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I hope you enjoyed reading Parts I and II of this series, and learned how to make further use of ProfitSource, at least the features I’ve discussed so far. I am aware that there is a common misconception about ProfitSource being just another Elliott Wave tool. I hope after you finish reading the entire series, you will be convinced that ProfitSource does more than just act as an Elliott Wave tool. So without further ado, let’s begin Part III by examining two features I commonly use in ProfitSource.

Alert Systems

The first feature I recommend for all system traders is the “Alert” functions. Assuming you have been to our advanced classes, you may be familiar with Tom’s 1010 system and Reverse Volex system, and perhaps George’s favourite moving average crossover system. Before we go on, since this article is not about these trading systems, I shall leave you to find out how they work. If you are still not sure, study your course manuals or seek clarification from your instructors. What I am trying to say in this article is that you should treat ProfitSource as your employee, and you want ProfitSource to alert you each day whether potential trading opportunities arise from some, if not all, of your trading systems. Figure 1 is a snapshot of some of my alerts in ProfitSource.

Figure 1: Alert Page in ProfitSource
(Source: ProfitSource)
Click here for larger view

As you see in Figure 1, I have alerts for Tom’s 1010 system and Reverse Volex systems, and also George’s moving average crossover systems. In our 3-day Interactive Technical Trading [ITT] Class, our instructors discuss how alerts can be set for your favourite trading systems. From my experience, I admit that the initial set-up process is painful, especially if you need to set up many alerts. However, once you have completed this phase, ProfitSource will take it over and report to you, “the boss,” every day the alerts that have been triggered after you have run your Update Manager (see Figure 2).

Figure 2: Activated Alert Page in ProfitSource
(Source: ProfitSource)
Click here for larger view

So, ProfitSource reported to me that on Jan 18, 2008 that there are some trading opportunities arising from Tom’s 1010 system. Of course, it does not mean you should go ahead to place the trade. You should do carry out the necessary due diligence before you place the trade. ProfitSource’s responsibility is done as it is telling you the potential trading opportunities. The ball is now in your court. So, if you decide to place the trade but it ends up losing, do not blame ProfitSource because it is beyond its role. Please be fair to ProfitSource as you would be to your employee. On the flip side, if you have never asked ProfitSource to work like this before, you may wish to overload Profistource (sorry, ProfitSource, you need to work harder!).

Scanning for Liquid Optionable Stocks

Do you know how many optionable stocks are there in the US?  According to Optionetics Platinum, as at Jan 18, 2008, the magic numbers were 3152 optionable stocks and 88 optionable indices respectively. Are you sure you want to scan all of them? I won’t because I have only 24 hours in a day. You may have heard from some of our instructors that we like to trade only liquid stocks and indices. In my mind, instead of scanning all 3152 optionable stocks for a particular trading system, I would concentrate on the top 500 of this list. On one hand, the scanning time will be shorter. On the other hand, by concentrating on the top 500 most liquid optionable stocks, we ensure that the spread is tight enough so that we can get in and out easily without losing a lot on slippage. So, how do we do this in ProfitSource?

Here are the steps:

Step 1: Click “Scanner” and Select “Market Scan.”

Step 2: A “Select Market Scan” Box will pop up. Create a new scan and you will be asked to name this scan. You may call it “Optionable Stocks Filter” if you want.

Step 3: Follow the parameters in Figure 3. For the purpose of this exercise, my top selection criteria are stocks that are between $20 and $400, the moving average of the daily trading volume over the last 65 days is above 1 million, and the daily trading volume of the stock is 2 million.

Figure 3: A specimen ‘Optionable Stock Filter’ Market Scanner in ProfitSource
(Source: ProfitSource)
Click here for larger view

Obviously, you do not necessarily need to follow my parameters. It is just an example. As some of you may know, I am not a big fan on Google Inc. (GOOG). So, you would not be able to include GOOG in this scan using my parameters. But, my message here is clear. This is not a spoon-feeding exercise. At the end of the day, you should learn how to build these scans and understand how they work for you. Again, in our 3-day ITT Class, our instructors show you how a market scanner can be built based on your preference or needs. Remember, there is no one way to build these scanners. Instead of teaching you specifically what the parameters should be set for a particular scanner, learn the process and build your own scan. Why? It is because no one trader is the same. So, it is the technique that matters, and this is what we teach in ITT Class.

I hope you will learn two more features from ProfitSource, and make use of them. We’re only one month away from our Singapore ITT Class (again, it will be Feb 18 to 20, 2008). I hope to see some of you there. As I have just heard from our Singapore office, it is almost full. Indeed, these classes do not come to Singapore very often. So, seize the opportunity!

We will conclude this 4-parts series of using ProfitSource next week. Stay tuned. 

To access previous articles written by Jack Wong, please click here.

Jack Wong 
Staff Writer
Optionetics.com ~ Your Options Education Site

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