EdgeWare FastBreak Standard Version 6.5 - Manual (Page 100)

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To activate the trendline Buy filter the above option is on the Buy Filter Tab. Activation
of this option will prevent purchase of any issue that is trading below its trendline. As
with the Trendline Stop, the Size box controls the type of trendline used. Reasonable
values to use are 0 to 15.
Data Required to Determine a Trendline
It can take a considerable amount of historical data to determine the first trendline. This
is because it requires two meaningful dips (in the case of an upward trendline) to create
the first trendline section. If the stock or fund is in a significant upward movement at the
beginning of its historical data, then no trendline can be drawn. Until a trendline can be
drawn, FastBreak will assume that the stock or fund is BELOW its trendline. Therefore,
this stock or fund can’t be purchased if either the trendline Stop or Buy Filter is used by
the strategy.
You need to be aware of this issue because you may see situations where a stock or fund
is highly ranked and clearly in an uptrend but a strategy will not purchase the equity. Re-
peat, until a stock or fund has two meaningful dips in the equity curve a trendline
cannot be constructed, and therefore FastBreak will assume the issue is below the
trendline and unavailable for purchase.
Trendline Summary
Is the trendline algorithm perfect? The answer is no, there are no perfect technical indica-
tors. Sometimes the algorithm makes an excellent determination, but other times it fails.
The question for an investor is does the indicator succeed more often than it fails.
Options for Buying Weakness and Selling Strength – BAT and RAT Options
FastBreak V6.5 added several new capabilities. Some of the changes were intended to
build systems that are complementary to traditional FastBreak systems that always buy
into strength. Some of the new options allow buying into temporary weakness and selling
into overbought conditions. This will become clear as each of the new options is ex-
plained. Note: The new options will only work with Linear Slope ranking.
BOOM (Breakout Optimization Method) with Linear Slope Ranking
Long term FastBreak users are familiar with the BOOM option for ranking. Read the de-
scription for the option later in the manual. We have made BOOM available to use with
the Linear Slope ranking method. In recent years we have found that Linear Slope is a
great ranking method for stocks and ETFs. This ranking method appears to help adjust
for the greater volatility of stocks/ETFs vs. the less volatile mutual funds so allowing
BOOM to be used with Linear Slope was a natural extension.