Reviews: Onmitrader

Nirvana Systems, Inc. has released the latest version of its Technical Analysis program OmniTrader. This program is designed to automate technical analysis for traders and investors. OmniTrader collects current data and then tests up to 120 different trading systems against selected securities from its 18,000+ security database and then generates buy and sell signals.

OmniTrader is based on the personality of markets theory, which states that different securities exhibit different personalities. The program attempts to pinpoint a security's personality patterns through backtesting and then issues buy and sell signals based on these patterns. OmniTrader's Focus List™ provides a summary of each day's trading signals. Users can configure this to display only those statistics in which they are interested.

Users are also able to view an equity curve when they backtest trading systems. They can give OmniTrader a hypothetical dollar amount and trade it at the start of the backtest to better view the performance of the system.

New data can be retrieved from major data vendors by the program's integrated downloader, which automatically adjusts for splits and dividends. The program also offers a 18,000+ security database with statistics.

OmniTrader's portfolio manager tracks and unlimited number of accounts, maintaining a current valuation of user trading positions and generating a tax Schedule D for income tax purposes.

In contrast to the hundreds of man hours needed to crunch numbers in the past, OmniTrader™ from Nirvana Systems, Inc. is a breeze. It is a totally automated trading system that can be used to trade anything from stocks to futures to mutual funds. For those of you who like to sit back and let the computer do all the work, this is the program for you. After I seamlessly imported my existing daily data (formats include AIQ, CSI, MetaStock, and Worden Bros. TC2000), OmniTrader took over.

OmniTrader first tests its own systems against the symbols in your portfolio and decides which systems and indicators work best against each symbol. Systems included in the program range from trendline breakouts, money flow, stochastics, RSI and MACD, to divergence.

After testing your data, OmniTrader generates buy and sell signals using the results. A summary then details which buys and sells the program generated and gives you a "voting" range on what indicators worked best, so you can explore those indicators further. You also are able to see which systems are generating the signals and how that system backtested on each individual signal. Automated patterns such as trendlines and candlesticks are drawn for you on the chart.

The most impressive thing is the speed at which all this is completed. The time to perform a 500-trading-day backtest, 125-day forward test, on 27 systems and on 21 stocks is approximately 45 seconds.

One Size Fits All
OmniTrader can be programmed to suit many types of investors and traders. You can set it to short-, medium-, and long-term mode. You can tell it to only take long trades and ignore the short side of the market. The program is extremely user-friendly; nothing is more than a few mouse clicks away.

Whenever I start trading a new system, I am always a little edgy. A few nights sleep are usually lost wondering if the system will work in real time. The system backtested fine, but can I make real money with it? Although that will always depend on how the trader uses the knowledge from any system, this is where OmniTrader's Trading Game™ and Lab Mode™ really help out. You are able to trade as if it were real time "out of sample" without the stress and the negative emotions. The Trading Game will actually tell you in dollars how well you did over the specified time frame. A couple of years could be traded in about 20 minutes. Whatever you see in the Lab Mode is what you would see if you were trading the system on that day and time.

Not for Techies
For techies who like to create their own systems and indicators, however, the program is limited. Changes generally cannot be made. OmniTrader is not a black box; you are given the rhyme and reason of why a particular trade is being made. But if you would like to change more than the number of bars that the stochastics is looking back, you will be disappointed. OmniTrader says that the systems and indicators they have chosen are all that a trader needs. This might be true for some, but you really don't have a choice in the matter.

Given this lack of flexibility, it is safe to say this product is aimed at the beginner investor and technician. That said, what I like is that I could throw a whole bunch of indicators on any issue and get a report back in seconds on what worked and what didn't. This aspect, in and of itself, is not a trading system but eventually could become part of one. For example, if one ran the testing module and found out that the S&P 500 had a high level of profitability with MACD or RSI, then one would be wise to incorporate that knowledge into his or her trading system.

OmniTrader is by no means the holy grail. It will, however, start the beginner off on the right foot and give the professional a very quick way of testing hunches on certain indicators in a matter of moments. What used to take months of testing by hand or days by mainframe computers, could now be done in moments on a PC with OmniTrader. With its super-fast speed, you'll even have time to walk the dog.

Paralysis by analysis is one of the most dangerous traps a trader can fall into. Too often, accepted and reliable indicators conflict with one another. By definition, one signal will be right and the other will fail; the mental capital expended in sorting the process out can undermine confidence in system trading and lead to a complete loss of trading discipline.

Wouldn't it be nice, therefore, if we could simultaneously apply a large number of technical indicators to a given data set and have a computer poll the indicators for a composite signal? OmniTrader does exactly that. The Windows-based trading system design and testing package includes over 120 recognized trading methods.

The installation procedure is straightforward, the documentation is clear, the program executes quite quickly, and the whole package is easy (and fun) to use. The software comes with an hour-long video that introduces the product and demonstrates most of its key features. Telephone (non-toll-free) technical support is available from during normal business hours (see Support).

The user interface and output are complete and generally self-explanatory to anyone who spends his day with toolbars, drop-down menus, side windows and push-button icons. The work and forethought in screen design shows. The user can select various chart types and technical studies to superimpose on them. The recommended trades are illustrated with a variety of tags, each of which is hyperlinked to a text box explaining why the signal was generated. Another set of lines can be generated for trading stops, both protective and profit-taking. An interactive "bomb-sight" tool allows for easy data inspection. Finally, a report writer generates trading histories.

OmniTrader tests various trading systems and presents the user with the most profitable combinations. The software comes with two highly attractive features, a "Trading Game," and a "Lab Mode." The Game is a walk-forward simulator that allows a user to imitate real-time trade idea testing. The Lab allows for a data history to be divided into testing and validation samples. The trading universe, or "focus list," to be tested, as well as the trading strategy universe, can both be edited.

OmniTrader's capabilities are impressive; indeed, it is hard to think of additional features that should be included in a data analysis and testing program.

Futures traders should be aware that while the software is shipped with a futures trading module, the emphasis is on the stock side. Many of the technical indicators, such as up volume/down volume, are for equity traders. Systems designed for equity market analysis do not translate readily to commodities markets for several reasons, most prominently because corporations change over time and commodities do not: John Deere is a different entity than it was 20 years ago, but 5,000 bushels of corn is still 5,000 bushels of corn.

Second, equities exist for the life of the underlying company, while futures have a definite expiration. Third, equities throw off a stream of income, while futures trade at a basis to their underlying commodity that reflects a cost of carry. Finally, equities have several powerful institutional imperatives that back an overall up trend, while commodities have no such underlying biases.

Of course, OmniTrader can generate a whole family of trading models, each designed to accommodate a specific underlying security. Because the OmniTrader Lab makes designing and optimizing systems so easy, and because it is human nature to keep tweaking parameters up to and past the point of perceived perfection, this one-model-per-situation outcome becomes likely. Systems designers should see the danger of "curve-fitting" and the resulting non-robust methods rather immediately.

One final note of caution: The video states several times that the user is "the final filter." In other words, a trader can invest considerable time and effort in back testing and design, and then override the whole thing on a hunch. How does this encourage discipline and avoid paralysis by analysis?

For beginning to intermediate level users, OmniTrader can have tremendous value for those learning how systems interact with the market. A user can see for himself the various strengths and weaknesses of different types of technical systems for different instruments under different market conditions. As such, OmniTrader makes an outstanding teaching and training tool.

When Ken Anthony's day as a Westinghouse branch manager is done, his work in technical analysis begins. But he's not one to burn the midnight oil making trading decisions. With OmniTrader(tm), about half an hour every evening is enough to find stocks and commodities that appear ready to make a healthy move in the market.

"OmniTrader saves a tremendous amount of time by automating the tasks associated with technical analysis. This allows me to spend my time making trading decisions based on the opportunities the program has identified," he notes.

While he's at work, Anthony's home PC is scanning the markets for breakouts and volume spikes with a utility that works in conjunction with his data service, Quotes Plus. "When I get home, it's all ready to roll," he notes. OmniTrader takes over at that point, examining the best candidates for technical viability. Securities that receive a strong buy signal from the program then get some human processing from Anthony, who applies simple technical tools such as trend line breaks, volume spikes, peaks, and highs and lows to verify the program's output. Has his diligence paid off?

"Absolutely," he says. "Without OmniTrader, I wouldn't have even seen the opportunities. Time constraints didn't permit me to look at candidates individually, read the research on them and go through the steps of finding companies showing promise of staging a price break-out." The program, he says, has paid for itself many times over, and he considers it to be absolutely fundamental to his success as a short-term trader.

OmniTrader provides automated system testing, automated signal generation, and automatic signal confirmation.

Features of OmniTrader
Profile: Lets you define the securities you want to track and the trading strategy that best fits your personal strategy. Define as many profiles as you like, with each potentially containing thousands of symbols. It automatically reads five popular data formats (MetaStock, Worden, CSI, AIQ, and Omega), so you don't have to convert your existing price quote data.

Test: OmniTrader tests up to 120 systems for each individual security, ending up with the best systems for each individual security. It then tests every system against every symbol on your list to determine whether those systems work together to predict security movement.

Signal: In minutes, OmniTrader examines all your securities using 120 systems, then filters the buy and sell signals to the "voting line" and creates a "focus list" for evaluation and trading decisions.

Voting Line: The voting line shows you the results of OmniTrader's analysis -- all the trading signals (current and historic) for your selected securities. Click on any buy or sell signal and the trading advisor tells you which trading systems generated the signal. The signals are also confirmed by the assistants in the chart.

Focus List: The Focus List is a quick summary of the day's trading signals sorted by advisor rating -- with the highest rating shown first. In a matter of minutes, the focus list displays the securities selected, generates a filtered trading signal based on the systems used and shows an advisor rating ranking the strength and reliability of that signal. The chart is instantly displayed when you click on any symbol.

Maximum Signal Confirmation: The buy and sell signals in the voting line are visually confirmed by signals in the systems area and by the assistants in the chart.

Performance Statistics: OmniTrader tells you how well its signals are performing.

Systems Area: Systems chosen from OmniTrader's testing are listed here, with the best first. Click on any system line and its plot is displayed, providing even more confirmation.

Trading Models: Trading models are additional signal filters for all levels of trading. For example, short-term trending could be used if you want to get in and out of the market in a matter of days. For a trading horizon of several weeks, you might consider medium-term trending. And for a trading horizon of several months, you could use long-term trending.

Automated Assistants: OmniTrader automatically categorizes and displays patterns like trend lines, candles and support/resistance levels. When a pattern is displayed, just click on its tag and the advisor activates to tell you what the pattern is and why it's significant.

Daily and Weekly Signals: OmniTrader generates daily trading signals for the focus list by waiting for multiple signals to line up before taking a trade. To provide further confirmation, OmniTrader can show those signals that are confirmed by weekly signals.

Money Management: OmniTrader lets you record trades right on the chart. You still have to place the trade with your broker, but once you record your fill price in OmniTrader, it will automatically track all your positions. You can set and move stops, and OmniTrader will alert you when stops are hit or positions need to be confirmed. The portfolio manager allows you to administrate several brokerage accounts for stocks, futures, options and mutual funds, as well as maintain paper-trading portfolios.