Skip to main content

Using the new TradeRadar software - a more complete strategy

With the latest release of the TradeRadar software (we're up to version 3.0.1 now), I thought I should provide a description of the trading system the software supports.

History --

The earlier releases of the software focused on technical analysis of closing price data.

We started out with the basic BUY/SELL signal logic including measures of how strong the signal is, how well-shaped the signal is, etc.

The next version added trend lines whose angles were measured and used to determine whether the signal was strong enough.

With these indicators, we added what look like colored LEDs on the Dashboard screen of the software where the detail of the indicator computations is presented. The LEDs would be set to Red/Yellow/Green based on whether the individual indicator was strong enough to support the BUY or SELL signal. For example, if you are looking for a BUY signal and the LED is Red, then the indicator is saying that a BUY signal is not confirmed. If all or most of the LEDs are Green, then the BUY signal is confirmed.

Since the TradeRadar software attempts to identify changes in trend, version 2.0 brought a set of technical indicators that are commonly used to identify or confirm trends. We added Aroon analysis, DMI and Chaikin Money Flow. We also provided an indicator that showed where the stock was in terms of its 50-day exponential moving average. All these indicators also had LEDs to quickly show the outcome of the computation and whether they confirmed the BUY or SELL signal.

The latest TradeRadar system --

With version 3.0 we added fundamental indicators to the program. This is a departure from the previously purely technical approach; however, it makes sense.

Let's look at what's going on when we use TradeRadar to identify a BUY signal. We look for a stock that has been in a prolonged down trend over the course of six months to a year and then we try to identify whether a trend reversal is taking place. What does this imply?

We are trying to catch a stock soon after it bottoms and begins to turn up. In other words, we are looking for a stock when it is relatively cheap. What does this sound like? It sounds a lot like value investing.

Momentum investors are well-known chart users. Value investors focus on the fundamentals. We have now added a number of fundamental indicators specifically chosen to help determine whether the stock is over-priced, fairly priced or a good value.

The new indicators are as follows:
  • Price to Sales Ratio - the lower the number, the better value a stock is
  • Price Earnings Ratio - the lower the number, the better value a stock is
  • Market Capitalization - this number is intended to help identify whether a stock is a micro-cap and is also used in the Cash Flow Yield calculation
  • Price Earnings Growth (commonly known as PEG) - the lower the number, the better value a stock is
  • Cash Flow Yield - the higher the number, the more cash per share is being generated by the business that is available to shareholders. Data from most recent quarter is used and then annualized.
As with all the other indicators, we have the Red/Yellow/Green LEDs to show when the individual indicator is in a good range. As a user, you do not have to become an expert in financial ratios any more than you need to become an expert in technical indicators. The program does the work for you.

Note that for more detail you can look up all these fundamental indicators at various web sites such as Investopedia.

Using the fundamental indicators --

Taken together these indicators provide a good picture of whether the company is profitable, whether its price fully reflects its growth rate and whether it is generating enough cash to run the business. Whether a company is profitable or not, price-to-sales is a good way to determine whether the stock is over-valued.

There are many stocks that do generate good technical BUY signals. As an investor, however, wouldn't you rather choose the company that is in the best financial shape?

Hopefully, the new TradeRadar software will help you separate the weak stocks from those about to become resurgent. The combination of technical and fundamental indicators should help minimize downside risk and provide a good analysis framework for your investing decisions.


Popular posts from this blog

Running TradeRadar on Windows 7 and Windows 8

Development of the original TradeRadar Stock Inspector software was begun back in the days before Windows 7 and Windows 8 were available.

As these newer versions of Windows have become more popular, we have heard from some users that they are having problems installing and running TradeRadar on their newer PCs.

The good news is that TradeRadar will work just fine on Windows 7 and Windows 8. All you have to do is adjust the Windows Compatibility Settings to ensure TradeRadar runs as intended.

It is recommended that you can apply Compatibility Settings when running the initial installation; however, it is also possible to apply Compatibility Settings after the program has been installed.

Prior to installation
After downloading the install program, go to the folder where you have stored the TradeRadarStkInsp_7_Setup.exe or TradeRadarStkInsp_7_PRO_Setup.exe executable. Right-click on the executable file and select Properties. Click the Compatibility tab. Adjust the Compatibility mode to …

Alert HQ has moved!

End of an era!

This site was started way back in 2006/2007 to showcase my blog posts and the Alert HQ buy signals and sell signals. Alert HQ grew to include other kinds of stock alerts including Swing Signals, Trend Busters, Trend Leaders, Cash Flow Kings and more.

In the meantime, I built a sister site, and I started using some of the same Alert HQ content over there. As a result, I am discontinuing the Alert HQ data here at

The good news, however, is that all the Alert HQ signals and stock screens are still completely free. In addition, the pages have been enhanced so that you can hover over a stock symbol and a small chart will pop up so you can get a quick look at the stock's recent price action. If you click on a symbol it will take you to a page with plenty of financial and technical analysis information (still free!) as well as a larger chart that you can play with in terms of adding or deleting indicators, moving averages, etc.

Click …

Durable Goods report for Sept just so-so but Computer segment is on fire

The Durable Goods advanced report for September 2011 was released on Wednesday.

I like to dig into the Durable Goods report because it can be useful for seeing how tech in aggregate is performing and how the sector may perform in the future. I always focus on two particular measures: shipments and new orders. Let's see how it played out last month.

Shipments -- 

I generally give less importance to Shipments since this is a backward looking measure reflecting orders that have been confirmed, manufactured and shipped. It's similar to earnings reports -- it's good to know but the data is in the past and we're more interested in the future. The following chart shows how September shipments looked for the overall tech sector:

Results for the overall tech sector were a bit weak but take a look at the next chart which tracks the Computers and related products segment:

Results here were actually quite good and, to make things even better, the previous month was revised upward.