Home	Frequently Asked Questions & Glossary	Last updated: October 18/2000
FAQ and a glossary about AmiBroker, DalleySuites and "what is involved" FAQ: Who are making stock investments? Those who wish to control their financial futures, by investing in the type of investment that returns the most, over the longterm. The Toronto-Dominion Bank's Green Line Investor Services is Canada's largest discount broker, with over 660,000 customers. Their review of 1998 states that the number of their self-directed investors (people who look after their own money) grew by over 100,000 that year. This trend is expected to continue, around the world. During the downturn of 1998, these informed investors showed a marked degree of confidence and stability in their longterm outlook, by taking advantage of the lower prices. As more people take charge of their own investments, building confidence, making more informed decisions and saving on costs with discount brokers, the sales of stocks and mutual funds to these investors is expected to "sky rocket", says the report. In fact, the number of people buying mutual funds has taken a noticable drop, since 1998. They are buying stocks, instead! AmiBroker is the main Amiga tool available, besides a spreadsheet, to help in making stock purchase decisions, by using technical analysis. AmiBroker graphs the daily stock price & volume, visualizing and analysing those numbers for you, and can help you find interesting trades that you might otherwise miss. How do I start buying stocks? If you have to ask this question, you are in for a lot of educating, planning and experimenting, and even more learning. Investing is a skill which is not usually taught in schools. How do you learn any skill? Before you invest in anything, you should have set goals and plans as to how to achieve them. Investing money yourself is not a game, but you must have a good "game plan" first! Subscribe to a high-quality investment newsletter that covers your market, such as "The Investment Reporter", in Canada, one which actually teaches you proper fundamental investing principles. Join an investment club or find a mentor, so that you are not doing this alone. Take a securities investing/trading course at your local stock exchange. Start building your own investment library of good books, since you will want reliable references close at hand. You should have money management and investing principles down pat, before you buy your first stock. I doubt many people do, though. You can never be right on 100% of your trades, so you must know (exactly) what you will do when things turn out differently from how you planned. Even "blue chip" stocks can go down in value quickly. What will you do when they "head south"? Hold on, sell or buy more? Follow your plan! After you do your home work, then you set up your brokerage accounts. If you are prepared, investing can be fun and profitable, at the same time. The first ten stocks you buy are the most important ones, since you don't want to lose your starting capital. The better your initial purchases, the less luck has to do with how they will perform. Why should I pay attention to price graphs? This is the $100 question. As I stress elsewhere here, sometimes the market is controlled by emotion. Although the market can be considered to be always "right", sometimes it is irrational. Irrational because the market participants are only human, and technicals are the only way to gauge emotion in one stock or a whole market. Fundamentals can't do this. Regardless of how right you think the situation is, you need a way to be warned that the market just doesn't agree with you. The trader also needs to know how to control his/her own emotion. Technicals, if the rules are followed, protect against failing markets and wishy-washy discipline. The paper trader finds this out the first time a real trade is made. See how emotional you get with real money on the table! Control the emotion by using proper rules to limit the risk and maximize the return. Learn early on to use good money management techniques to keep every trade objective. Because one element of the market is people, they not only have emotion, but also a memory. If you are in a trade that turned ugly and you held onto the stock, if the price trades near where you bought in, it is very likely you will take the first opportunity to get out with a small loss or slight profit, if given a chance. This is where support and resistance comes into play. Fundamentals have little to do with past prices; technicals are based upon a stock's price & volume history, whether current or long past. Have you ever wondered why, just before an important event, the price of a stock can change dramatically? Somebody (insiders, or people close to the company (relatives, friends, lawyers, employees, advisors)) knew something and decided to make an early move. Volumes increased; pressure on the price changed it quickly. T/A is the only way to "see" this kind of action. The news affecting the stock instantly gets priced into it. Even if you are sceptical about their usefulness, you still need to pay attention to the technicals, since almost everyone else does, these days. With so many people using T/A, this alone is enough to move markets. Is it worth ignoring what many others perceive as important? Add all of these things together and you have some powerful reasons to pay attention to what graphs can tell you about a market. Let AmiBroker help you. But I am ready, or an experienced investor or trader! How do I start using graphs? Maybe you already have some trading experience, so you know some of the early procedures, and have made your investment plans. Make sure your brokerage account is ready for placing orders, and that you understand their rules and limitations on placing orders. If you use an on-line broker, some have methods for practicing at placing orders. Do it. Know your broker's terminology, too. To invest in stocks using technical analysis, AmiBroker needs reliable, daily data. Look for a high-quality supply, for all of the markets you wish to trade. AmiBroker can display daily data as weekly, or longer periods, if that is how you want to use it. If no DalleySuite importer exists for your local market, more can be made, but only if the proper data exists. Register AmiBroker and join the mail list. Subscribe to Technical Analysis of Stocks & Commodities magazine. Read back issues, such as April '98 for one investing "plan" (Zero Cost Averaging) which mixes fundamental and T/A, and any other investing and T/A books that interest you. Learn about the different ways you can protect your investments, by using money management techniques, too. Start by building your database, daily. Buy a data CD of your local data starting after your earliest date in your database, and import all the MetaStock 5.0 histories you want. Remember, it may take some time to build your database to an acceptable condition. This won't happen overnight; it may take more than one year to build up a useful, reliable database. DalleySuite importers for some free histories found on the Internet are available, too. Make sure you have the proper computer resources to handle the amount of data you want to use. If you want to use any DalleySuites, order them once a registered AmiBroker is installed. Now comes the fun part, learning how AmiBroker's indicators can help you find profitable trades! Start reading, use AmiBroker and practice at finding good trades as soon as you can. Why should I track a whole exchange? Most of your time with AmiBroker should be spent making trading decisions that fit with your plan, looking for new opportunities. To do this well, any T/A program needs data - lots of high quality, daily data. While most exchanges, except a few major ones, have only a few hundred stocks, some will have over 1,000. Maybe half of those stocks trade daily. That still is a lot of data, so how are you going to enter it all - accurately and quickly? Data loaders are the only answer. Importing daily data for all stocks should not really be a time burden, for you or the Amiga, if the data exists in a convenient format. Data entry, when using any built-in or DalleySuite importer, sure won't be a limiting factor! Even if you delay data entry, you must be consistent at collecting daily data before it disappears, though, since AmiBroker won't know (or care!) if data is missing. It is more efficient to enter the daily data than to try to catch up using histories. What happens whenever someone mentions a stock that you don't follow closely? For once, they might be onto something, but does it fit with your rules and plan? If you don't have all stocks in your database, you must quickly go get the data for AmiBroker to do its job - helping you make these decisions. Very few quote sources have long, free histories! This places AmiBroker (and you) at a disadvantage. The MegaQuote importers always keep you up-to-date, by importing all data for the exchange (configurable, of course). This way, you can always have all current data, on every company in your local exchange. Does doing all of this take a lot of time? Importing a complete set of over 1800 EOD quotes for the Toronto Stock Exchange takes less than 6 minutes using an '030 (a few seconds with an accellerator). Other exchanges take less time. Data collection could take longer (depending upon the number of quotes and the source), but even that could be automated. For example, starting Dec '98, I began using simple web robots to collect most of my data. Whatever the size of your database, let AmiBroker quickly analyse it, to help find the best trade candidates, according to your own rules. This is much faster than you manually cycling through it, drawing each graph, then "eye-balling" them. If you use limits on the size of AmiBroker's database, then you can shorten the time needed for Loading or Saving. Keep histories as long as comfortable, though. Is there an on-line FAQ, or any e-books, about investing or T/A? Sure! Here are some good ones, and check out the ones at the AmiBroker site, too: information links Why should I learn about Japanese candlesticks? To make more profitable trades. Technicians use all sorts of "tools" to gain insight into market action and mood (momentum, psychology, volatility, etc.). The Japanese candlestick is only one such tool, along with moving averages and trendlines, but some technicians even use astrology. The point is that you should always use the best tool for any task. For instance, you shouldn't use a volatility measuring tool to interpret momentum. You can try, but chances are it won't give you reliable information on which to base a profitable trade. Because there is a buyer and seller for each trade, psychology plays an important part in the market's actions, and emotion plays a huge part in market psychology. Trader's emotion (bullish, bearish, undecided) is easy to interpret and then gage, when using candlesticks. Candlesticks and their related patterns can also give a more leading indication of pending change, compared to traditional western price bars or bar patterns. Japanese candlesticks display market emotion instantly, in any time frame, giving the technician profitable insight into a market over people who don't use them. Few other tools can do this, or as well. Once accustomed to the new look, and after you do a bit of learning, you will start making better trades. If you already import a complete quote (open, high, low & close) into AmiBroker, you have all you need to use coloured price bars (candlesticks), instead of traditional, colourless price bars. In AmiBroker, change a stock's chart to use Japanese candlesticks by selecting the "Continuous quotations" box in the company Information panel. Any DalleySuite importer will do this for you automatically, for any newly added ticker, if all four prices are in the data. Combined with other traditional western indicators and T/A techniques, Japanese candlesticks make a powerful addition to your T/A toolbox. What can I do if I am not sure if I want to get involved? One of the things that I did to get started learning about T/A was to enter a local newspaper stock picking contest. Unfortunately, contests are not all equal, so you might be put under unrealistic situations, such as limited stock selections, and nearly all have restricted time periods (usually one quarter). Luck plays a major part in the ones that don't let you trade once the contest begins. Some have outrageous fees, some are free. Some require constant attention and trading to stay competitive. The rates of return of the winners will astound you! Contests are a good way to break through the shell around investing concepts. They will focus your attention on a small number of stocks, and you can start learning fundamentals & technicals, too. Can AmiBroker help do day-trading? Basically, no. AmiBroker is designed to be easy-to-use for the private investor. Day-trading is buying & selling an instrument before a trading day finishes, usually holding for minutes to hours (rarely overnight, hence the name). Day-trading requires a real-time data feed, a dedicated phone-line and day-trading software, which does not exist for the Amiga. Cliques do it, while sharing expenses, in dedicated offices, not dabbling at it from a desk at work. It also helps to have the right psychological make-up and experience at using sophisticated trading techniques, to be able to successfully handle this high-risk type of investing. The three main requirements are: discipline, discipline, discipline. SwifTrade has a training course ($2,500US) and a trading site, for foreigners to day-trade on the big US markets. Most other exchanges are just too illiquid, making them poor candidates for day-trading. Although AmiBroker can't display multiple intra-day quotes, it can still help you make a trade during the day. Japanese candlesticks play an important part at understanding how to do this safely. InstaQuote importers will help you graph the data efficiently. Remember that most free intra-day quotes are delayed by upto 30 minutes, so check current prices with your broker or real-time data source, before you make a trade. Look on the net for an intra-day graphing service, too. Any attempt at "timing the market" adds its own risk, especially if using limited trading experience or knowledge. Can AmiBroker help trade mutual funds? Sure, but you will have to manually enter a complete EOD quote (OHLCV). Some people think this is sort of a redundant effort, since many fund managers use technical analysis on the underlying stocks, anyway. Lots of others do it, though. Glossary: advances/declines = the ratio of stocks that rose versus the number that fell in price DalleySuite = a set (by country) of AmiBroker data importers and other support programs Each could involve a number of different data formats, depending upon just what is available, or usable: complete/partial exchanges, portfolios, intra-day and/or EOD quotes, indices, histories, etc., are all possible. EOD = End-Of-Day, after markets close histories = long sets of EOD quotes Build these to greater than 1 year each, before you ever invest! T/A without good data is very risky gambling! intra-day = during market hours InstaQuote = a program which imports quotes instantly from a browser's or terminal's screentext Japanese candlesticks = price bars which show more info visually - use the last 5-10 to show the most recent emotion If you are serious about T/A, you should try to understand these and their patterns. In comparison, uncoloured price bars offer no emotional insight into the markets, placing you at a great disadvantage. MegaQuote = a program which imports a complete/partial exchange's EOD dataset MegaQuote importers can build your own histories for all stocks, if none are available on the net. Most will do extra calculations, too. multiple or unlimited = imports all available files of a similar format Example: 8 portfolios or 47 quotes (some importers do both at once!) portfolio = a quote which has two or more quotes in it Portfolio quotes can have different information compared to a single quote, making it useless for T/A, so check yours carefully. quote = stock price information, mainly: Ticker symbol, Date, Open, High, Low, Close & Volume Without an Open price, Japanese candlesticks can't be used. Some quotes supply supplimentary information, such as the number of shares outstanding, full company or instrument names, P/E ratios and market capitalizations. AmiBroker calculates certain financial ratios automatically, if you have entered the necessary data, such as the number of shares. DalleySuite importers can do this for you! DalleySuite importers import all appropriate data, when available, and some even calculate figures that AmiBroker can't use yet, such as A/D numbers, for use with spreadsheets. The automatic entry of instrument names (or the Full company name) and share numbers can literally save you hundreds of manual entry hours, every year! report panel = a display of useful info (such as A/D data), after an import is completed Technical Analysis, or T/A = the study of investment instruments (stocks, bonds, commodities, indices, etc.) using various formulas to graphically show price or volume changes, through time Each indicator represents a different amount of the momentum, volatility and emotion in a market. The glossary of technical terms may help.