FAQ

Q:	What is Trade Prospector?
A:	Trade Prospector is a unique combination of client-side software and backend compute and database engines. Each day after market close, our systems run a battery of complex analytic, projective, and signal generation algorithms and make this information available to traders via the Trade Prospector "front end" (the client-side software component loaded on your PC). You don't need an end of day data download service, you don't need to manage historical price data, and you don't need to run your own technical analysis or stock scans. Trade Prospector provides you with a spectrum of trading information and indicators (including projected entry prices and support/resistance levels) that you can apply the next trading day.
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Q:	So is Trade Prospector a stock scanner? Can't I do the same thing with an ordinary stock scanner?
A:	Consistency, structure, and repeatability are keys to successful trading. Stock scanners can be good especially for "investment" (fundamental data) searches or for those who feel the need to do all the analysis work themselves - trying to find search criteria that work consistently, then trying to evaluate which of the stocks that came up in the scan are the best candidates, then trying to guess when/if to take a particular trade entry. Technical study charting software is also a great visualization tool (you can access a web-based interactive charting utility and news summary by using the Chart/News links found in TP). But both tools leave each trader to their own individual and often subjective devices to determine how, when, and where to trade a particular stock. The production Trade Prospector program does offer a variety of user definable indicator filtering options (exchange, price range, personal stock list, etc.) not found on the website. And we are also considering a future upgrade with expanded filtering capability (e.g., top 10 Nasdaq stocks in volatility compression and with a 4+ point narrow trading channel, etc.). However, Trade Prospector is not an ad hoc stock scanner. It is patterned after the internal trading software used by many private trading firms where the computers analyze and identify trades and the traders trade. The technical analysis, custom algorithms, trade candidate evaluation and ranking, and trade entry trigger price boundaries are calculated by the Trade Prospector compute engine and the results are presented to the traders as discrete trading indicators. Trade signals occur at the computed price boundaries. Proven algorithms, heuristics, and pattern recognitions are used rather than merely a collection of ad hoc user definable search parameters. If you need an interactive chart and/or recent news about a particular indicated stock, click its Chart/News (CN) link. If you want the detailed Trade Prospector Support/Resistance boundary information, click the stock symbol. Additional hyperlinks to an extended number of online bulletin boards are accessible through new ergonimic enhancements being made to the production program. Our goal as traders is to take as much money from the market as possible. We and hundreds of our existing users can do this with Trade Prospector's indicators. The software is designed for traders who prefer to engage in trading (rather than analysis) and who want a consistent, structured, professional edge in the market.
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Q:	Does Trade Prospector track bulletin board stocks, penny stocks, etc.?
A:	Due to either thin volumes or thin total trading dollars of most bulletin board stocks, their markets are overly subject to manipulation by market makers and/or pump and dump artists. This makes quantitative analysis of these markets meaningless and therefore no rational technical trading strategies can be effectively developed for these stocks. Tradable markets have relatively consistent behavioral patterns. However due to the inconsistencies and discontinuities inherent in bulletin board stocks, "trading" in them is much more like rolling dice or buying a lottery ticket than it is actual trading. There are of course potential gains from long term investing in such issues, however the rate of failure of investors in these stocks is extremely high and all reputable entities in the security industry advise potential investors that it is more likely that they will lose some or all of their investment in such issues than they are to turn any reasonable profit. Trade Prospector is designed to help traders attain structured, consistent, and repeatable profits - we therefore make no attempt to track penny stocks, thinly traded stocks (volume or total dollars), or actual bulletin board stocks because such results are not possible.
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Q:	I don't see a particular stock that I like in the Trade Prospector database, why is that and can I get it added?
A:	The stocks in the Trade Prospector infobase account for most of the daily trading volume in the market - they include all optionable stocks, the Dow 30, the S&P100, the S&P500, and the Nasdaq 100, plus many other stocks. There are approximately 3,000 stocks and almost 120,000 options which Trade Prospector tracks. These stocks were selected due to there "analyzability" - that is the ability to conduct reliable quantitative and predictive analysis on their trading patterns. Specifically, very recent IPOs, thinly traded stocks, very low priced stocks, etc. lack analytic reliability. However, these conditions change and we periodically rescreen stocks and add new stocks to the infobase which are now sufficiently analyzable. If any user has stocks which they would like us to specifically rescreen for possible inclusion in the infobase prior to one of our periodic rescreenings, all they need do is send us an email with their list and we will re-examine them and immediately add those which can now be reliably analyzed.
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Q:	What trading styles can I use Trade Prospector with?
A:	Trade Prospector provides a spectrum of trading information applicable to multiple trading styles and timeframes, including swing trading (intraday and multiday), breakoout trading, directional daytrading, momentum trading, support/resistance surfing, trend trading, option trading, etc.
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Q:	How much does it cost?
A:	Trade Prospector costs just $399 for the first year and includes use of end of day and realtime software, access to the TP infobase, access to the TP support/resistance projection database, all software updates, technical support, and our nightly trading bulletins. That's a lot of power and information for an average of less than $35/month. Many trading bulletins alone cost more than that. Subsequent annual renewals extend continued access for only $250/yr after the first year.
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Q:	Do I have to pay for it before I get a chance to use it or do I have to pay for a trial period license key?
A:	Absolutely not. Unlike some other trading tools which put the risk on your shoulders and require you to either buy the product before you can see it or at least pay $100 or more for a "trial use license key" - Trade Prospector is offered to users for a 14 day trial period. If after you've had a full two weeks to put Trade Prospector to use, you agree that it is a powerful trading tool that you need in your moneymaking arsenal, then you'll be able to process your transaction online and your user ID will be unlocked for a full year's use of the TP service.
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Q:	Do I need a realtime quote vendor and if so which ones do you recommend?
A:	It depends on what kind of trading you want to engage in. If you seek to daytrade, then definitely we believe you need a realtime quote vendor and we recommend quote.com's QCharts service. If you are a position trader or a multiday swing trader, then one of the free realtime quote services or those provided by your broker could be sufficient for your needs - especially if you use unattended buy/sell stop orders for entry/exit.
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Q:	In some of your online material, you show charts with SRs drawn on them - how do you do that?
A:	Those are copies of actual charts from our personal trading screens. We use quote.com QCharts which has drawing capabilities. We simply draw lines on the chart to represent the key boundaries and near SRs to provide visual references during the trading day. We also use realtime price alerts to alert us when/if we are not watching a particular chart. Multiple charts can be displayed at the same time with all relavent key boundaries and SRs automatically displayed (including new realtime dynamic SRs). Alerts will automatically be generated near key boundaries and SRs based upon user preferences and reflected graphically on the chart. We are also working on integrating level II and ISLD displays that automatically change when charts or quotes are clicked.
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Q:	What are the key trade entry boundaries?
A:	This depends on the particular indicator group. For example, for volatility compressions the key entry boundaries are either the trading channel or breakpoint boundaries (which ever is nearest to the price). These represent key support and resistance. But for the breakthrough momentum indicators, the key boundaries are the key boundaries are the continuation and failure boundaries noted for each indicator. If you are trading one of your favorite stocks that isn't on an indicator group for that day, you would use the Trading Channel and the Breakpoints as key entry boundaries. As with all trading, you will then use a trailing stop and the SRs and probability boundaries for trade management.
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Q:	You mention the use of trailing stops a lot - are they really that important?
A:	They are extremely important. They provide necessary structure to your trading and eliminate making "gut feeling" decisions. If you are disciplined and can/will pull the trigger on a trade you could get by with using alerts in your quote program and then initiate the trade manually. Otherwise, we advise using actual trailing stops through your broker or through a trading platform like CyberX.
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Q:	What brokers do you recommend?
A:	We recommend CyberX from Cybercorp for stock trading and Preferred Trading for those also engaging in option trading. Both offer direct routing and execution of your order and both integrate well with quote.com's QCharts program. CyberX has a sophisticated smart order routing feature and also lets you manually direct your order for execution. It also has an advanced stop management feature. Preferred offers direct routing of both stock and option orders, but currently only supports stops on NYSE stocks (which is actually done by NYSE's DOT system) and options. An upgrade to support stops on Nasdaq stocks is supposed to be due out later in the year. You can check them out at http://www.cybercorp.com and http://www.preferredtrade.com
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Q:	How much do I need to start to trade?
A:	We don't believe that anyone should begin actually trading with less than $10,000. This amount (in a margin account) allows you to swing a 100 share lot of up to a $200 stock (although we would suggest that you limit yourself to stocks below $150 as an extra cushion). Further, we follow the standard usual rule that you should never risk more than 2% of your capital on a trade. This means that you can risk $200 with a capital balance of $10,000. This means that you can risk a $2 stop on a 100 share trade. This also conforms well to the rule of allowing at least a 1% trailing stop on your trades. Thus, if you have $10,000 in capital and you are trading 100 shares of a stock costing $200, then you can risk correctly still risk the 1% ($2) stop and stay within your 2% of capital ($200) risk limit. As noted above, we would suggest someone with only $10,000 in capital should initially try to stay with stocks costing no more than $150/share to provide a margin of error. This would mean that you would be well within your trading limits (risking an initial stop of $1.50 on the 100 share trade is less than the 2% of capital limit). Remember that trading is about three key things - trade picking, trade management, and capital preservation.
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Q:	A lot of stocks that produce large moves seem to cost a lot - how can I trade these if I don't have hundreds of thousands of dollars?
A:	It's not about trading in large lot sizes at first, it's about achieving consistent profits. If you do that, your capital will grow and you will eventually be swinging larger lot sizes (see the discussion of a "Little known statistic" in the Introduction section of the Trading Examples). If you have have at least $10,000 in capital in a margin account, you can trade 100 shares of up to a $200 stock. You will of course not be able to trade $300-400 stocks, however there are a lot of trade candidates each day under $200/share. Additionally, the production program will have enhanced ergonomics that will allow you to filter indicators by price range and exchange.
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Q:	How can I trade my favorite stocks even if they don't appear on one of the indicator groups for that day?
A:	If you are trading one of your favorite stocks that isn't on an indicator group for that day, you can still trade them with Trade Prospector information depending on your particular trading style. If you are a breakout trader, you would use the Trading Channel and the Breakpoints as key entry boundaries. If you are a swing or directional trader, you may wish to use the SR3 directional swing price level to determine your entries. As with all trading, you will then use a trailing stop and the SRs and probability boundaries for trade management. If you are a multiday swing or position trader, you can use Trade Prospector's stop management SR information to trail a stop on your position.
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Q:	I'd like to download a watchlist of the stock symbols I want to track in my quote system - can Trade Prospector do that?
A:	One of the ergonomic enhancements currently being made to the production program is an export function which will let you select and then export indicator stock symbols to a text file which can then be imported into QCharts and other quote programs.
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Q:	I only trade NASDAQ stocks, can I get the indicators to only show those stocks?
A:	Also one of the new ergonomic enhancements currently being made is the ability to filter the indicators based on exchange, price range, and personal watch list. In this way, you can restrict the kind of stocks that appear in your personal view of the indicator groups.
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Q:	I'm using the website Trade Prospector information, when will the production program be ready?
A:	As a result of our beta test, we are currently modifying the data access technology used by the program to improve its performance over slower dialup connections. At the same time, we are taking the opportunity to add many of the ergonomic and feature enhancements that beta users suggested. In the meantime, we are offering all pre-registrants free access to the web-based functionality which provides you with most of the functions and information that Trade Prospector offers. We hope to deliver the production program to everyone within the next month.
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Q:	How do I calculate an option's value?
A:	Option value is based upon several factors - volatility, time period, price of the underlying security, interest rates, and dividends. The probable value of an option (or price of a stock) is based on this and the expected earnings growth rate of the underlying stock. By using the Trade Prospector Option Greeks Calculator, you can not only compute the various "greeks" but also project compute current option value, impute implied volatility, and project future value.
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Q:	There are a lot of stocks shown across the various indicator groups - how do I chose which ones to trade?
A:	There are a lot of stocks that show on many indicator groups. This is an indication of just how many trade candidates there are available on any given day if you know where to look for them. For our personal trading, we usually take the top 2-3 stocks from the indicator groups we follow that match our trading styles. This provides us with 8-20 stocks (depending on the trader) to watch the next day. We then setup charts and alerts for the next day. During the trading day, we then are alerted to trade opportunities by the alerts we previously set and call up a level two and ISLD window from which to initiate a trade entry when the boundary is broken. For a look at one of our trader's screens, check the Introduction section of the Trading Examples.
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Q:	How do I calculate the chance of a stock reaching a certain price in a certain period of time?
A:	Use Trade Prospector's Price Probability calculator (under the Trend menu item). It provides you with the ability to project the probability of a future price based on its current price, volatility, interest and dividend rates, and earnings growth rate. This can be used to evaluate the probability of an option as well as the probability of achieving a particular stock price in the specified time.
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Q:	What's the difference in, and when do I use, a limit order and when do I use a stop order?
A:	Limit orders are basically saying "This is the most I will pay to buy" or "This is the least I will accept to sell". A stop says "Do this order when the price hits this price". So a buy stop at 130 1/8 says to buy the stock when the ask gets to 130 1/8. If on the other hand you put in a limit order of 130 1/8 when the stock was trading at 125, you'd immediately be buying the stock because your limit is higher than the current ask. Buy stops should be based on the ask and sell stops should be based on the bid. Limit orders are just orders with max (or min) prices and aren't specifically related to the bid/ask. Remember it this way: Buy limits are used to set a purchase price BELOW the current price (that is you want to buy if the price drops to your limit) or to make sure you don't pay more than a certain price for a trade. Sell limits are used to set a sell price ABOVE the current price (that is you want to sell if the price goes up to your limit) or to make sure you don't sell for less than a certain price for the trade. Buy stops are set ABOVE the current price (that is you want to buy only if the price hits your stop price). Sell stops are set BELOW the current price (that is you want to sell only if the price drops to your stop price).
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Q:	Why does TP cover a variety of indices?
A:	The reason the indices are covered by TP is that there are options traded on most of them. Aside from their use for option trading, they are also used by some traders as indications of probable price action in stocks covered by an index. Example, if the CWX is breaking to the upside, it indicates that the software sector is being bought up. If the MSH is breaking down, it can be an early sign that the 35 high technology stocks it covers are selling off.
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Q:	Should I use a third party realtime datafeed or a trading platform with an integrated datafeed?
A:	A reason for considering the use of a public datafeed like QCharts is that third party software, such as TP's realtime software can integrate with them. The realtime software integrates TPs existing capabilities with special realtime versions of our multi-temporal SR algorithms, realtime trade signal alerts and graphical indicators, automatic key boundary charting, non-linear time charting, automatic trailing stop indicators - all while transparently integrating with TP's various current features and indicators. The realtime option analyzer and scanner will also depend on such datafeed integration. Some proprietary integrated trading platforms don't currently provide such datafeed integration capabilities and others have fairly primative integration toolkits. We plan to rollout support in our upcoming realtime products for datafeeds in the following order (based on the sophistication of their software integration support): Quote.Com (QCharts) PCQuote eSignal DTNiq myTrack Realtick III (others as they become available and/or are requested)