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Non-Tech : OmniTrader-Do you like it???
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To: Ken Adams who wrote (116)3/29/1998 10:15:00 PM
From: Bill Fischofer   of 402
 
OT Confirmations

I posted some earlier notes on how I'm using OT at Message 3460165 on this thread. The main indicators I use in SuperCharts are the Directional Movement Index (DMI) and On Balance Volume (OBV) as well as Exponential moving averages at 4, 9, and 18 day lengths. Add to that some Bollinger Bands, RSI, and a Slow Stochastic or two and a Commodity Channel Index (CCI) and that pretty much covers the main confirming indicators I look for.

Basically, because OT generates a constant stream of promising candidates the key to using it successfully is to be very choosy. I'm very quick to "disqualify" any signal either because I don't like the OT track record for it or because SuperCharts doesn't confirm it strongly. Using OT you also quickly gain an appreciation for which systems to weigh more heavily than others in looking at the signals. For example, Williams %R seems to be very trigger-happy and fires very often. If that's the only system driving the voting line I'll mentally assign that signal a low priority. On the other hand, the two-moving average crossover doesn't fire very often but when it does it's usually a strong signal.

All TA does is try to give you better odds in selecting potential trades. Ideally you want to see a signal from OT which is multiply confirmed and for which OT seems to have had a very good recent track record in calling the turns. The key to winning with OT is thus to be very selective up-front and very quick to bail if a trade goes against you. As Marty Zweig says, the key to winning is to avoid big mistakes.

I think it is important to note that OT's charting is pretty rudimentary compared to other programs on the market, which is why it looks like Nirvana has a special deal with Equis for their OT+MetaStock bundle. I use SuperCharts but recently picked up a copy of MetaStock to compare the two. For now I'm sticking to SuperCharts but may upgrade to TradeStation when Omega releases their 32-bit version later this year (at minimum I'll upgrade to the 32-bit SuperCharts). I suspect one of the reasons some people haven't had success with OT is that they aren't independently confirming OT's signals with a real charting program. Also, anyone investing in OT or any other TA software owes it to themselves to subscribe to Technical Analysis of Stocks & Commodities magazine. They have a web site at traders.com but reading (and rereading) the magazine on a monthly basis will do wonders to hone one's ability to use charting software to perform the sort of independent confirmation that I'm referring to here.
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