layout files DO NOT contain price data. They do contain:

» The number, size and screen location of all graphic windows open at the time the Layout was saved.

» The type and time frame of the chart.

» The symbol used to create the chart.

» The analysis tools displayed on the chart.

Open a

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Chart Suite

The Chart Suite is a layout without security names so that it can be used on any symbol in your List with a single keystroke or menu selection.

To use the Chart Suite, select a symbol in your List, then select Chart Suite from the Charts menu or press =

The default Chart Suite brings up a daily, weekly and monthly chart (offline) or a 5 min, 15 min, 30 min and 60 min chart when you are online. To change the suite, open the charts you want included in the suite (all charts must be based on one symbol), then select Chart Suite from the charts menu while the charts are the front windows.

from the charts menu while the charts are the front windows. You can redefine the suite

You can redefine the suite as frequently as you want but only the last definition will be "remembered".

Candle Pattern Identification & Alerts

Pro Analyst can assist you in finding and understanding Japanese Candle chart patterns. To toggle this feature on or off, move your mouse to the right of the date or time line on any Candle chart. Click your mouse once when the cursor changes to a light bulb.

Candles that identify patterns are "painted" in offsetting colors. Hold the mouse down on any of these candles to read a description of the pattern and its meaning. Page numbers are a reference to Steve Nison's book on candlestick interpretation. Pro Analyst can identify 26 key candle patterns including:

Hammer & Hanging Man Piercing Pattern & Dark Cloud Cover Inverted Hammer & Shooting Star Harami & Harami Cross Bullish & Bearish Counterattacks Tri Star Bottoms & Tri Star Tops

When candle pattern id is active, the program will alert you when a new candle pattern forms on that chart.

Bullish & Bearish Engulfing Morning & Evening Stars & Doji Stars Upside Gap Two Crows Three Black Crows Bullish & Bearish Beltholds Dojis

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Pivot Point Alerts

Our pivot point alerts are based on a day trading system used by many floor traders. To calculate the pivot point, we add the previous day's high, low and close and divide the result by 3. The pivot point is then used to calculate the four alert levels as follows:

Pivot Low is the pivot point multiplied by 2 less yesterday's high. Pivot High is the pivot point multiplied by 2 less yesterday's low. Extreme High is the pivot point minus nearby support plus nearby resistance. This would be the next expected level of resistance if the nearby resistance failed to hold. Extreme Low is the pivot point minus the difference nearby resistance and support. This would be the next expected support level if nearby support failed to hold.

These alerts are calculated automatically when you open a list. They are in addition to any personal alert levels that you set. As the alerts are hit, you will be notified in the rank column and the upper half of the ticker tape. You can turn off the notification (or turn it back on) through the program defaults dialog (Edit menu).

You can turn on (or off) the display of these alert levels on any chart by clicking in the scale area of the chart while holding the shift key down. On intraday charts, the scale of the chart will display the alerts instead of the normal scaling. On charts longer than hourly, the alerts will be displayed as colored horizontal lines. In both cases, the chart will be rescaled if the alerts are outside the range of the chart high and low.

A

similar display of your own personal alerts and position entry price is available by clicking

in

the scale area of the chart while holding the option key down. This command will be

ignored if you have not set alerts.

Trade Tracking

The Trade Tracking window summarizes your open positions including:

Profit or loss since the position was established; Profit or loss from yesterday's close (intraday P/L); Best in profit today. Value of the position (shares x current price).

The first two profit figures will be equal if the position was opened today. Position value will be blank for futures contracts.

All calculations update real time.

To activate the Trade Tracking window, select Trade Tracking from the Special menu (or press F9).

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Automatic Alerts

The following tools will automatically generate alerts if they are displayed on a charts

MACD will trigger an alert if it is displayed as a histogram and the MACD value crosses zero or, if it is displayed as a double-line then it will trigger an alert when the two lines

Stochastics will trigger an alert if %k crosses above %d when the value of %k is less than 75 and conversely when %k falls below %d and %k is greater than

Moving Averages will trigger an alert when they cross.

Parabolics will generate an alert when a reversal is pending.

Rate of Change will generate an alert when the value crosses 100.

Keltner Channels will generate and alert when the price exceeds outer channels.

Program generated trend lines will alert you when prices touch or break out of their channels.

The last pair of manually drawn trend lines (support and resistance) will be alerted if touched or broken.

Alert Sounds

Hold the option key down and select Alerts from the Edit menu to set the default Alert sounds for automatic alerts

Technical alerts are those based on technical analysis studies like MACD and Stochastics.

Set the sound to Silence for any of the alerts if you prefer to turn off audible alarms.

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Calculator

Enter two dates and press the Dates button. Our special calculator will determine the number of trading and calendar days between the two dates. Add a third input (the +45 in our example) and Pro Analyst will project future dates as well.

Enter two prices and press Retrace and our calculator will compute Fibonacci retracement levels. Hold the Control key down to find retracments in eighths. Use the Option key to request retracements in thirds. Enter a single price in the first field and a percentage in the second field and we compute percentage moves up and down from your price.

Enter a price in the first field and a ± number in the second field and press Count. We'll check how many times your price was within the high and low range.

The Stats button will calculate standard deviation, volatility and price range between any two valid dates. With no input, we use the date range of the chart.

deviation, volatility and price range between any two valid dates. With no input, we use the

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Trader's Journal

Every successful trader must learn from experience, good and bad. Our Trader's Journal feature allows you to keep dated notes, stored separately for each security. The perfect spot to write your thoughts, emotions, etc.

The perfect spot to write your thoughts, emotions, etc. Time & Sale select a symbol in

Time & Sale

select

a symbol in your quote monitor, then select Tick from the Charts menu. In the lower left of the chart is a graphic control. Click on the 4th picture from the left to turn the tick chart into a Time & Sale display

To view time and sale information

a Time & Sale display To view time and sale information All charts can be converted

All charts can be converted to time and sale display format through this same control. The time frame of the chart dictates the information that is contained in each row of the Time & Sale display.

To export this information for use in AppleWorks, Excel or other Mac

programs

menu.

select Save As from the File

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To export this information for use in AppleWorks, Excel or other Mac programs menu. select Save

Online Versus Offline

Many of Pro Analyst's features require connection to the MacTrack data feed. It does, however, have many features that can be used when you are not connected. We thought a few words on this subject might be helpful.

First, lets define how you tell whether you are online or offline

ticker tape window will be open along the bottom of your monitor and your QuoteMonitor will display a few extra columns (e.g., bid and ask).

During market hours (you define these) the program will automatically want to work online. Online only features include intraday charting and analysis, news features, and MarketPulse reports. Longer term charts (i.e., daily, weekly and monthly) and analysis are available whether you are connected or not. When the markets are closed, Pro Analyst will automatically work offline unless you select Start Monitor from the Special menu. Intraday data is collected and stored between these hours. If you want to watch afterhours news and quotes but do not want the quotes stored, you should start the connection manually after we have automatically disconnected for the day.

Why would you want to work offline? A few features, specifically, creating and modifying Lists, are available offline only. Second, you don't always need to be connected to the internet to use a variety of the programs features. This could be useful if you are traveling as one example.

when you are online, the

Maintaining Multiple Lists

If you maintain more than one List, we recommend that you segregate your main intraday List from the rest of your Lists by creating them in separate data folders. This is to prevent the potential loss of intraday data. When you start monitoring, Pro Analyst opens (or creates) and indexes the Intraday data file located in the same folder as the List. If your secondary Lists are located in the same folder as your main List and you start monitoring, Pro Analyst will index the Intraday file to the secondary List. This would, in most cases, cause you to lose Intraday data.

There are many reasons why you might want to maintain more than one List. Here are a few examples

1. You want to monitor markets that open at odd hours to your main List, like night futures'

markets or overseas markets.

2. You want to maintain historical data on securities that are not in your main List. Your main

List is limited to 500 symbols. You may even wish to limit the size of your main List below the maximum because of speed concerns related to your connection speed or the speed of your Mac. You can maintain historical data on thousands of additional securities in separate Lists (in separate folders). If and when you decide to add any of these securities to your main List, you can move the histories to the folder containing your main List.

To update the historical data on a secondary List

1. Select Open… from the File menu.

2. Select Start Monitor from the Special menu.

3. Select Update Histories from the File menu.

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6

Technical Analysis and Charting

A Primer

Introduction to Technical Analysis

What is technical analysis and why is it important? All investors should do some form of due diligence before making any investment. There are two basic forms of investment analysis; fundamental and technical. Fundamental analysis involves evaluating an investment on the merits of its balance sheet, products, supply and demand, and the economic climate. Technical analysis assumes that the market has discounted the fundamental information (the market knows the information before it becomes public) and seeks to interpret the market reaction to this information by analyzing price movements for a given investment.

Prices move in trends, and these trends tend to continue in the same direction for extended periods of time. The technician, through the use of charts and other indicators, attempts to identify these trends. The charts do not cause the market to go up or down. They simply reflect the market's perception of the fundamentals. In essence, it is a matter of cause and effect. Fundamental analysis seeks to interpret cause, while technical analysis interprets effect. The fact that XYZ's earnings continue to grow is the fundamental cause for higher stock prices while the actual price range in which XYZ finds support and resistance is the effect.

Support and resistance? Every investor has a price at which he becomes concerned about continued ownership of his stock and decides to sell. When enough investors have a similar price in mind, there are more sellers than buyers in the market and the price of the stock will fall. This price is referred to as resistance. Similarly, at some price, investors will view a stock as being undervalued and decide to buy. The price at which more investors want to buy than sell is considered support. As investor psychology changes over time, so do the areas of support and resistance. The key to market timing is identifying support and resistance areas and attempting to buy at support and sell at resistance. This is the heart and soul of technical analysis.

Charts are the basis for technical analysis. They offer a visual aid to interpreting trend and market action. The old axiom "a picture is worth a thousand words" was never more appropriate. Even the novice can do basic chart interpretation. We can all look at a chart and say "I wish I had bought this stock then" or "Wouldn't it have been great to take profits then." Hindsight is easy and you can't always be right, but with the right tools and a little work, you can decrease your risk and increase your profits.

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The three most popular forms of charts are the bar chart, candlestick chart, and the line chart. Pro Analyst can create all of these in daily, weekly and monthly time frames. For the experienced trader or investor, Pro Analyst saves you hours with access to some of the most powerful analysis tools. It can also help prevent you from making the emotional mistakes we are all susceptible to.

Learning technical analysis, with our software, is easy if you have invested or traded before. After reading through this section of the manual, down load data on securities you have traded in the past. Examine the chart around the time you entered the trade. Did you enter the trade at the most opportune time? Would the chart, by itself, have altered your strategy?

Next, let's apply one of the analysis studies. Pick an indicator (e.g., Stochastics). Can you spot anything here that would have helped you enter the trade at a better point? Check your other charts to see if your observations hold. The next step is to discover how studies work in conjunction with one another. This is called "looking for confirmation". No single tool will be 100% accurate in predicting direction or timing. However, two tools, each 50% accurate, might produce 75% accuracy when they both point in the same direction at the same time. Take your time, Rome wasn't built in a day. Each tool that you master will enhance your bottom line.

We strongly recommend paper trading if you are new to trading. Trading is the only business that can truly be tracked on paper. If you were to open a video store on paper, you would not get a true picture of potential profitability because factors such as the quality of your employees, location, traffic, theft, bad debts, etc., can only be estimated. Investments can be tracked on paper and all variables are known. Take advantage of this and make your mistakes on paper, not with real money. Many of the techniques involved in technical analysis can only be learned through experience and Pro Analyst offers you an excellent way to gain this experience. In time you will make fewer and fewer mistakes and you'll be ready to put that experience to work. Our Trader's Journal feature (Special menu) was designed to help the trader keep track of his thoughts and emotions. We think you will find it to be an excellent aid in paper trading.

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Bar Charts and Trend Identification

Daily bar charts are the most widely used type of chart. These charts are constructed by representing each day's activity as a vertical bar. Opening and closing prices are represented by horizontal marks to the left and right respectively. To display a daily bar chart in Pro Analyst, simply select Bar Daily from the Charts menu. Pick the appropriate file from the selection dialog and press Open.

Speed Tip As the number of files in your Main List grows, scrolling through the file selection dialog takes longer. This dialog can be manipulated much faster through the keyboard. Press the first letter in the file name and the dialog will proceed directly to the first file beginning with that letter. Once there, the up or down arrows can manipulate the dialog quickly to the file you wish to select. When that file is highlighted, pressing Return treated the same as clicking on the Open button.

Chart appearance is very flexible in Pro Analyst. Users can set scaling, grid division, zoom level (i.e., chart spacing), study smoothing, colors, even default studies. Beauty is in the eye of the beholder. When you know how you want to display your charts, Pro Analyst will let you lock in your preferences for each type and time-frame of chart. Until then, the program will use default settings. In other words, you don't need to be an expert to create useful charts.

Clicking the mouse on any bar in the chart will display the data (date, volume, open, high, low, and close) reflected in that bar. These numbers are displayed directly above the chart. Moving average and analysis tool values are also displayed if they appear on the chart.

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Figure 5 Clicking in other areas of the chart (see Figure 5) will allow temporary

Figure 5

Clicking in other areas of the chart (see Figure 5) will allow temporary changes in chart appearance. We call this our Point & Click interface.

As you move the cursor around the graph you will notice that the cursor changes to indicate the function of our point & click interface.

Clicking with this cursor active displays the information of that bar or candle at the top of the graph. This cursor should appear in the main body of the chart as well as the main body of sub studies (i.e., Stochastics). Clicking with this cursor active scrolls the chart forwards in accordance with the what you have selected in the Program Defaults for end-of-day charts. On intraday charts it will remove one day of data for each click. This cursor should appear in far right corner of the date line. Clicking with this cursor active scrolls the chart backwards in accordance with the what you have selected in the Program Defaults dialog for end-of-day charts. On intraday chartsto indicate the function of our point & click interface. it will restore days removed from to indicate the function of our point & click interface. it will restore days removed from

Defaults dialog for end-of-day charts. On intraday charts it will restore days removed from the chart

it will restore days removed from the chart (see shift right above). This cursor should

appear in far left corner of the date line. Clicking with this cursor active allows you to change the start or end date of the active chart. This cursor should appear towards the right or left side of the date line on daily, weekly and monthly charts. from the chart (see shift right above). This cursor should Clicking with this cursor active allows from the chart (see shift right above). This cursor should Clicking with this cursor active allows

Clicking with this cursor active allows you to change the time-frame of the chart (e.g., turn

a 5 minute chart into a 10 minute chart).This cursor should appear towards the right or left side of the time line on 1 minute to 60 minute charts.

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Clicking with this cursor active allows you to change zoom levels. This cursor should appear left of center on the date line. Clicking with this cursor active allows you to change indicators, zoom levels, etc., through the
Clicking with this cursor active allows you to change indicators, zoom levels, etc., through the Preset Chart Dialog. This cursor should appear right of center on the date line. This cursor should appear left of center on the date line. Clicking with this cursor active
Clicking with this cursor active allows you to change upper and lower Y-axis scaling. This cursor should appear in the scale area of the main chart. This cursor should appear right of center on the date line. Clicking with this cursor active
Clicking with this cursor active allows you to change indicator smoothing. This cursor should appear in the scale area of the indicator. cursor should appear in the scale area of the main chart. Clicking with this cursor active
Clicking with this cursor active allows you to edit the data used to create the chart. This cursor should appear above the main body of the chart on the information line. cursor should appear in the scale area of the indicator. Clicking with this cursor active allows
Clicking with this cursor active allows you to set alerts and/or positions. This cursor appears in the upper right. It is the same as selecting above the main body of the chart on the information line. Alerts from the Edit menu. Alerts from the Edit menu.
Clicking with this cursor active turns on Candle Pattern analysis and Candle Pattern alerts. This cursor appears to the right of the date line or time line on Candle Charts.alerts and/or positions. This cursor appears in the upper right. It is the same as selecting

The mouse is also used for five other important features…

1. Hold the Shift key down while dragging your mouse to manually draw trend lines. Trend lines are automatically stored when you close the chart window. To remove trend lines, one at a time, hold the Shift and the Control key down and click on the line to be removed. To remove all trend lines with one command, hold the Shift key down and select Clear from the Edit menu. See the section on our Double Click interface for instructions on how to edit your manually drawn lines,

2. Hold the Control key down and drag the mouse. The cursor will change to a giant cross hair, stretching from top to bottom and left to right. As you move the cursor across the chart, the data reflected by that point in the chart will update. Horizontal and vertical drop lines will be drawn on release if the cursor is still in the body of the chart. The resulting drop lines are automatically stored when you close the chart window. To remove drop lines, one at a time, hold the Option and the Control key down and click on the lines to be removed. To remove all drop lines with one command, hold the Control key down and select Clear from the Edit menu.

3. Hold the Option key down to track the price and date of the mouse location.

4. Hold the Shift and Option keys down and drag your mouse around an area of the chart body to zoom in on that section of the chart.

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Figure 6 Daily charts are very useful for identifying short term trends. Identifying the trend

Figure 6

Daily charts are very useful for identifying short term trends. Identifying the trend and the magnitude of the trend are the key to chart analysis. Trends are most often broken down into three categories -- primary, secondary, and minor. Pro Analyst identifies all three for you. Figure 6 shows an example of our computer generated trend lines created by selecting Trend from the Analysis menu. The heavy lines represent the Primary trend while the light lines display the minor trend. In this example, the secondary trend lines are obscured by the heavy primary lines.

As the human eye can sometimes see things that the computer missed, an understanding of what constitutes a trend line is in order. Markets fluctuate up and down in a succession of peaks and troughs. If the peaks are getting higher and higher, the trend is said to be up. Conversely, if the troughs are getting lower and lower, the trend is down. Sometimes, both of these trends are evident at the same time. This is a mixed trend and usually indicates a market in a decision making process. A line can be drawn between successive peaks or troughs to graphically illustrate the trend. It takes two points to define a trend and a third to confirm. The top line is termed the line of resistance and the line connecting the troughs is termed the support line. The small circles displayed in Figure 6 were created by another analysis tool called Key Points. This combination of these two features can be invaluable to those learning to identify areas of support and resistance.

Another important concept in the development of trend lines is parallel channels. Many analysts believe that true resistance on a market that is rising will be found along a line that runs parallel to the support. Conversely, in a market that is trending down, true support will fall on a line parallel with resistance. This is important to remember as we pursue the concept of trend reversals.

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Pattern Identification

As we said before, markets tend to trade within channels for days, weeks or months. The next task of the technician is to identify when the trend will change or accelerate. To do this, the chartist will use a combination of momentum studies and chart patterns. While patterns are not identified by Pro Analyst, no discussion of technical analysis would be complete without them. These patterns have been given names such as -- head and shoulders, gaps, flags and pennants. Generally, patterns fall into two categories: reversal patterns and continuation patterns.

Gaps and Other Major Reversal Patterns

The head and shoulders is probably the best known of the reversal patterns. Our example shows this pattern predicting a trend reversal in IBM in 1991. While the pattern is not truly confirmed until the neckline is broken, early anticipation can lead to greater profits. Momentum studies, such as Stochastics offer the best opportunity for early recognition.

offer the best opportunity for early recognition. Head & shoulders Once the pattern is established, there

Head & shoulders

Once the pattern is established, there are several important characteristics of this pattern to look for. First, the distance between the top of the head and the neckline provides a minimum target for the new support level. In our example, the head is at 106 and the neckline (directly below the head) is at 95. This means we would expect new support to be no higher than 84. In this case, the measurement is almost perfect as IBM dropped to 84 in early December. The second characteristic is a return move back to the neckline after the neckline is broken. This is very important if you failed to recognize this pattern before confirmation. In this case, IBM

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exceeded the neckline, however, that is not normal. Finally, the wider the pattern, the more significant the reversal.

A head and shoulders is a special version of a triple top where the middle peak is higher than

the first and the last peak (the shoulders). Multiple tops or bottoms offer the clearest, most

reliable signals of trend reversal. It is easy to recognize them as they are usually named after the patterns they form. Some examples: the "W" bottom, the "V" or spike bottom, the "saucer" bottom and "rounded" tops. The "W" bottom is a special version of a double bottom. It appears on the chart as a "W" and is confirmed when the center top is exceeded. The longer the time delay between multiple tops or bottoms, the more significant the reversal

or breakout when it occurs. Testing of previous support or resistance is key to the

continuation and strength of a trend, therefore failure to "take out" a previous high or low is usually the first warning of a trend reversal. Saucer bottoms and rounded tops are also good indicators of a reversal in trend. They are caused by a gradual change in market psychology. Stochastics and RSI are very useful for confirming reversal patterns in their early stages.

for confirming reversal patterns in their early stages. "W" Bottom - a powerful reversal pattern Gaps

"W" Bottom - a powerful reversal pattern

Gaps are simply blank spaces on a chart where no trading has taken place. They occur more

frequently in thinly traded markets and are caused by a lack of buyers or sellers, usually due

to news that surprised the market. Gaps quite often occur just before or just after a trend

reversal and are therefore important. Gaps have different meanings depending on where in the price structure they appear.

It is not uncommon for a market to retrace and fill the gaps later. This phenomenon can

provide a target for entry into missed markets. However, since this does not occur every time,

it should not be depended upon to exit losing positions. There are five types of gaps:

Common Gap

These gaps have little or no forecasting value as they occur in thinly traded

markets.

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Exhaustion Gap - These gaps appear in the direction of the current trend when that trend has been in existence for a long period. They are a good sign of an impending trend reversal. These gaps are almost always filled Breakaway Gap - These gaps usually occur at the conclusion of an important topping or bottoming action and are rarely filled. Measuring Gaps - These gaps occur in mid range of a trend and are a sign of increased momentum. Islands - Islands are simply an exhaustion gap followed by a short consolidation and then by a breakaway gap in the opposite direction. They are aptly named as they leave an island of bars on a chart.

the opposite direction. They are aptly named as they leave an island of bars on a

Island Top indicates reversal

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Continuation and Indecision Patterns

Continuation patterns occur after a strong move up or down and are essentially a resting point or consolidation period. The market moves sideways while it "works off" the over- bought or over-sold condition. This sideways movement occurs as the market moves closer and closer to a temporary equilibrium. The pattern formed resembles a pennant or a flag. The strong move before the formation of the flag is referred to as the flagpole.

Triangles are indecision patterns and appear similar to a pennant except they occur in mid- range and quite frequently before major news events. If the news is good, the chart exits the triangle to the upside and conversely if the news is bad, the chart exits the triangle to the down side. Early identification of a triangle offers excellent short term trading opportunities.

Japanese Candle Charts

Over 100 years before traditional bar charts were developed, the Japanese were using Candlestick charts to analyze the rice market. The Pro Analyst presentation includes daily, weekly and monthly candlesticks. All the analysis tools that may be displayed on your daily and weekly bar charts may also be used in conjunction with these new charts. Get ready for a whole new language…

The thick part of the candlestick is called the "real body" and represents the range between open and close. When the real body is solid it means the close was lower than the open, if the real body is white, it means the close was higher than the open. The thin lines above and below the real body are called "shadows" and they represent the high and low of the day or week. If the open and close are the same, the display will appear like a traditional bar. These are called "doji" lines.

Pro Analyst can assist you in finding and understanding Japanese Candle chart patterns. To toggle this feature on or off, move your mouse to the right of the date or time line on any Candle chart. Click your mouse once when the cursor changes to a light bulb.

Candles that identify patterns are "painted" in offsetting colors. Hold the mouse down on any of these candles to read a description of the pattern and its meaning. Page numbers are a reference to Steve Nison's book on candlestick interpretation. Pro Analyst can identify 26 key candle patterns including:

Hammer & Hanging Man Piercing Pattern & Dark Cloud Cover Inverted Hammer & Shooting Star Harami & Harami Cross Bullish & Bearish Counterattacks Tri Star Bottoms & Tri Star Tops

When candle pattern id is active, the program will alert you when a new candle pattern forms on that chart.

Bullish & Bearish Engulfing Morning & Evening Stars & Doji Stars Upside Gap Two Crows Three Black Crows Bullish & Bearish Beltholds Dojis

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Point & Figure

Point & Figure charting dates back to the turn of the century. It's acts like a filter, showing only "significant" price movements, allowing the analyst to see patterns more readily. The basis for plotting revolves around selecting a box size (the value of a + or o). This is one of the most critical decisions for the analyst. A box that is too small will make the chart too sensitive while one that is too large has the opposite effect. Pro Analyst decides the box size for you based on current price, recent volatility and accepted standards providing the optimum sensitivity for the chart.

standards providing the optimum sensitivity for the chart. Plotting is based on well defined rules. Horizontal

Plotting is based on well defined rules. Horizontal movement reflects trend changes rather than time. In other words, each column can encompass a different amount of days, weeks or even months.

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Preference is given to price movements that continue in the direction of the current column. If the last column of the chart is a down column (o's) then the low of the day is tested first. Price movements are considered "significant" if they exceed previous movements in the trend direction by one box.

The price must reverse direction by an amount equal to three boxes for it to be considered "significant". Traditional charts use "x" to mark up trends and "o" to mark down trends. Pro Analyst uses a "+" instead of an "x" but otherwise follows the traditional format.

Let's look at our example (the Lumber chart on the previous page)

achieved in the last column (o's) is 352. The chart is a 3 x 8. This means each o or + represents 8.0 with a 24 point (3 x 8) move necessary to reverse column direction. When a new day of data is added to this chart, Pro Analyst will test the low of the day first (because the last column is a down column). If the low of the day exceeds 352 by at least one box (i.e. £ 344) then Pro Analyst would add one or more o's. If this test fails (e.g., the low is 345) then Pro Analyst will test the high of the day to see if it matches the criteria necessary for a new column. In this case, the high must exceed 376.

P&F are the easiest charts to draw on paper. This is one reason why they have remained a popular choice for analysis for over 60 years. On paper, you keep the grid size constant and associate a different value for each box. On a computer, windows are adjustable in size and a circle can not be made infinitely small. This can present a problem.

The solution is to keep the box size constant and only display that part of the chart that will fit in the window. Pro Analyst decides which part of the chart is key based on recent price movement. Click in the scale area to toggle the display to the other part of the chart.

Clicking in the left corner of the chart will "scroll" the chart to the left if more columns exist than can be displayed in the current window. Clicking in the right corner will "scroll" the chart back.

the lowest point

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Point & Figure Analysis

Many of the same techniques for interpreting bar charts apply to point & figure. Trend lines are more easily identified as are many of the chart patterns. The most common point and figure formations are shown in following example with corresponding buy and sell signals identified.

example with corresponding buy and sell signals identified. Recognizing patterns, entries and exits, and potential price

Recognizing patterns, entries and exits, and potential price objectives, are a function of experience. Don't give up, in time you will realize the power and accuracy of this time-tested tool.

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Technical Tools

As all technical studies are overlaid directly on or under your charts, the analysis menu remains inactive unless an appropriate chart is in the active window. Analysis menu selections that appear before the separator line (e.g., RSI) will be drawn underneath the chart. The studies can be divided into five basic categories: momentum, trend, volatility, directional and volume. No single tool will be 100% accurate in predicting direction or timing. Successful traders look for confirmation between several studies. Very few analysts have the time to use all the tools available in Pro Analyst. Each extra study, which confirms previous work, reduces risk and increases the probability of a successful trade. However, there is a diminishing return with each additional confirmation. On average, minimal risk can be achieved with the use of three to five indicators.

Momentum Studies

Momentum studies include Stochastics, RSI, TSI, MACD, and Rate of Change. While each momentum study has a different presentation, there are three areas of interpretation that are shared: divergence; trend; and absolute value (in order of importance). The following discussion of Stochastics applies in general to all momentum studies. If you can learn to spot divergence and trend on one momentum study, you have mastered the use of all.

Stochastics

Markets that are heading higher tend to close nearer the high than the low with the reverse being true in markets that are heading lower. This is what Stochastics is attempting to measure. There are three calculations that comprise Stochastics.

Fast %K = ((Close-Low in Period)/(High in Period-Low in Period))*100 Slow %k = Moving average (user selectable) of Fast %K %d = Moving average (user selectable) of Slow %k

Fast Stochastics uses the first two values while slow Stochastics use the latter two. Pro Analyst can plot slow or fast stochastics or all three lines. All values that are not assigned the same color as the background color will be displayed. We are using a 20 day, slow Stochastics in our example.

In simplistic terms, Stochastics is considered oversold when %K is under 25 and is crossing over above %D and overbought when it exceeds 75 and crossing under %D. As crossovers often occur with no change in price trend the skilled analyst will filter out false signals.

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Divergence is the best filter. When price patterns are making higher tops while Stochastics is

Divergence is the best filter. When price patterns are making higher tops while Stochastics is making lower tops, this is called bearish divergence. As the name implies, this is a sell signal. Conversely, when the price pattern is making lower bottoms and Stochastics is making higher bottoms, this is bullish divergence.

A second filter for this indicator is the trend of the %d line. In our example you can see that

we have drawn a trend line connecting the dips in this line. When this trend line was broken, it marked the end of the up trend in prices.

A

third filter would be to look for signals generated by other indicators to act as confirmation

or

denial of the signal presented by Stochastics.

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Williams %R

Developed by Larry Williams, the formula for %R is a variation of Stochastic Fast %k. Where %k compares today's price to the lowest low, %r compares today's price to the highest high. This produces values that are inverse of one another. The indicator is plotted using negative numbers. For interpretation purposes, it is the absolute value that is important, so ignore the minus sign. %R produces buy signals when the indicator is high ( 80) and sell signals when it is low (£ 20).

the minus sign. %R produces buy signals when the indicator is high ( 80) and sell

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RSI

The Relative Strength Index is a momentum oscillator that measures the velocity of price change. RSI is based on the observation that a stock that is advancing will tend to close nearer to the high of the day than the low. The reverse is true for declining stocks. RSI measures an equity's price relative to itself and might more appropriately be called an "internal strength index". It is relative to its past performance. It is also front weighted, therefore, it gives a better velocity reading than other indicators. RSI is less affected by sharp rises or drops in an equity's price performance. Thus, it filters out some of the 'noise' in a security's trading activity. Developed by J. Welles Wilder, RSI is a very popular technical tool and has many uses and interpretations. Values above 70 indicate an overbought condition and values below 30 indicate oversold. As with all momentum studies, the identification of divergence and trend patterns are more important. If the market is making new highs, while the RSI is heading lower, this is called bearish divergence and is an early sign of a top.

is making new highs, while the RSI is heading lower, this is called bearish divergence and

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TSI

The TSI (Trendsetter Strength Index) is a variation of RSI. By design, it moves more slowly than RSI. As such, we recommend using a lower smoothing value. If you prefer to use a 14 day RSI, try a 7 day TSI. Interpretation is the same as RSI except that overbought and oversold levels are closer together (i.e., 65 and 35 for TSI versus 70 and 30 for RSI). Again, divergence and trend breakouts are more powerful interpretations than absolute value.

versus 70 and 30 for RSI). Again, divergence and trend breakouts are more powerful interpretations than

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Rate of Change

This is a momentum oscillator built on the formula: ROC = 100*(C /Cx ) where C is the latest close and Cx is the close x periods past. Ten periods is the accepted standard but it is adjustable in our software. The result is the percentage that the security's price has changed in the last x-periods. A rating of 110 means that the security is trading at 110% of its level x- periods past.

The concept is to measure acceleration of price change. Analysis is similar to all momentum studies, look for trend, divergence and changes in direction.

look for trend, divergence and changes in direction. Rate of change may be viewed as a

Rate of change may be viewed as a histogram or in line form. To toggle the display, hold the Shift key down and click in the scale area of the indicator. You can choose the default view of this indicator through the definitions dialog (SetUp - Definitions, File Menu).

Rate of Change may be overlaid with a user-defined moving average. To turn the moving average off, set the smoothing to zero (SetUp - Analysis, File Menu).

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MACD Histogram

Moving Average Convergence Divergence is an oscillator based on exponential moving averages. This standard formula subtracts the difference between a long term (26 Wk) and a short term (12 Wk) exponential moving average. This difference is then made into another moving average (9 Wk) before display. The default parameters are shown in parenthesis. They are adjustable through the Analysis setup dialog. For more volatile markets, you may want to shorten the periods of the EMA's. The name of the indicator is derived from the fact that the shorter EMA is continually converging toward and diverging away from the longer EMA's with all oscillators, look for divergence from price pattern and trend within the oscillator.

from the longer EMA's with all oscillators, look for divergence from price pattern and trend within

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MACD Double Line

MACD can be toggled between the traditional double line display and our standard histogram. In the double line display, the fast MACD line is displayed as a solid, single thickness black line, the signal line is displayed as a patterned, double thick line. To toggle the display, click in scale area (far right side) of the MACD display. You can define the default display through our General Preferences dialog accessed by selecting Set Up - Definitions under the File Menu.

When the fast MACD line crosses above the signal line, it gives a buy signal. Conversely, when the fast line crosses below the signal line it is time to sell.

signal line, it gives a buy signal. Conversely, when the fast line crosses below the signal

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TRIX Index

TRIX was developed by Jack Hutson, editor of Stocks and Commodities Magazine. It is a 1 day rate of change of a triple exponentially smoothed moving average of closing prices. Its triple exponential smoothing is designed to filter out "insignificant" cycles (i.e., those that are shorter than x-periods). Trades should be placed when the indicator changes direction. You also can also plot a moving average of the TRIX to create a "signal" line (similar to the MACD indicator) and then buy when the TRIX rises above its signal line, and sell when it falls below its signal line.

MACD indicator) and then buy when the TRIX rises above its signal line, and sell when

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Commodity Channel Index (CCI)

Don't let the name fool you, while Donald Lambert developed this indicator with commodities in mind, it is very useful with stocks, mutual funds and indices. CCI is calculated by examining the difference between the "mean" price of a security and its average mean over the x- periods. The result is normalized to a trading range of ± 100. This means 70 to 80 percent of all CCI values will fall between 100 and -100. The oscillator was designed to determine when a cyclic trend is in force.

It may be used as a breakout indicator, buying when readings exceed 100 and selling when readings go below -100. However, we have found that interpretation as a momentum indicator appears to work more reliably. Look for divergence, trend and absolute value (i.e., 100 and -100).

CCI is a leading indicator. Like most leading indicators, when its right it will prove very profitable but it will be wrong frequently. We recommend using CCI as an early warning flag. Wait for confirmation from other indicators before following its lead.

We recommend using CCI as an early warning flag. Wait for confirmation from other indicators before

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Williams AD

Williams' AD is a price based indicator that accumulates the total of x where:

if we close higher today than yesterday then

x = close - the true range of lows

else if we close lower than yesterday the

else

x = close - the true range of highs

x = 0

The true range of highs is defined as the greater of yesterday's close or today's high. The true range of lows is defined as the greater of yesterday's close or today's low.

Williams recommends trading this indicator on divergences only. Our own work indicates that trend within the indicator may be just as important.

this indicator on divergences only. Our own work indicates that trend within the indicator may be

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Williams Ultimate

Developed by Larry Williams, the Ultimate Oscillator is a combination of three oscillators based on three time spans. The formulation is too complex to describe fully in this manual.

Williams suggests the following regarding buy and sell signals

1. Buy on positive divergence where the low of the oscillator has dipped below 30.

2. Sell on negative divergence where the high has exceeded 50.

3. Close long positions when the oscillator exceeds 70.

4. Close short positions when the oscillator goes below 30.

50. 3. Close long positions when the oscillator exceeds 70. 4. Close short positions when the

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Volatility Studies

VBands

Volatility trading bands (aka Bollinger Bands) are based on the volatility of the underlying security. As such, these bands will narrow and expand as the volatility changes. The bands are a moving average of the standard deviation, plotted above and below the primary moving average of the active chart. The number of standard deviations is adjustable. Adjusting the moving average will also change the bands. A 20 day moving average works best on daily graphs and a 10 week works best on weekly graphs. The following two examples illustrate common usage of these bands.

two examples illustrate common usage of these bands. In this example, point A illustrates "coiling", a

In this example, point A illustrates "coiling", a narrowing or compression of the volatility. Like putting a lid on a pot of boiling water, the pressure builds and the security will "explode" in one direction or another. Usually, the buy or sell signal comes when the security closes outside of the bands as it did at point B. Normally, it will then "stair-step" in the same direction (point C), test support at the moving average (point D) and finally test resistance at the band again.

When coiling and stair-stepping are not present, this is an indication of a sideways or trading market. Buy at the lower band, sell at the upper band and place stops on a close outside of either band. In the second example, you would buy at point A, sell at point B, buy at C, sell at D, be stopped out at E and re-enter Long at point F when it tested support at the moving average. Volatility trading bands are an excellent short term trading tool. No indicator is correct 100% of the time, however, studying previous market behavior in relationship to this tool will display its value.

%Bands

Percentage bands are created by calculating a percentage change from the moving average. The bands are plotted above and below the primary moving average of the active chart. The percentage is adjustable. Adjusting the moving average will also change the bands.

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Keltner Channels

Keltner Channels were first introduced in the book How To Make Money in Commodities by Chester Keltner. Like our volatility bands and percent bands, they are comprised of three lines which form an envelope. Envelope theory holds that price has the greatest probability of falling within the boundaries of the envelope. Price falling outside the envelope boundaries is considered an anomaly and therefore provides a trading opportunity. The major differences between envelope types is in the calculation of the lines, in the spacing between the lines (i.e., bandwidth) and how they are interpreted.

Construction of Keltner Channels is straightforward. The middle band is a moving average of the pivot point (C+H+L)/3). To create the outer bands, we make a simple moving average of the high minus the low, then add that value to middle band to form the upper channel and subtract that value to form the lower channel.

Keltner designed his system to be used as a breakout system, buying when the close exceed the upper channel and selling when the close was below the lower channel. Basically, penetration exceeding the channels showed a strong bullish or bearish momentum and presumably the momentum would continue. However, like our VBands, 90% of price movement occurs within the bands. This means that most of the time, the upper and lower bands are the extremes of the price movement and are a warning that price exhaustion may be occurring. Buy signals occur when the price is below the lower band and sell signal occur when price exceeds the upper band.

These two interpretations seem opposite, however, this is where the addition of additional analytics can be combined to determine whether a break in the band is the time to buy or sell.

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True Range Oscillator

The oscillator plots the volatility ratio (VR) which is defined as today's true range divided by the true range of the past 10 periods. A wide ranging day is defined as a day when the VR exceeds 2.

Our True Range Oscillator was inspired by the work of Jack Schwager, author of "Market Wizards" and "Technical Analysis on Futures"

True range is used to in DMI and William's AD calculations, among others. It is defined as the true high - the true low, where the true high is the maximum of today's high and the previous close and the true low is the minimum of today's low and the previous day's close.

high and the previous close and the true low is the minimum of today's low and

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Directional Studies

DMI

The Directional Movement Indicator was developed by Welles Wilder and introduced in 1978. It is a very strong indicator of trend, trend direction and impending trend reversal. The indicator is composed of three values: +DI (plotted as a thin solid line) is a measurement of positive movement; -DI (plotted as a dashed line) measures negative movement; and ADX (heavy solid line) measures the strength of directional movement (i.e., the stronger the trend, up or down, the higher the ADX value).

While the graphic may look complex, the system is relatively simple, when +DI crosses above -DI, a Long position is taken. The position is reversed when -DI crosses above +DI. Trend reversals occur concurrently with the first down turn of the ADX after the ADX has crossed above both of the DI lines.

Wilder also uses what he calls the 'extreme point rule'. Don't buy or sell on the day the +DI crosses above or below the -DI. Rather, note the high or low of the day. Then, wait to execute the trade until the price reaches either the high or low, on a subsequent day, depending on whether the stock is moving up or down.

the price reaches either the high or low, on a subsequent day, depending on whether the

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Parabolics

Parabolics stops resemble a parabola (hence the name). The system allows for the market to react for the first few days after a trade is initiated and then the stop begins to move more rapidly. This makes the stop a function of price AND time. This system is a true reversal system; that is, every stop point is also a reverse point. Therefore we call each stop a SAR which stands for "Stop and Reverse".

The formula for calculating SAR

SAR(t)=SAR(t-1)+[AF * [EP(prior)-SAR(t-1)]]

AF stands for "Acceleration Factor". The AF begins each new trading cycle at .02 and increases by .02 each time a new high or low is made in the cycle until it reaches .20. EP stands for "Extreme Price". For the first day of entry (after you are stopped out) the SAR becomes the EP. If your new trade is a "Long" then the EP is the lowest low achieved in your previous short position. If your new trade is "Short" then the EP is the highest high achieved in your previous short trade. As the trade develops, the EP and AF are adjusted if and only if a new high is made in a long trade or a new low is made in a short trade. Example for a Long position entered @ 52.20:

Day

High

Low

SAR

EP

EP± SAR

AF

AF * DIFF

1

52.35

51.50

50.00 52.35

2.35

.02

.05

2

52.10

51.00

50.05 52.35

2.30

.02

.05

3

51.80

50.50

50.10 52.35

2.25

.02

.05

4

52.10

51.25

50.15 52.35

2.20

.02

.04

5

52.50

51.70

50.19 52.50

2.31

.04

.09

6

52.80

51.85

50.28 52.80

2.52

.06

.15

7

52.50

51.50

50.43 52.80

2.37

.06

.14

8

53.50

52.30

50.57 53.50

2.93

.08

.23

9

52.50

51.30

50.80 53.50

2.70

.08

.22

10

51.30

50.50

51.02 - Stopped & reversed @ 51.02

SAR becomes EP (53.50) EP is reset to newest Low (50.50)

 

10 51.30

50.50

53.50 50.50

3.00

.02

.06

11 51.00

50.00

53.44 50.00

3.44

.04

.14

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Trendsetter Movement Index (TMI)

Typically the average daily range will increase or decrease before a major market turn. TMI measures range oscillation to spot critical turning points. Reversal signals appear when the value of TMI exceeds 80 and peaks or falls below 20 and bottoms. At that point, we take the opposite direction of recent price activity. In our example below, we achieve a reversal signal the beginning of October, just before Apple's price turns. Because price activity is falling, we take a long position. Entry signals occur infrequently, but are rarely wrong when they do.

activity is falling, we take a long position. Entry signals occur infrequently, but are rarely wrong

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Moving Averages

A moving average is a method of calculating the average value of a security's price over time.

The term "moving" means that the average changes or moves as new prices are posted to the chart. Pro Analyst calculates and displays three types of moving averages: simple; exponential; and weighted.

A simple moving average is calculated by adding the prices for the past n periods, then

dividing by n.

An exponential moving average is calculated by adding a percentage of today's price to the reciprocal percentage of the previous day's average. The percentage is based on the smoothing established by the user using the following formula

percentage = 2 / (smoothing + 1)

A 10 period exponential average = (today's price * .18) + (previous day's average * .82)

A weighted moving average is calculated by multiplying each day's price by the it's day

number, then adding the values and dividing by the sum of the weights. A four day weighted average would add the first day's price times one, plus the second day's price times two, plus the third day's price times three, plus the fourth day's price times four, then divide the sum by ten (1 + 2 + 3 + 4). As the name implies, a weighted average, weights the most recent price data more heavily in the calculation of the average price.

All charts may include from zero to three moving averages. In addition to the type of moving average, you can select the period of smoothing and the type of price data used to calculate the moving average(s). User preferences, such as these, are stored independently for each type and time-frame of chart. Smoothing factors are assumed to be in the time frame of the chart. For example, a 20 period moving average is 20 days on a daily chart, and 20 weeks on a weekly chart. To turn a moving average off, set its smoothing to zero.

A common method of analysis is to look for crossovers. A crossover occurs when a shorter

term moving average crosses over the longer term moving average. By this method, the trader would buy when the shorter average is above the longer average and sell when it crosses back. This method works well when markets are trending in one direction.

reciprocal percentage = 1 - percentage

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Trend Studies

Automatic Trend Lines

Identifying the trend and the magnitude of the trend are the key to chart analysis. Pro Analyst will identify and draw primary, secondary and minor trend lines on your daily chart. The default periods used for these lines are 30, 20 and 10 weeks respectively. The primary lines are drawn two pixels thick (for identification purposes). The other two pairs of lines are drawn in shorter lengths.

The other two pairs of lines are drawn in shorter lengths. In our example, the intermediate

In our example, the intermediate and long term trend lines had formed a parallel channel which has just been broken (a shorting opportunity). This was further forecast by the short term trend which had resolved a downward sloping wedge by breaking through support a few days before.

Manual Trend Lines - Draw Your Own

To draw your own trend lines, hold the Shift key down and drag your mouse. Manually drawn trend lines are automatically stored when you close the chart window. To remove trend lines, one at a time, hold the Shift and the Control key down and click on the line to be removed. To remove all trend lines with one command, hold the Shift key down and select Clear from the Edit menu. There is no limit to the number of manually drawn lines that can be stored and displayed.

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Least Squares

Linear regression is a statistical model used to measure trends. The model produces a center line, or equilibrium price, around which prices will fluctuate; and buy and sell lines that define the range of projected price fluctuation based on previous volatility forming a linear regression channel. The least squares method is used to plot the lines, hence the name. In theory, 90% of all prices will fall between the buy and sell lines. Long term investors can buy with a minimum of risk when the price approaches the buy line and sell with maximum reward at the sell line. Pro Analyst calculates and draws all three lines for you. Each chart is analyzed for the period displayed, changing the zoom level or analyzing daily versus weekly, will change the positioning and may even change the direction of these lines.

As one of the accepted standards in determining trend direction and whether current prices are overbought or oversold, Personal Hotline uses this tool to calculate a "Regression" rating during Master Analysis. The rating is a measurement of where the current day closed in relationship to the center line (median). As we move towards the lower line (oversold) the rating will approach 100. As we move towards the upper line (overbought) the rating will approach -100. As prices can exceed the outer line boundaries, the ratings can exceed ± 100.This rating can then be used for ranking.

As prices can exceed the outer line boundaries, the ratings can exceed ± 100.This rating can

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Key Chart Points

Key points are defined as highs that are higher than the high for the 3 days prior and post the reversal (the converse is true for lows). They are displayed as circles on the bar charts. By definition, you will not see a key point until at least three days after it occurs. This makes it a lagging indicator. Lagging indicators (moving averages are another) are useful for confirming that your positions are correct. Key points are also useful in learning to draw trend lines. Like connect the dots, you can draw trend lines by connecting the circles.

Gann Lines and Gann Angles

William Gann (1878-1955) developed a unique combination of geometric and mathematical principles, which he applied to trading stocks and commodities. The proportional relationship of time to price was the basis for much of Gann's work.

Gann attributed special significance (in relation to time) to 3 sets of numbers.

The number 7 and it's multiples (i.e., 7, 14,17) with special significance given to 49 (the square of 7) and 77 (e.g., the 49th day, week or month from a previous top or bottom would project a trend reversal). Interestingly, Gann lived to be 77 years old.

The numbers 12 and its multiples were also considered important. There are 12 months in a year, 24 hours in a day (2 x 12), 60 minutes in an hour and 60 seconds in a minute (5 x 12), 180 degrees (opposition) is 15 x 12 and 144 (12 squared) is a Fibonacci number. Finally, 30 x 12 is 360, the number of degrees in a circle.

Which brings us to Gann's third set of time numbers, the harmonics of circle, 30, 45, 60, 90,120, 135, 150, 180, 210, 225, 240, 270, 300, 315, 330, and 360 days, weeks, months, etc. In case you are wondering, over 30% of all numbers fall into one of these categories, inviting skepticism to statistical significance when he is right. Two parts of his work do seem to have important correlation to price movement. Gann Lines and Gann Angles

Gann Lines are potential retracement levels generated by dividing a market advance or decline into eighths and thirds. As Gann attributed the most significance to the 37.5%, 50% and 62.5% levels, these lines are drawn heavier.

Finally, price and time come together in Gann angles, which project trend lines from important tops or bottoms. All of Gann's angles are quoted in price to time relations, (i.e., 1 x 8). Translated, this means move 1 unit of time to the right and 8 units of price, up or down. The angle representing price and time in balance is 45 degrees (1 x 1, price to time). To Gann, this was the most important angle. Other important angles, in order of importance are: 2 x 1 and 1 x 2, 4 x 1 and 1 x 4, 8 x 1 and 1 x 8. These lines are drawn down from the top or up from the bottom.

Important turning points are often found when Gann lines and angles meet. Note the action in late November, mid-January and mid-February (see example).

Gann lines and angles can be selected independently or together. Pro Analyst will automatically select the significant high and low for both angles and lines. Once the indicator is displayed, you can change the significant high and low of the indicator by double clicking on the main body of the chart.

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Fibonacci

Leonardo Fibonacci lived in the thirteenth century. His work on the relationship of mathematics and nature has been applied in physics, astronomy and engineering. Many famous market analysts believe that Fibonacci principles apply equally as well to markets and market psychology.

The Fibonacci number sequence is created by adding the last two numbers in the sequence to create the next number (i.e., 1,1,2,3,5,8,13,21,34,55,89,144… ). The first three numbers in the sequence are normally dropped for analysis purposes. The number sequence creates some interesting mathematical relationships. The most commonly used are: the ratio of any number to its next higher number which approaches a constant value of .618 (e.g. 34/55 = .618, 55/89 = .618); the ratios of alternate numbers which approach a constant .382 (e.g. 21/55 = 382, 34/89 = .382).For those that are mathematically inclined, .382 is also the inverse of .618 (i.e., 1- .618 = .382).

.382 is also the inverse of .618 (i.e., 1- .618 = .382). The number series and

The number series and its ratios are used to create four indicators…

Time lines are vertical lines drawn at fibonacci intervals from the significant high or low of the current trend. The first line is drawn five days after the significant high or low which is circled. In theory, future turning points should coincide near these time lines. Note how the significant low was made exactly 55 days after the significant high.

Fibonacci Ratios are horizontal lines drawn using the ratios .618, .5 and .382, from the same high or low point. These lines are often useful in identifying retracement points when you

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have missed entry. In our example, Soy Beans found resistance at the 50% ratio on the 89th day after the significant high was made.

Fibonacci Fan lines are drawn using the ratios .618, .5 and .382, from the same high or low point. An invisible vertical line is drawn through the second extreme value. This vertical line is then divided into three using the fibonacci ratios. Three trend lines are then drawn connecting the first significant point and each of the dividing points on the invisible line.

point and each of the dividing points on the invisible line. Arcs combine time and price

Arcs combine time and price to display expected containment of price action over time. Circles are used to identify the significant high and low used for these indicators. Note how prices found support, after the significant high at the outer arc.

Many analysts use arcs and fan lines together expecting significant support or resistance to occur where these lines cross.

Pro Analyst will automatically pick the significant high and low when any of the Fibonacci tools are requested. Once the indicator is displayed, you can change the significant high and low by double clicking on the main body of the chart.

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Speed Resistance Lines

This study divides price movement into thirds for support and resistance identification. Pro Analyst will automatically pick the significant high and low. Once the indicator is displayed, you can change the significant high and low by double clicking on the main body of the chart.

indicator is displayed, you can change the significant high and low by double clicking on the

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Andrew's Pitchfork (Trident)

This trend study is composed of three lines resembling a pitchfork or trident. The outer two lines form a parallel channel based on a significant high and low. The third line bisects the channel. As with all trend studies, the idea is to project support and resistance. Pro Analyst will automatically pick the significant high and low. Once the indicator is displayed, you can change the significant high and low by double clicking on the main body of the chart.

indicator is displayed, you can change the significant high and low by double clicking on the

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Volume Studies

On Balance Volume

Developed by Joe Granville, OBV checks the relationship of today's close to yesterday's close and then weights the volume accordingly. If a security closes up, 100% of that day's volume is added. The theory is that the trend of this indicator precedes price changes. If a security closes down, 100% of that day's volume is subtracted. The summing process amasses data from many, many days, minimizing the impact of any one day. In theory, when OBV is rising, the security is in an accumulation phase. When it is falling, it is in distribution. The scale is not of any value; only the slope (i.e., the direction) of the line is of value.

it is in distribution. The scale is not of any value; only the slope (i.e., the

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Volume Bars

Our standard Volume display is in histogram form. A moving average of the volume is displayed over the histogram. Data series that contain open interest, such as futures' contracts, will also display a patterned line. Up versus down volume color controls are also available.

as futures' contracts, will also display a patterned line. Up versus down volume color controls are

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Volume Accumulation

Developed by Marc Chaiken, VA checks the relationship of the close to the mean price of the day and then weights the volume accordingly. If a security closes on its high, VA is 100% of that day's volume. If a security closes on the low, then VA is -100% of that day's volume. If the security closes at the mean of the day, VA is zero. If we close half way between the mean and the high then VA will be 50% of that day's volume. VA is normally smoothed (moving average) before display. Ten periods is standard.

will be 50% of that day's volume. VA is normally smoothed (moving average) before display. Ten

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Force Index

Developed by Dr. Alexander Elder, this oscillator combines price and volume in a similar fashion to OBV. The formula is Volume * (close - previous close). FI creates a moving average of this information versus the accumulation of OBV. Dr. Elder provides a full set of trading rules in his book "Trading for a Living". In essence, as with all oscillators, we watch for price/oscillator divergence, trend changes. Beyond those rules, the oscillator will be above zero when the bulls are in control of the market and below zero when the bears are in control. Spike bottoms and tops normally indicate trend changes.

Spike bottoms and tops normally indicate trend changes. The default smoothing for the Force Index is

The default smoothing for the Force Index is 13 periods. To change the smoothing: click in the scale area of the index (far right). Dr. Elder also suggests viewing the index with a 2 period smoothing.

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Program Defaults

Double clicking on any security in the Quote Monitor will open a window to display a chart of that security. The type of chart or information display is user definable. This brings us to the next dialog in the Edit menu, Program Defaults.

us to the next dialog in the Edit menu, Program Defaults . There are currently six

There are currently six set-up features in the General Definitions dialog. Each is defined "Globally". That means they apply to any List, chart, or security.

1. What we will display when you double click on a security in your List; a Bar chart, a Candle chart, or a Line chart and what will the default time frame be.

2. What font size do you want displayed on your charts. The font size affects the data information line that appears across the top of the monitor and the scaling down the side. Default is 9 point type.

3. When we draw a chart, how much blank space do we leave between the last bar or candle and the Y-Axis scale? The default is 10.

4. When you click in the corners of a daily, weekly or monthly chart, do we move the chart by a day, week, month, year, half-page or full page. You define how much the chart will move with this control.

5. MACD can be displayed in either a histogram view or the traditional double line display. The display can be flipped once drawn by clicking in the scale area of the MACD. This next control allows the user to define which display is viewed first.

6. Rate of Change can be displayed in either a histogram view or a single line display. This next control allows the user to define which display is viewed first.

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Colors

Pro Analyst allows you to control the color of virtually all elements of your charts and analysis. You can turn off many of these lines by setting their respective colors to match the color of the background. This dialog should be self-explanatory.

of the background. This dialog should be self-explanatory. Other display characteristics are available by double

Other display characteristics are available by double clicking on the chart. Color controls for the Quote Monitor are available by selecting Ticker Tape from the Edit menu.

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Reference Section

File Menu

New… (Off Line)

Creates a new List. Lists are groups of data files ranging in size from one to 500 symbols. All securities added to a List must be in the same folder as the List. When you select New the program will request the name of the new List to be created. After naming the List and selecting the folder where it is to be created, press Save. The program will present the List Modification window to facilitate the addition of existing security files to the new List. After adding existing securities, press OK.

Open… (Off Line)

Loads an existing list.

Close Window

Closes the active window.

Close All… (shift-option Close Window) Hold the shift and option keys down, then pull down the file menu and select Close All to close all open chart windows.

Close Related… (option Close Window) Hold the shift and option keys down, then pull down the file menu and select Close All to close all open chart windows whose symbol matches the active window.

Save

Will force Pro Analyst to save changes to your List immediately instead of waiting until you Quit or open another List. This is recommended after adding, or deleting data files.

Save As… Quote Monitor in Front

When the List (Quote Monitor) is the front window, Save As will save the current List with the name and location you specify. If you save the list into a different folder, all data files referenced by the List will be copied into this folder.

Save As… Graph in Front

When a Graph or Time & Sale Display is the front window, Save As will export the data as a tab delimited text file with the name and location you specify.

Modify… (Off Line)

Select the List to be Modified and press Open. Double Click on items to be added or deleted from the List. Press OK to open the modified List.

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Delete

Use this function to permanently delete data files, as if you had dragged them to the Trash and emptied it. To minimize the possibility of "trashing" the wrong file, Pro Analyst will give you an extra opportunity to change your mind by displaying a special Alert. The selected file will simultaneously be removed from the List.

Recover (Off Line)

The Recover function will rebuild the selected data file, omitting data that is outside the selected date range and duplicate dates within the valid date range. This can be used to remove extraneous data from the beginning, end or middle of a file. Recover also checks highs and lows for validity as it is rebuilding. A copy of the original file is created before rebuilding.

Update Intraday (Online)

The Update Intraday function will request today's intraday data for the selected security, replacing any partial data stored for that day.

Update All (shift-option Update Intraday) Hold the shift and option keys down, then pull down the file menu and select Update All. When you are online, Pro Analyst will request intraday data for all securities from the current selection to the end of the List.

Recover All (shift-option Recover) Hold the shift and option keys down, then pull down the file menu and select Recover All. When you are off line, the program will rebuild all file in the current List using the first and last dates in each file to determine the valid date range. Copies of the original files are not made.

Update Histories

Requests end-of-day data from the server bringing all histories up-to-date. If you have a Dial Data account, This menu selection will launch a helper application to retrieve longer term histories

Export

Will export historical data from a single file or the entire list into a tab or comma delimited text file with the name and location you specify.

Export One

Will export today's data from the active list into a text file named export.

Text Viewer…

Will present any text file for display (max. size 32K).

Quit

Exits to the finder and request's permission to save changes to the current list.

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Edit

Copy

When the active window is a chart, this menu item will copy the window contents to the clipboard.

Clear

When the active window is a chart, this menu item will remove all studies from the chart. When modified with the shift key, this menu item will clear all manually drawn trend lines from the chart. When modified with the control key, this menu item will clear all manually drawn drop lines from the chart. When modified with the shift and option keys, this menu item will clear all manually drawn drop lines, trend lines and studies from the chart.

Cut, Paste, Select All

These menu items are for use with TextViewer, Trader's Journal and Help windows only.

Server Info

Enter or modify information related to connecting to the server for live information including account name, password, hours of automatic operation, and coming holidays.

Ticker Tape

At the bottom of your main screen is a split ticker tape window. Last trade and trade size are scrolled continuously as they are received. You can slow the ticker down by turning off groups of securities. For example, you can exclude indices and options. You can also define minimum volumes for stocks and options to appear in the ticker tape. Quotes that are excluded from the ticker tape are still displayed in the quote monitor and stored for analysis. Changing the ticker tape set up affects the tape only. The last option, Alerts & Positions Only, will only send quotes to the ticker tape where you have indicated that you have a position or you have set alerts.

Alerts

Fill-in your alerts and/or current position then press Next to move to the next security in your List or Done if you are finished.

Alerts Sounds (option Alerts) Define the sounds used to notify you for automatic alerts.

Default Studies

Preset which technical studies you want displayed when a chart initially draws. This dialog allows you to define different default charts for each time-frame.

Study Smoothings

Through this dialog you can set personal preferences for moving averages, MACD and other technical studies. This dialog allows you to define different smoothings for each time- frame.

Colors

Pro Analyst supports your choice of 132 colors used for graphic displays.

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Program Defaults

Define personal chart display preferences that affect all charts such as the type of chart (bar, candle or line), and the default time-frame when you double click on a symbol in your List.

MarketPulse

Define which MarketPulse reports you want included in our request to the server.

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Charts

Charts analyze an instrument's performance over time and can display their information in either line, bar or candlestick form. The time frame of a chart refers to the amount of time each bar or candle represents. A 5 minute chart in Pro Analyst can cover 2 or 3 weeks of market activity where each point in the chart represents 5 minutes. All charts, regardless of time-frame update with each new trade when you are online.

Daily, weekly and monthly charts are built from end-of-day data stored within each securities data file. Today's data is added to the end of the chart when you are online.

5 minute thorough hourly charts are built from data stored in the Intraday file.

Data for one minute charts is requested from the server. The time necessary to build this chart will vary depending on the speed of your connection and the time of day. The later we are in the market day, the longer it will take to retrieve the data. While we are waiting for the data, this menu option will be disabled since we can only request data for one chart at a time.

Tick data is stored in memory only. This makes these charts fast to draw but limits the amount of data available.

Intraday charts (all charts shorter than daily) are available when you are online only.

Suite

Our Chart Suite feature is the same as a layout except it does not pertain to any symbol. To use this feature, simply select a symbol then select Suite. If you select Suite when a graph is the front window, the program will ask if you want to re-define the Suite definition based on the current set of open graphs. You can re-define the chart suite definition as many times as you want.

Analysis

All studies are drawn to the active graph, therefore, items in this menu are gray unless the active window contains a graph. Re-selecting the same menu item acts as an Undo command.

See the Technical Tools chapter of the Technical Analysis and Charting section for a detailed discussion of the use and interpretation of each analysis study.

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Windows

Tile

Re-sizes and moves graphic windows so they are equal in size and use as much screen space as possible. For example, 2 graphic displays will each take half the screen, 4 graphics displays will each use 1/4 of the screen. Odd numbers are treated the same as the next even number higher (e.g., 3, 4 are the same).

Stack

Re-sizes and moves graphic windows to use as much screen area as possible while allowing a small overlap both horizontally and vertically. This facilitates clicking to change active windows. Actual size will depend on the number of windows open at any given time.

Layouts

A layout is a combination of window size, placement and contents. To save a layout,

simply set your graphic windows up the way you want them, then select Save Layout from the Windows menu. Name the layout in the dialog provided and press Save. To recall the layout, simply select Use Layout from the Windows menu and select the named layout.

Zoom In

Increases detail and decreases total data displayed in the active window. Default zoom

levels can be set using SetUp Charts from the File menu. Clicking in the center section

of the date line lets you reset the zoom level.

Zoom Out

Decreases detail and increases total data displayed in the active window.

Size, Style and Font Menus

These menus are currently used for text based windows only. These include the QuoteMonitor, Headlines, News, Trader's Journal and TextViewer.

Quote Monitor (Window 0)

Bring the Quote Monitor window to the front.

Graph 1-9

Bring selected window to the front (making it active).

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List Mgmt

Sort & Rank- reorder the List by the criteria chosen.

Sort Menu

Description

Rank Column

Symbol

Alphabetical by Symbol

No Affect

Name

Alphabetical by security name

No Affect

Type

Sort by type of security (e.g., stock, index, future)

shows type

Sector

Sort based on user definable sectors.

shows sector name

Updated

Sort the List by the last date updated.

shows date

Last Saved

reverts to the order last saved

No Affect

Rank Menu

Description

Rank Column

Net Change

Rank by the net change from the previous day.

No Affect

%

Change

Rank by the percentage net change from the prev. day

Shows Percentage

YTDH

Rank by current price in relationship to 52 week high

Shows Percentage

YTDL

Rank by current price in relationship to 52 week low

Shows Percentage

YTD Range

Rank based on 52 week range

Shows Range

Most Active

Rank based on current volume

No Affect

Open Int.

Rank based on current open interest

No Affect

%

Change Vol

Rank based on percentage increase in volume.

Shows Percentage

EPS

Rank based on earnings per share.

Shows EPS

P/E Ratio

Rank based on price divided by earnings per share.

Shows P/E

Dividend

Rank based on dividends.

Shows Dividend

High Alert

Rank based on relationship of current price to alert.

Shows Alert

Low Alert

Rank based on relationship of current price to alert.

Shows Alert

Profits

Rank based on current profit or loss of your position

Shows P/L

Size

Rank based on current value of your position

Shows Value

Find…

 

Search your List by file name or symbol. Selected file will be moved to the top of the Quote Monitor without altering the order. The Find dialog will search open charts if a chart is the front window when activated.

Add Security

Add any type of security to the active list.

Modify Security

Reset symbol, security type, tick and display format for securities in your active List.

Remove Security

Remove any security, without deleting the data, from the active List.

Edit Data

Selecting Edit Data allows you to edit the last end-of-day record for any file in your List.

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Delete Data

Delete the last end-of-day record from the selected file only.

Block Delete

Deletes n number of records from the end of each file in the List or from the selected security.

Next

This menu selection changes the current graph to the next symbol in your list.

Previous

This menu selection changes the current graph to the previous symbol in your list.

AutoRun…

Will display a new series of charts on a user selectable timer. The timer can be overridden with the Next and Previous menu selections or canceled by re-selecting AutoRun or

pressing

you can add or delete studies from charts in between their display.

Analysis menu selections do not interrupt the AutoRun sequence. This means

Special

Split…

Will split all data records up to but not including the date entered.

Rollover…

Adjust all previous data records up to and including the date entered. Designed for creating perpetual futures' contracts, many Mutual fund traders find this tool useful for adjusting fund prices after a distribution.

Trader’s Journal

Allows for date stamped entries into each file. Use it to make notes about your trades, emotions or analysis.

Start/Stop Monitor

Override the automatic timer to start or stop the connection to the server.

QuickQuote (online only) Display a detailed quote of any symbol .

Headlines (online only) Begin displaying headlines. Select the headline numerical ID to read full news story.

News Search (online only) Search news for stories related to the selected stock

MarketPulse (online only) Request market leaders and statistical information by market.

Enable/Disable AutoPilot

Turns on/off the automatic timed monitoring feature.

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Special Keys and Key Combinations

Some of the functions of the software may be modified through the use of the Shift, Option, and Control keys. Wherever possible, these keys modify functionality in a similar fashion. For example, the Shift and Option keys together will affect the full list versus a single security as in closing all windows. Modifier keys are not recognized unless you use the mouse to make your menu selection. You must have the keys down before you pull down the menu.

Most menu titles are altered to indicate the modified functionality of these special keys.

The following menu options may be modified with these keys.

File Menu Shift-Option Close Window (Close All) will close all windows.

Option Close Window (Close Related) will close all windows whose symbol matches the symbol in the active window.

Edit Menu

Shift Clear will remove all manually drawn trend lines. Control Clear will remove all drop lines. Shift-Option Clear removes all studies, manually drawn trend lines and drop lines.

Charts Menu

Shift Key forces new chart into active window instead of opening a new window.

List Mgmt Menu Shift-Option Edit Data (Add Holiday) adds a Holiday to each of the securities in the list. Holidays leave an extra space in the chart where they occurred.

Function Keys F1 -> Charts menu, 5 min F2 -> Charts menu, 15 min F3 -> Charts menu, 30 min F4 -> Charts menu, Hourly

F9 -> Open or bring to the front Trade Tracking Window F10 -> Open or bring to the front the QuickQuote Window F11 -> Open or bing to the from the Headline News Window F12-> Toggle Quote Monitor between names and symbols

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The following non-menu functions may also be key modified…

1. Hold the shift key down and drag your mouse to draw your own trend lines. Trend lines

are automatically stored with the chart. To remove all previously drawn lines

key down and select Clear from the Edit menu. To remove a specific line, hold the shift and control keys down and click on the line to be removed.

2. Hold the option key down to track the price and date of the mouse location.

3. Hold the shift and option keys down and drag your mouse around an area of the chart

body to zoom in on that section of the chart. The new zoomed view will be displayed in its own window.

4. Hold the control key down and drag the mouse to turn the cursor into a giant crosshair.

All legends will update as you move the cursor within the price area of the chart. Release the mouse button within the body of the chart to leave horizontal and vertical drop lines on the chart. Release the mouse to the right of the Y axis (scale area) to turn off the tool without

leaving lines. To remove all previously drawn drop lines

select Clear from the Edit menu. To remove a specific line, hold the option and control keys down and click on the meeting point of the drop line to be removed.

5. Hold the Shift and Control keys down to remove a specific manual trend lines.

6. Hold the Option and Control keys down to remove a specific drop lines.

The following key equivalents are a combination of the Option and the keys.

Windows Menu Option-Command / appears in the menu bar as ÷ (Tile) Option-Command \ appears in the menu bar as « (Stack) Option-Command > appears in the menu bar as (Zoom In) Option-Command < appears in the menu bar as £ (Zoom Out)

hold

the shift

hold

the control key down and

Break Response . may be used to exit certain routines early. The effect will vary on which routine is active. AutoRun - current procedure will be finished, then AutoRun will be terminated. Opening a List - stop loading list immediately. All items currently loaded will be displayed for your use and manipulation. As list was not completed, it will be opened as an Untitled list. Split - cancel the operation. Rollover - cancel the operation. Recover - cancel the operation.

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Appendix A Glossary

Ask - Price which sellers are asking.

At-the-money - Strike Price is equal to security price (options).

Bid - Price which buyers are bidding.

Box size - Minimum fluctuation on Point & Figure chart.

Call - The right, but not the obligation, to purchase a specific security or index at a specific price (strike price) within a specified time (expiration date).

Channel - Range in which stock prices fluctuate.

Commodities - See Futures Contract

Contract - alternative term used for puts and calls as well as futures.

Covered Call Write - A strategy in which one writes (sells) call options while simultaneously owning an equal number of shares of the underlying security.

Covered Put Write - A strategy in which one writes (sells) put options and simultaneously is short an equal number of shares of the underlying security.

Discounted information - Impending news has been incorporated into current stock price.

Down loading - Transmitting data between computers.

Drawdown is a calculation of the cumulative maximum loss sustained by a trading model (i.e., how deep do my pockets need to be). An example should help.

Trade #

Profit/Loss

Cur Drawdown

Max. Drawdown

Net Profit

1

$1000

0

0

$1000

2

($500)

$500

$500

$500

3

$200

$300

$500

$700

4

$2000

0

$500

$2700

5

($200)

$200

$500

$2200

5

($500)

$700

$700

$1500

6

$1000

0

$700

$2500

In the example above, if you started trading with a model at the worst possible time (trade #5) you would have sustained a loss of $700 before you had your first profitable trade.

Expiration date - This is the date on which an option expires. If an option has not been exercised before expiration, it ceases to exist. The expiration of all equity options is Saturday following the third Friday of the expiration month.

Fundamental Analysis - Analysis based on factors such as earnings' reports, balance sheets, product and economic climate.

Future's Contract - A standardized contract calling for the delivery of a specified quantity of a commodity at a specified date in the future.