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July 22, 2024

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Insider TA™ Version 7.5

  • Overview
  • Equivolume Box Charting
  • Box Analyzer (BA)
  • Volume Analyzer (VA)
  • VA RANK Function
  • Consolidation Mapping
  • Candlestick Charting
  • Candlevolume Charting
  • Point & Figure Charting
  • Data Requirements
  • Stoploss and Trailing Stop Signaling (Pro Version only)
  • Backtesting (testing for effectiveness) with the BAYld(S/O) value
  • Recommended Reading
  • Versions available & Pricing

  • Overview

    Insider TA™ by Stock Blocks Inc® is a technical analysis program for Windows 10/8/7 computers. This page provides a brief overview on Insider TA's analysis methods and interactive environment. It's interface and method of data presentation is unique, and as such we hope it will compliment your existing set of investment tools.

    A good overview on Insider TA's concepts and functionality can also be found in various program reviews (the first one published in June 1996) by Technical Analysis of STOCKS & COMMODITIES magazine. The latest of these reviews is in their November 1999 issue.

    Insider TA Professional and Standard edition can download free ASCII data from Alpha Vantage. (Note: IEX Cloud has changed their business model recently, making it less desirable for Insider TA.) This utility is fully documented in the help documentation that is provided with the Insider TA demo software. After installing, open up the help and search for ASCII File Downloader.

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    Equivolume Charting

    Price Range and Volume reflects the box shape

    Insider TA's charting technique embraces Equivolume Charting where each trading period's high price, low price, and volume define the plotting coordinates of a box. Sometimes referred to as "box charting" in our documentation, this innovative technique is the creation of Richard W. Arms.

    When plotted using this method, the resulting graph reveals a chain of boxes with varying shapes. The shapes, which are quantified by the boxes' height-to-width ratio, are viewed as significant forecasting signals.

    Equivolume charting, or "box charting", was never thoroughly exercised in other software packages, simply because the vertical and horizontal graph scales were always constrained to fixed scaling. Insider TA breaks this barrier and exploits the concept of box charting by allowing you to flex the plotting scales through its interactive viewport. The ability to pan, zoom, stretch, and compress the charts in real-time (that is, without the need to pull down a menu for redefining new plotting parameters) is one of Insider TA's more popular features. Once you get accustomed to Equivolume charting, you may find it to be your preferred viewing environment.  Other volume-based indicators, like Insider TA's Box Analyzer and VA Rank functions (discussed below), can then be used to search for potential buy and sell points.

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    Box Analyzer (BA)

    Box Charting relies on our cognitive ability to pick out trends in box shapes. This often becomes difficult, primarily due to the sometimes erratic fluctuations a stock may travel on a day-to-day basis. To aid in this task, and based on Richard Arm's Ease of Movement (EMV) analysis, Insider TA has a Box Analyzer (BA) function which provides insight on how the box shapes are trending. The output of this numerical-based trend analysis is plotted in an independent BA Graph window. Insider TA produces "buy" and "sell" tags that signals when the box shapes begin to trend in a way that may indicate a reverse in price movement.

    Vtel Corp (Daily: 12/13/94-1/12/96)

    The above example illustrates how the BA Function can filter the seemingly chaotic behavior of box shapes, and reveal trends that could not have been detected otherwise. Two very well-placed BA buy/sell tags have been calculated, all based exclusively on past behavior.

    When using the BA Function, we look for an overall consistency in the accuracy of multiple BA buy/sell pairs in a box chart. If they are well placed, as shown above, then we have a better chance of accurate hit rates for future buy and sell tags.

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    Volume Analyzer (VA)

    Insider TA's Volume Analyzer (VA) stems from the concept of On-Balance Volume, or OBV. This is a simple accumulator function that counts volume based on up and down days. Introduced by Joseph Granville, OBV uses closing price for determining up/down days. Insider TA's implementation modifies this concept... assuming that the "closing" price is merely an instant in time, with no inherent significance, the up/down volume accumulation is better calculated by basing it on the price midpoint, or the average of the high and low for the day.

    The VA, like the OBV, assumes ALL volume on any given day was either up or down, depending on the midpoint price move. A more precise approach would involve detailed analysis on volume/price performance throughout the day, commonly referred to as the Cumulative Volume Index, or CVI. Unfortunately (or fortunately perhaps, for simplicity sake!), stock listings only provide the high and low, so taking a simple average is our best approach.

    Simply put, the Volume Analyzer function is a rough measure of the demand for a stock. We quantify the plotted VA Line by calculating the "Up Volume to Down Volume" ratio, or UV/DV. As in the VA calculation, this is based on price midpoint and not the closing price. UV/DV ratios greater than 1 signify an inclining VA Line; less than 1 signify a declining VA Line. One of our primary tenets is to buy (long) a stock only if the VA line is on an incline (UV/DV > 1.0).

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    VA Rank Function

    Insider TA extends the VA concept with an additional function that measures the relationship between a stock's price and its corresponding VA level. Large gaps between the Price line and VA line are given high "ranks", and may signal possible "buy" points. Small gaps are given lower "ranks", and may signal possible "sell" points. The VA Rank Function plots these rank values in a separate graph. Observe the data for DSP Technology (ticker DSPT) in the following graph...

    DSP Technology (Daily: 7/16/93 - 11/30/94)

    The resulting peaks and valleys observed in the VA Rank function reflect possible "buy" and "sell" points. By positioning the two horizontal lines (shown above as "BUY @ 91%" and "SELL @ 51%" in the VA RANK FUNCTION window) so that they pierce the major peaks and valleys in the VA Rank Function, we arrive at some pretty accurate buy/sell tags.

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    Consolidation Mapping

    Box charting's visual presentation of data causes a person to mentally combine ideas, data, and information in a totally unexpected way. The symmetry that arises when plotting along a volume scale offers a means to examine and evaluate information not attainable by other charting methods. Consolidation markers help to map these symmetrical regions. When viewed in a box chart, consolidation periods are marked by a horizontal band of boxes within a fairly constant price range. Boxes in these areas will generally be "flat" in shape (i.e., shorter and wider), reflecting larger volume because the buyers and sellers are executing their trades with little resistance.

    In some cases, after all interested parties have fulfilled their desires (of either acquiring or ridding their shares), volume tends to diminish. This point in consolidation may signal an impending move, but wait further until you see which direction.

    When boxes begin to diverge from a consolidation period, increased trading activity (sometimes more of a frenzy) stimulated by the forces of fear and greed begins to drive a stock price to new levels. Based on Arms' theory, this is where consolidation mapping comes into play: Relying on the assumption that all traders who bought shares during the consolidation period are now selling (either to take profits, or diminish losses), we can deduce that the sum of all shares involved in the consolidation period will approximately equal the sum of shares involved in the price move.

    Since box charting is plotted on a volume scale, it follows that the horizontal distance of the consolidation period will approximately equal the distance of the move. Observe the following example of Federal Express. Here, we defined a consolidation period from 5/5/95 to 7/24/95 (Box #380). Insider TA mapped out an equidistant range from 7/24/95, and successfully placed a marker at the end of the price advance (11/6/95). Had we performed this analysis shortly after 7/24/95, we would have had a significant indicator on when to sell Federal Express.

    Federal Express (Daily: 10/4/94 - 1/12/96)

    Note that consolidation mapping cannot predict how high or low a stock will advance. Instead, it can be an effective tool in timing the duration of a stock's move. Insider TA allows you to insert up to three consolidation periods (actually 30, because you can define up to 10 views) in your viewport. By drawing out what you believe is the consolidation period, Insider TA will show an equally distanced period to its immediate right, in effect "mapping" out how far the projected price advance should progress.

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    Candlestick Charting

    Candlestick charting is supported by Insider TA, provided your stock data includes Open and Close price on top of the minimum requirements of High, Low, and Volume. Candlestick plotting is not a volume-oriented method of analysis, but some prefer it's graphical presentation over box charting, so we have included this option.

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    Candlevolume Charting

    Insider TA can generate box charts with candlestick-styled characteristics.  The result is known as Candlevolume charting, and is quite popular for those who want the best of both worlds.  In this mode, a traditional candlestick chart is drawn with each candle's width reflecting the volume for that day.  This feature is toggled on/off by pressing Control V on the keyboard.

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    Point & Figure Charting

    Ok, so Point & Figure charting isn't a volume-oriented analysis technique.  But it's uniqueness and popularity in the technical analysis community has made it a good addition for Insider TA's toolbox.

    Refer to the handling of Point & Figure in Insider TA.

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    Data Compatibility

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    Recommended Reading

    Insider TA's box charting principles is based on Richard Arms' Equivolume charting techniques.  For more information on this topic, we recommend you read his book, titled Profits in Volume - Equivolume Charting .

    Another book we recommend by Equivolume Charting expert Richard Arms is Trading Without Fear .

    Point & Figure charting is covered quite well in a book by Thomas J. Dorsey, titled Point and Figure Charting - The Essential Application for Forecasting and Tracking Market Prices .

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    Future Versions

    Insider TA is continuously evolving. Updates are available with Insider TA's Internet Update Utility to ensure you always have the latest-and-greatest software build for the version that you have purchased.

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    Insider TA is available in two levels: Standard and Professional. For a side-by-side comparison and current prices, please refer to this page.

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