TechnicalStockRating

Description

The Technical Stock Rating study is a rating system developed by Markos Katsanos. When applied to a stock symbol, the system evaluates its performance based on five technical analysis criteria. The stock is then assigned a rating based on how many criteria it satisfies. For greater flexibility, the study also uses a system of weights as optimization may be required for some symbols.

The following criteria are taken into account when assigning a rating to a stock symbol:

  • Money flow: This criterion is met if the symbol's current Volume Flow Indicator value is positive.
  • Trading above average: This criterion is met if the close price is greater than its simple moving average (SMA).
  • In uptrend: This criterion is met if the SMA value has increased over the last four bars.
  • Trend quality: This criterion is met if the total number of crossovers between the price and its moving average during the lookup period does not exceed a certain value.
  • Overall market direction: This criterion is met if the exponential moving average of the appropriate market index has increased over the last two bars.

The stock symbol receives one point for meeting each of the above criteria if all the weights are set to 1.0. By default, only the "overall market direction" weight is equal to 2.0; however, you are free to assign the weights according to your preferences.

Ratings provided by this system are used by the TechnicalStockRating strategy to add simulated buy orders.

Input Parameters

Parameter

Description

vfi length

Defines the period for which the Volume Flow Index is calculated. Used when checking for the "money flow" criterion.

average length

Defines the period for which the simple moving average is calculated. Used when checking for the "trading above average" and "in uptrend" criteria.

trend quality length

Defines the lookup period for checking for the "trend quality" criterion.

max stiffness

Defines the maximum number of times the price is allowed to break through the SMA during the "trend quality" lookup period.

market index

Defines the market index to check for the "overall market direction" criterion.

weight for money flow

Defines the weight for points scored for meeting the "money flow" criterion.

weight for trading above average

Defines the weight for points scored for meeting the "trading above average" criterion.

weight for uptrend

Defines the weight for points scored for meeting the "in uptrend" criterion.

weight for trend quality

Defines the weight for points scored for meeting the "trend quality" criterion.

weight for market direction

Defines the weight for points scored for meeting the "overall market direction" criterion.

show label

Defines whether or not to show labels with criteria that are currently being met.

Plots

Plot

Description

Score

The plot of stock rating scores over time.

MoneyFlow

Boolean plot of the "money flow" condition value over time. Hidden by default.

TradingAboveAverage

Boolean plot of the "trading above average" condition value over time. Hidden by default.

Uptrend

Boolean plot of the "in uptrend" condition value over time. Hidden by default.

TrendQuality

Boolean plot of the "trend quality" condition value over time. Hidden by default.

MarketDirection

Boolean plot of the "market direction" condition value over time. Hidden by default.

Further Reading

1. "A Technical Method For Rating Stocks" by Markos Katsanos. Technical Analysis of Stocks & Commodities, June 2018.

Example*

*For illustrative purposes only. Not a recommendation of a specific security or investment strategy.

You may also like
MomentumPercentDiff
The Momentum Percent Diff is a momentum-based technical indicator. Unlike the regular Momentum ...
Tick Counter
Tick Counter is a feature available for charts using Tick aggregation. This feature shows ...
SlowRSI
The Slow Relative Strength Index is a version of the classic Relative Strength Index (RSI), ...