Appearance Dialog, Momentum Model, Value Model

Updated 03/11/14

In the Appearance Dialog, you can change the way the chart looks.

Click for Trend Line Options

Click for Rebalance, Model, Rank By

Click for Chart Select Buttons

Click for Line Width Options

Click for Chart Size Options

Click for Chart Background Options

Click for I Chart Options

Chart Select

The entry box at the top of the Chart Select section provides a way to display 1 to 6 different charts or indicators.

• AccuTrack Chart(A)

• Adjusted Return Charts (J and 2)

• Moving Average Chart  ( V )

• RSI Chart ( I )

• Price Chart ( P )

• MACD Chart ( M )

• Relative Strength Chart( R )

• Stochastics Chart(S)

• Bollinger Bands Chart ( B )

• Total Return Chart ( T )

Click the buttons below the entry box or hand enter the desired letters to fill the entry box.

For example,

• To display the Total return Chart (T Chart ) on all six zones, click the Total Return button 6 times. The Chart Select box will then contain TTTTTT. Actually, leaving the entry box partially unfilled will extend the size of the last chart displayed sone only one click is necessary.

• To display the T Chart, A Chart, and J Chart equally sized Click the Total return button twice, the AccuTrack button twice, and the J button once or twice.

• OR, click on the Chart Tab and Hit the "D" key. This will popup a box that will let you enter the Chart Selection such as TTAAJJ. Note the abbreviations for each chart above.

Line Width

Click to change the width of the lines displayed on the charts. Click the desired width or enter the pixel width in the nonRed entry box.

Notice that the width of the red line is set separate from the other lines on the chart. This feature is used for making presentation graphics where you would want the red line to stand out from other lines.

Chart Size

Set the pixel width and height of FastTrack for the Web. If you don't like the present small, large, and normal sizes, then enter your own pixel sizes in the Width and Height entry boxes.

• Small=640 x 480
• Large= the size of your full screen (but not maximized)
• Normal fills the 90% of the screen size . . .  you can still see the Windows Desktop
• User Set: You fill in the size in pixels.

FastTrack will always look its best on a 800x600 or 1024x768 display. On a 640x480 display, you may not be above to see everything in the help. On very large displays, the lines get thin and the letters small.

Chart Background

Click "Change" to bring up a color selection box which will allow you to change the background  color of the charts. Click "Default" to restore standard colors.

Misc Settings

Plot Log Scale

Determines whether the chart is drawn on a logarithmic rather than an arithmetic scale. On a logarithmic scale, a constant rate of return is a straight line. On an arithmetic scale, a constant rate of return is curved. The default is logarithmic.

Logarithmic (recommended) is best when viewing long periods and/or using trend lines , but logarithmic scale tends to diminish the recent action of a line. As such, you may wish to use arithmetic scaling when viewing long charts, but making short-term decisions.

Show Distribution Info Check Box

When checked, FastTrack shows Distribution information when the Dashed Pole is over a "white dot" on the Total Return Chart's red line. This can be distracting if you are not interested in distribution information.

Chart Size and Line Width

FastTrack will always look its best on a 800x600 or 1024x768 display. On the smallest 640x480 displays, you may not be able to see everything in the help.

On very large displays, the lines get thin and the letters small. Some users note that FastTrack for the Web's lines are not as crisp as FT4 DOS screens. This is due to the thickness of the lines. Under DOS's 640x480 screen, lines contain 4 times as many pixels(dots) as on a 1024x768 screen. Increase FastTrack for the Web's line width  to compensate. This is especially important if you plan to print the charts on a color printer.

 

Rebalance  and Averaging Strategies:
Settings for Modeling

FastTrack can average the returns of a family of stocks, mutual funds, or any mix of issues.  For example, using the ticker 

HITECH AVG

will compute the average of the HITECH family of sector mutual funds. Using

LIST AVG (entering just "AVG" defaults to LIST AVG)

as a symbol will average the issues listed in the  Issue List. Or entering

SCREEN AVG

Will average the lines visible on the Chart (not including other ... AVG lines). You may also paste issues from the clipboard to a ColorBar cell and they will be averaged.

Methods of Rebalancing (Models)

The AVG computation depends on the Model settings. See below for the Momentum Model, Value Model, and None Model.

Note: After changing a Model, you MUST recompute the AVG to see the result.

1. Right-click ColorBar to recompute the AVG. This will use the same list of issues which were previously used previously. 
2. Click on the ColorBar cell and this <Enter><Enter>. This will cause the AVG to reload the issues used.

The computation has some complexity with respect to the inception dates of the issues.

• The average is computed by first dividing $100000.00 evenly among each issue existing on 9/1/1988. This means that the computation of a 50 issue average would start with $2000.00 in each issue if ALL 50 issues exist as of 9/1/1998.

• As the computation progresses, the portfolio changes according to the Model Strategy chosen. When new issues become available, they will enter the holdings when they become top performers.

Rebalancing

Rebalancing  takes the assets' value and divides it among issues. The   rebalancing method depends both Rebalance, Model. and Rank By options selected.

The charts below show the impact of the permutations of rebalancing and averaging applied to 10% and 30% return lines. The green 20% line is shown for reference purposes.

Rebalance Daily

At the closing prices, all issues are effectively sold,  the assets are divided evenly, issues are rebought.

Each day assets are shifted from the 30% line to the 20% and 10% lines. The Cyan Colored result is very nearly the same as the green 20% annualized Total Return(CAGR). There are slight differenced due to rounding.

Model and Rank By settings have no impact on Daily rebalancing, and cannot be selected when Daily is selected.

The end results is a fair average, although it implies trading that no one would actually try to execute.

Never Rebalance

FastTrack does not rebalance at all. This means that weak issues will, over time, become a smaller portion of holdings. A few strong issues will become essentially ALL the holdings. The portfolio becomes less and less diversified over time.

Never rebalancing and Daily rebalancing averages look very much the same if the issues being averaged are similar in pattern and performance, as would be the case averaging the GROWTH family mutual funds.

In this chart, the assets in the 30% line stay there. There in no rebalancing to shift assets to the lower yielding 20 and 10% lines. Therefore, the  never rebalanced cyan AVG of the red and yellow lines produces more return than the 20% green line.

Model and Rank By settings have no impact on Daily rebalancing, and cannot be used when Never  is selected.

Rebalance Weekly, Monthly, Quarterly, Annually

The rebalancing occurs on the last market day of the period. No rebalancing occurs until a whole period has elapsed. For example, if you choose Annual rebalancing starting at 9/1/88, then the first day on which rebalancing occurs is 12/31/89 because a whole year has not passed as of 12/31/88.

The difference between daily, monthly, and quarterly rebalancing  with Model=None is vanishingly small. However, with other Model and Rank by settings the differences can be vast.

Modeling and Averaging

Momentum Modeling shows what would happen if you shifted 25% of your  assets from the worst performing issues to the best performing issues on the first trading day of each period. The decision to trade is made on the last trading day of the period.

FT's modeling isn't complex,  optimized, or theoretical (when using families without survivor bias). Use FastBreak (3rd party product) if you want very sophisticated modeling.

The Average Daily Data Points

An average always starts with $100000.00 invested. The daily prices show the total dollars invested on any each day. If you want to know exactly what is going on in the rebalancing, then compute one AVG and, assuming you installed FastTrack in the suggested folders,  immediately print or view the file,

C:\FT\FT4WIN\TEMP\REBALANCE.LOG

This text file shows all the transactions associated with rebalancing periods and new issues. It does not show the everyday gains due to market action.   The most recent 5 versions of REBALANCE.LOG are kept. The prior four are named,

     REBALANCE.X-1
     REBALANCE.X-2,
     REBALANCE.X-3,
     REBALANCE.X-4

None Modeling

When there is no rebalancing strategy, then all issues in the family are rebalanced to have the same dollar value at the end of the period.  The Annual rebalancing of the 10% and 30% lines showing in this chart has a interesting pattern in the Relative Strength chart. The sine wave is generated as the compounding at 30% + 10% falls behind a true 20% return in the first half of the year but then catches up by year end (Remember, assets are shifted only once a year). The red and green line are chart so close together that only the red is visible. The lover R chart magnifies the very slight red/green differences.

When a new issue becomes available (when using a real family like Fidelity which adds new funds over time), then it is purchased on the first day of the period after its inception date. For example, when there are 49 existing issues held then, all are sold at the end of the period and the assets divided equally between the now 50  existing issues. New issues are purchased only when their performance qualifies them for inclusion at the end of a period.

Using None Modeling

None Strategy is is particularly useful when dealing with speculative stocks whose prices jump around in different patterns with no long trends. The None strategy effectively acts as a mild Value strategy taking profits from the winners and buying the depressed issues. This can be an effective strategy for holding speculative issues long term.

Note how the Red line smoothes out the erratic movements producing returns substantially greater than a true average.

Momentum Modeling

When the rebalancing period has elapsed, assets are sold from the worst performing issues until 25% of the total assets have been liquidated. The liquid assets are then reinvested in the top 10% of all the issues. In the chart, all assets quickly shift to the 30% holding.

Momentum strategy works well in bull markets and decently in bear markets WHEN the list/family averaged includes a diverse set of sector mutual funds like the SELECT or EXTRADED  family.

The Cyan line starts at  (30%+20%+10% ) / 3= 20% rate of return, but curves up to the 30% rate as assets are transferred quarterly to the 30% line.

See Momentum trading examples at, Sector Mutual Fund Trading, and Morningstar style trading.

Value Modeling

When the rebalancing period has elapsed, assets are taken from the best performing issues until 25% of the total assets have been liquidated. The liquid assets are then reinvested in the bottom 10% of all issues In this case reinvested in a  single issue, the red 10% line.

The Cyan AVG line starts out at the 20% return /year average, but curves down matching 10% line's gains as assets transferred  at the end of each year to the worst performing red 10% line.
Value strategy usually reduces volatility, but also reduces return. Substantial caution MUST be used when using the Value model. A single bankrupt stock dying a slow death can devastate a Value portfolio.