Trading Stocks on Paper (Validation Test) The object of this module or test is to run through a single stock, or a list of stocks, generate buy and sell signals, and paper trade, to see if you can make a profit. This block of code will be merged into a larger program written by another RAC, maybe even you. The stock method being used is the Darvas Method, with a small twist. The Darvas Method defines boxes or trading ranges. See this graph… [url removed, login to view] The object is to buy when the prices breaks through the top of the box, and set the stop loss just under the bottom of the box. When the next box is formed, the stop loss is moved to just under the new box. When the stop loss is touched, the stock is sold. This is the straight Darvas method. The end result is a text file with the contents of the trading, like this… [url removed, login to view] Here is a graphical illustration of the same process… [url removed, login to view] Darvas would buy the stock if it was at or near an all time high, had unusual volume, and the boxes were going up. Here’s the twist: The most profitable stocks have a long period of consolidation before taking off. I define this long period of consolidation as a Superbox, which is a Darvas box that is at least 42 days long, the top of the box is equal to the 52 week high, and the price breaks out to the upside of the box. Using the superbox theory, the right time to buy is to wait for the first regular box to be formed outside the superbox, and buy as it breaks through the top of this box. The methods of finding the boxes [url removed, login to view] has already been defined. The method of finding superboxes is complete except for the 52 week high. You'd have to add that... [url removed, login to view] Your objective is to come up with a module that trades these boxes and superboxes.
In addition to the requirements in the description above, I am also looking at the possibility of optimizing the profits using this method of trading. The question becomes, is it more profitable, without increased risk, to buy closer to the bottom of the box, once you know a box has been formed, and it’s heading back up? Can the program that you write answer this question? This program asks for either an individual stock, or an include list, a feature which I’d like to keep. I’d also like the option of trading either style, the superbox style or the straight Darvas style. For example, start by looking for a Superbox to trade, if there is no superbox, look for a volume spike and rising boxes to trade. Here’s some conditions and actions that come to mind as I sit here writing this: [url removed, login to view] The trickest part of these conditions is that one doesn’t know if a new box has formed until 3 days after the resistance point (top of the box) was set, and three days after the bottom resistance point was set (bottom of the box) This will NOT be a web based application. It will be a stand-alone PC application. He/she will use a stock downloader (written by another RAC), to download the stocks of interest, and then run through the backtesting to see how profitable he/she could have been. The interface has not been designed yet. Use whatever makes sense. For example, from the menu, select Trade-? Single, pop up a dialog box that asks for the stock, and display a verbose listing of the trading as it occurs. Or for a list of stocks, Trade -? List, pop up a dialog that asks for the list name, display a verbose list of each stock as it is traded, and then display a total of the stocks that have been traded up to that point. Each trade should also be written to an ascii file, for example [url removed, login to view] which can be viewed with notepad, or Vernon D. Buerg’s “List?? program. The program should be written in VB6, as that is what I have. I hope I didn’t overwhelm you with information, this really is not a difficult program to write. Just a lot of information to get you to the point of understanding. I am trying to keep this project as close to a “clean sheet?? design as possible. Makes it easier for you to write. I’ll award a bonus if you truly understand what I am trying to achieve and code accordingly. I'll furnish a sample acsii list of stocks for the filter part of the program, and some samples of stock data that you can test your program with. 1) Complete and fully-functional working program(s) in executable form as well as complete source code of all work done. 2) Installation package that will install the software (in ready-to-run condition) on the platform(s) specified in this bid request. 3) Complete ownership and distribution copyrights to all work purchased.