Fine-tuning your investment strategy is one of the constant tasks of any serious investor. As the markets continue to rotate in different themes, experience global events, and crashes, serious investors will continue to adapt their strategies to the changes in the market environment. One of the common steps users would take is to change some of their screening filters or technical analysis settings to find that “Holy Grail” setup for their strategy. However, most literature will tell you there is no 100% win rate strategy. What traders and investors can do is optimize their win rate and fewer losses. In the pursuit of finding new indicators or filters, you may come across something unique. One of those unique filters is Barchart’s “Trend Seeker®.”
What is Barchart’s Trend Seeker®?
Trend Seeker® is Barchart’s proprietary trend analysis system, developed by Barchart.com, that uses a combination of wave theory, market momentum, and volatility to attempt to find a general trend for a specific market that traders can take advantage of. Trend Seeker® attempts to help traders cut losers early and let winners run.
How to apply Trend Seeker® in your screening strategy?
Traders can use Trend Seeker® in Barchart.com’s “Screener” tool. Simply log in to a Barchart.com account, go to Tools, and choose Screener.
From the Stocks Screener page, the filter option “Opinion Indicators” is available to help investors filter based on Trend Seeker® like signal, strength, direction, and new signal.
Once a criterion is chosen, you will have a shortlist of companies that meet that criterion.
What does each criterion give you?
Each signal provides different results. Depending on what traders would like to achieve, they can choose the criteria that fit their intended results or combine them with different existing strategies.
- Trend Seeker® Signal - captures stocks with an existing buy signal based on the filter.
- Trend Seeker® Strength - captures stocks currently trading in a trend that is categorized either in a weak or maximum trend strength.
- Trend Seeker® Direction - captures stocks based on the current trend's strength. For example, a stock with a buy signal with a "strongest" direction means a buy signal which is becoming stronger and vice versa.
- Made New Trend Seeker® Signal - captures stocks that recently generated a new signal
Putting it into action
Now that we know what the filters give us, let’s try getting some sample companies using the filters. For example, suppose you want to only focus on mid-size and above companies that continue to strengthen their trend direction or are at their strongest and have generated a new signal for entry. In that case, you can filter for the criteria below:
- Market Cap = Midcap and above
- Trend Seeker® Direction = Average to strongest
- Made New Trend Seeker® Signal = Buy
You can then sort the results by YTD performance to only focus on the strongest stocks of the year.
Now let’s look at some of the results.
Digital Ocean Holdings Inc. (DOCN)
Digitalocean Holdings, Inc. is a company that offers a cloud computing platform via an on-demand infrastructure as well as platform tools for developers, start-ups, and small-to-medium-size businesses. The company enables its customers to rapidly accelerate productivity and agility by simplifying cloud computing processes through its platform. The Company's mission-critical infrastructure solutions offer computing, storage, and networking services and also enable developers to extend the native capabilities of the Company’s cloud with fully managed application, database, and container offerings. Its customers use its platform across numerous industry verticals and for a range of use cases, such as:
- Web and mobile applications
- E-commerce
- Website Hosting
- Media and gaming
- Personal Web projects
- Managed services
Pegasystems Inc. (PEGA)
Pegasystems Inc. is a company that develops, licenses, markets, hosts, and supports enterprise software. This helps organizations simplify business complexity through its software Pega Infinity. Pega Infinity is a software portfolio that helps connect enterprises to customers in real-time channels. Its applications and platform intersect with and encompass several software markets, including customer engagement, low-code application development platforms, and others. The company’s “Customer Decision Hub” predicts customer behavior and provides real-time recommendations for the next best action across channels. Its Pega Customer Service application includes a contact center desktop, chat, knowledge management, omnichannel self-service, and others. Its Pega Platform is software for intelligent automation that helps increase the efficiency of its clients’ workflow and processes. Finally, the company also offers various services like Global Client Success, Global Client Support, Global Service Assurance, and Pega Academy groups.
Ansys Inc. (ANSS)
ANSYS, Inc. is a company that develops and globally markets engineering simulation software and services. The company product is used by engineers, researchers, designers, and students. The company services a range of industries and academia which includes:
- High-tech
- Aerospace and defense
- Automotive
- Energy
- Industrial equipment
- Materials and chemicals
- Consumer products
- Healthcare
- Construction
The Company’s products allow its users to analyze designs via cloud and/or on-premises. This provides their clients with a common platform for product development, from design concepts to final-stage testing, validation, and deployment. The company offers its products through direct sales offices and a network of independent distributors and resellers. Its product portfolio consists of:
- ANSYS Workbench
- Fluids
- Structures
- Semiconductors
- Electronics
- Multiphysics
- Systems
- Embedded Software
- Three-Dimensional (3D) Design
- Optical
Final thoughts
Stock selection is as important as trade execution and risk management. Finding companies that exude the qualities of high-performing stocks, more often than not, have the potential to be better performers in the future or continue performing as well. As investors, it is important to test these strategies using methods like backtesting (testing a strategy with historical data to get the strategy's performance over time) to get realistic expectations on the strategy, its limitations, and its advantages.
On the date of publication, Rick Orford did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
