UWL values are shown in 4 columns. The first three refer to trade signals and the fourth measures the strength of the instrument. All trade signals are produced within the UWL. By observing the instruments at the top and bottom of the list when sorted as recommended and by using the simple triple-aces and pair- trade patterns described below, trading is as easy as it can be.
CS (Current Signal), the first column.
Here we see whether or not a trade signal is being produced during the current (latest) interval. When a long signal is produced, we see the number 1 with a green background. Similarly when a short signal is produced, we see a -1 with red background. When there is no signal produced during the current interval we see a 0 with a gray background.
With large time frames, like the daily one that we use for stocks, CS may change during the day, particularly if the instrument has extreme volatility. That's why we normally trade at the end of the interval of our selected time frame.
CS is the most important of the 4 columns, because it is the one that indicates to us whether or not to enter a new trade when flat, to hold a trade, to add or not to an existing position if we trade with multiple lots, or to exit a trade.
CS is used as the first sorting field, from z to a.
NS (Number of Signals), the second column.
The total number of trade signals produced during the current trend period is counted and shown here. The background colors of the cells in this column are six, three shades of green and red, pink and tan.
The default color coding in this column is light green or tan background and the numbers in the cells remind us of how many signals were received since the current trend started. Certainly the closer the NS number is to the TP number the better it is. In other words if the trend period has been enriched with multiple trading signals it is far better that if only one was produced when the trend change was triggered.
The most important time, that of a new trend trigger, is denoted in the NS column with 1 or -1 and with green or red background according to whether the new trend is long or short. Of course at this time both the CS and TP columns have identical content as the NS column, in other word we see triple aces. In plain words when we get a trend trigger, the current signal, the total number of signals and the trend period are all 1 or -1.
The remaining color codes are discussed in the next paragraph since they are only seen simultaneously in NS and TP.
Five instruments with long triple aces
Five instruments with short triple aces
TP (Trend Period), the third column.
The numbers in this column simply depict how many intervals ago did the current trend start. You can think of the numbers as how many bars ago in a chart did the current trend start. Again there are six background color codes.
Similarly as in the NS column, the default color code is light green or tan background. However the numbers in the TP column are more important, since they give us the length of the current trend cycle, a value used in sorting the watch list.
When a trade signal is produced persistently at each interval since the inception of the trend, both NS and TP columns have a bright green or pink color code. In such cases CS has always an 1 or -1 and the absolute values in columns NS and TP are the same. Trading instruments with these characteristics can produce some excellent results and we call them pair trades.
TP is is used as the third sorting field, from a to z.
Three instruments with long pairs
Three instruments with short pairs
IS (Instrument Strength), the fourth column.
In this column we see the Strength that each Instrument has shown in the recent past.
It can take values from 0 to 100. High numbers denote that recently there has been a rise in the price of the instrument and low numbers indicate that the instrument price has been experiencing some pressure recently.
Strength values larger than 62.5 are considered pretty good and are color coded light green, while values below 37.5 are considered poor and are color coded tan. In between strength values are considered neutral and are color coded yellow.
IS values above 75 are considered excessive, something like the familiar over bought situation, while IS values below 25 are thought to be also excessive, something like the classic over sold situation
IS values are very important and play the second most crucial role in deciding the initiation of a new trade.
They are somehow used in a contrarian fashion, will better long entries initiated when IS is smaller and better short trades initiated when IS is larger.
IS is used as the second sorting field, from a to z.
UWL Sorting
We can sort any eSignal 11 Watch List with respect to any three columns and do so automatically even every few seconds. The recommended way to sort UWL, so that picking instruments to trade long or short is easier, is as shown in the following image.
UWL sorting
The first sort field is CS, the Current Signal, which we sort from z to a so that at the top of the list we will get the 1 values, then the 0 values and finally the -1 values. In plain words we want our list to be customized with the instruments that are creating a long signal at the current interval to be at the top, then to see the instruments that create no signal, which implies holding of position and finally to have the instruments that create a short signal.
The adjacent column NS, the Number of Signals, is not sorted but it is used to inform us if the CS value is for the initiation of a new trend or a signal to add to an existing position. It also informs us how many signals have been produced and if they were done persistently on every interval.
The second sort field is IS, the Instrument Strength, which we sort from a to z so that at the top of the list we get instruments with low strengths and they are increasing as we go down the list for the same CS number. This way we get to see the ideal for long trades instruments at the top and for shorts at the bottom of the list. The way that the instrument strength is measure by GemsBot, it is better to enter longs with the lowest strengths and shorts with the highest.
Finally the third sort field is TP, the Trend Period, which we sort from z to a so that when the other two field as the same for two instruments we see on top the one that has being trending for a longer period. This is of minor importance and plays a small role in our decision making process.
By ticking the Auto-sort every box, and inserting a number in the seconds box, UWL is auto shorted as frequently as we set it.
Note: The above images were extracted from a UWL we use to actively trade stocks that are components of the S&P100 and Nasdaq100 indices, 186 stocks in total due to listings in both. The sorting is done as mentioned above and a daily time frame is used. The following screen shot:
was taken after regular trading hours close on April 1, 2011. Try to find which were the stocks that had the above triple aces and pair trades. If you do find them quickly, you have mastered the UWL system.
