The Advisor Rating is a number from 1-100 that basically represents the "strength" of a signal. In other words, A high Advisor Rating means that the systems that OmniTrader chose for that symbol were accurate, profitable and in a good number of trades in the backtest period. I like to say that the Advisor Rating should be used as a shortcut to see which symbols had the best test results. However, I want to warn against reading too much into the exact value of the Advisor. For example, if one symbol has an Advisor of 92 and another one has an Advisor of 94, that does not mean that the symbol with the 94 is more likely to be a better trade. Both of these should be viewed as good candidates.

The Advisor Rating for this signal shows good test results.

Filtering the Focus List on Statistics If you have a large number of securities in your focus list, you can use the filter to only show the securities that meet a specific criteria. For example, many users will want to see candidates that have at least an 80 Advisor Rating and 80% Backtest Hit Rate. By clicking on the filter icon at the top of your focus list, you can select to see only the symbols with test results that meet this criteria. An example of this type of filtering is shown to the right. If you use this filter, you know that any symbol you look at had at least an Advisor Rating of 80 and an 80% Backtest Hit Rate. Obviously, better test results in the backtest period increases the likelihood of the current signal being correct.

Periodicity Confirmation
In one of our earlier lessons, we talked about using weekly confirmation. In real time, you can also use a higher periodicity to confirm signals as well. For example, you can confirm 5 minute signals with 15 minutes signals. Periodicity confirmation will increase the accuracy of your signals, but realize that it will also filter out signals as well so you well see less trade candidates. This is the reason that we only recommend using this confirmation with profiles that have a large number of symbols.

5 minute signals confirmed with 15 minute signals in a real time profile.

For more information on periodicity confirmation, please refer to Tip 4 entitled Customizing a Profile, Part 2.

Moving Average Crossovers
There are many traders that like to use a Moving Average Crossover to confirm trades. In OmniTrader, this can be achieved in the Trading Model. A Moving Average Crossover will cause OT to wait for the security price to cross the Moving Average before firing a signal. This confirmation technique is better for finding longer term candidates. For this example, we are going to apply a 50 period moving average delay to our focus list.

Click on View and select Signal Generation. Under the Trading Model tab, click on the Edit Model button. Under the Entry Delay tab, you will see where you have the ability to apply a Moving Average delay. I have created a 50 period moving average delay and renamed the model accordingly.

A Trading Model with a 50 Period Moving Average Delay

Now lets take a look at a chart with this model applied. I have plotted a 50 Period Moving Average as well to illustrate how a signal will not make it to the vote line until the security has crossed the Moving Average.

The Moving Average Crossover delay applied to the chart for Dupont

Summary
In conclusion, I want to stress that the types of confirmation that we have covered in this lesson will also filter out candidates. If you choose to apply one or a combination of any of these techniques realize that your list of candidates will be reduced. If you are using a small list of securities, I would refer to last weeks lesson on visual confirmation techniques.

Best of luck with your trades!

Jeff Drake
Director of Education
Nirvana Systems
jdrake@nirvsys.com