The Trading Strategy is the core of OmniTrader's Signal Generation Method. In the previous weeks, we have covered the aspects of the Trading Stragety that generate a signal. Today we will look at the feature that controls filters and exits - the Trading Model.
Lesson 6: Trading Strategy Part 3 - Trading Model
The Trading Model Window in OmniTrader
Trading Models: A Trading Model consists of Entry Filters and Exit Rules. Once OmniTrader has generated a signal to be shown on the vote line, it will need to pass any filters
that are in the model before it will be reflected there. One the signal makes it to the vote line, it will stay "in trade" until one of the models exit rules cause the position to exit. To explore Trading Models further, we are going to look at the Short Term Trending Model (displayed above). Click on the Edit Model button to look at the filters and exits more in depth.Entry Filters: OmniTrader can create Entry Filters based on the indicators provided in the program. In this model, we see that an exponential moving average is being used as a filter.
The Entry Filter for the Short Term Trending Model
In the bottom right corner of the Entry Filter Window, we see that this filter is used a 40 period exponential moving average. You have the ability to adjust the definable parameters of an indicator to customize your filters as well.
Exits: The Exits tab shows which exit rules are being used in the current model. In the Short Term Trending model, we are using the Eighth's Stop and a Fixed Loss Stop.
The Exits Tab in OmniTrader
Similar to filters, you can adjust the definable parameters for each exit rule as well. Chapter 4 of the OmniTrader guidebook explains each of these exit rules in detail.
The final tab, "General", allows you to define the number of periods OmniTrader will use in calculating ATR (Average True Range) values. Anywhere you see the term ATR in OmniTrader (mostly in the Trading Models) will use this parameter to calculate its value.
Trading Models give you the ability to use the same profile, but select different models that are looking for specific types of signals and exit strategies. Feel free to experiment with Models, but be sure and save any changes under a different name, as you will want to maintain the Trading Models provided by Nirvana Systems.
This concludes our discussion on Trading Strategies. Chapter 4 of the OmniTrader guidebook contains in-depth information on the topic, as does the Help file.
Best of luck with your trading,
Regards,
Jeff Drake
Director of Education
Nirvana Systems