Thursday, November 12, 2009


As you and I both know, regardless of what the market is doing, there are always profitable trading opportunities. What’s more, MetaStock has the ability to identify these opportunities, assuming you know how to use it. Yet, if you’re like most people, even though you’ve spent almost $1000 on purchasing it, you probably don’t use it to its full potential. Within this report we’ll show you how you can program MetaStock to find these profitable trading opportunities, and in doing so employ a technique usually only exploited by the professionals.

Before we get into the actual code however it’s necessary that you understand the difference
between two contrasting security selection methods - the top down approach and the bottom
up approach. The former begins its analysis by looking at macro economic and political trends. These trends are used to identify industries expected to outperform the rest of the market. The final stage in this approach is to then select securities from within these industries. The belief behind this method is that if we can select securities in superior industries, these securities will perform along with their respective sectors. This follows the fact that money flows from underperforming areas of the market, to more profitable areas.

Therefore, the odds of success are tipped in your favour.

This is illustrated by Stan Weinstein who said; “… my studies have consistently shown that two equally bullish charts will perform far differently if one is from a bullish sector while the other breakout is in a bearish group. The favourable chart in the bullish group will often quickly advance 50 to 75 percent while the equally bullish chart in a bearish group may struggle to a 5 to 10 percent gain” – taken from “Secrets for Profiting in Bull and Bear Market”

This method is actually at the heart of the RSC exploration.

In contrast to this method is the bottom up approach. This involves scanning the market as a whole, using either a technical or fundamental basis, to find trading candidates. The main strength of this style lies in the fact if we can identify successful companies they usually remain successful regardless of which sector they’re from.

Even though the RSC exploration is primarily used in a top down approach we’ll show you a
way to use it in bottom up analysis too. We believe that both methods have their merits and
together, with their contrasting styles, they compliment each other.

So What Is The Relative Strength Comparison (RSC)?

Simply, the RSC compares a security's price change with that of a "base" or benchmark security.

This is then plotted as a line and can be interpreted as follows:

  • If the RSC is moving up, it indicates that the security is performing better than the base security.
  • If it were moving sideways, it indicates that both securities are performing the same.
  • If it is moving down, it indicates that the security is performing worse than the base security.