EdgeWare FastBreak Standard Version 6.5 - Manual (Page 14)

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of a fund to an index and buys the fund that is showing the strongest strength compared to
the index. Ranking strategies compare the price action of a fund to a group or “family” of
other funds. The fund showing the greatest percentage change in price is purchased.
There are obvious similarities in all these systems. FastBreak uses the Ranking method to
select the funds to buy and sell. The how or why a sector or fund is rotating in or out of
favor is not as important as making an accurate determination that the rotation is happen-
ing, and the trend will continue long enough so that the movement is tradable.
There are many good technical tools available to help determine when the trend has
changed, such as trend line analysis, RSI, moving averages and AccuTrack. Some tech-
niques only help predict a trend for a specific fund that may be changing: trend line analy-
sis and moving averages are examples. Other tools and indicators not only give buy and
sell indications but can show relative strength between different funds, AccuTrack for
example.
No technical analysis technique is perfect. Many techniques require the user to “interpret”
or make a value judgment. Others require considerable amounts of time to calculate or
evaluate changing trends. Finally, if many different funds give a buy signal, there is al-
ways the question of which funds should be purchased for the best return?
Many FastTrack users have been using “fund ranking” to determine the particular fund to
buy or sell, and this is the system FastBreak uses. Fund ranking is a very simple concept
to explain, but refer to the FastTrack manual for a complete description. First, the inves-
tor makes a family of the funds under consideration for trading. The family is then
“ranked” for gain over a given period (15 market days for example) using the blue pole
and the “Rank” command. The funds are listed using the “List” command. The investor
typically sells a fund that has dropped out of some predetermined top percent of the
ranked funds (50% is common). The investor then buys the top “ranked” fund. As an
example, if the investor makes a 15 day rank on 20 sector funds, and the fund being held
is more than 10 places down on the ranked list the fund is sold and the money rolled into
the first fund on the ranked list. The following table is used to illustrate the example.
The table is a 15 market day FastTrack rank list. Assume this list contains all the funds in
the trading family. Any fund below FSVLX on the list would be sold. The fund to pur-
chase is FSELX.
SELECT Family Ranked from 01/10/96 to 01/31/96 ending 01/31/96
No Symbol Fund Name Gain
---- ----- ------------------------------- ---- ---- ---- ---- ------
1 FSELX Fidelity Sel Electronics/008 13.8
2 FSPTX Fidelity Sel Technology/064 10.0
3 FDCPX Fidelity Sel Computers/007 9.7
4 FIDSX Fidelity Sel Financial Svc/066 9.6
5 FSLBX Fidelity Sel Broker & Inv/068 9.6
6 FSRBX Fidelity Sel Regional Bank/507 9.0