• TECHNICAL ANALYSIS BLOOMBERG


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TECHNICAL ANALYSIS
BLOOMBERG
RaSHeeD AbaD
BLOOMBERG FUNCTIONALITY:
The following is a list of technical analysis tools that can be utilized using a Bloomberg
terminal.
Moving Averages:
Simple Moving Average
Exponential Moving Average
Moving Average Envelopes
Variable Moving Average
Weighted Moving Average
Triangular Moving Average
Moving Average Convergence Divergence (MACD)
Boiler Bands
Trading Envelopes
Keltner Bands
Oscillators:
Relative Strength Index (RSI)
Stochastics
Directional Movement Index (DMI)
Williams %R
Commodity Channel Index (CMCI)
Rate of Change (ROC)
Chaikin Oscillator
Chart/Graphics:
Daily, weekly, monthly, quarterly, yearly
49 Different Chart types (Bar, Candle, etc.)
Trend Line
%Change
Fibonacci
Regression
Drawing Tools
Other:
Demark Indicators
General Overview Chart
Parabolic Studies
On Balance Volume
Hurst Exponent (HURST)
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BTST
Other technical analysis websites
TUTORIAL
This tutorial is designed to introduce the user to the technical analysis features in
Bloomberg. If you are a first time user of Bloomberg it would be advisable to go through
a Quick Start Guide to help you become familiar with the general Bloomberg
environment. However, as long as you know how to log onto a Bloomberg terminal this
tutorial is designed to be a self contained document. If you are a first time Bloomberg
user, make sure to create a separate login so your work will be saved accordingly.
*A key stroke will be indicated by:
Log into the Bloomberg terminal.
For this tutorial we will be using the stock Yahoo (NYSE: YHOO).
On the upper left corner of the screen type: YHOO G .
Figure 1
Any technical analysis studies you create will be saved on this worksheet page for
future access. At anytime during your session you can return to this page by
typing: G .
Add a new worksheet by either clicking Add Worksheet or typing: 1 .
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The following pop-up window should appear.
Figure 2
Either click on Single Security Historical or Type: 1
Figure 3
The popup window asks you to title your graph. This is the title that will appear
on your worksheets page for future access. Since the sample equity we are using
is Yahoo we will title the plot Yahoo Plot.
Type: YAHOO PLOT
Figure 4
The Date Range pop up window allows you to specify the date range, frequency
of data, and if you would like to Roll the chart to the end date (Include the last
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date specified on your graph). Make sure all your parameters looks like the above
window.
Once you have finished entering the parameters type:
Figure 5
This pop-up allows you to specify how the price information will be displayed on
the screen. There are 49 choices to select from. In order to view all the choices
press the button on the Bloomberg keyboard.
We will choose a Bar Chart for our data.
Either click on Bar Chart or type: 1
Figure 6
At this point the Edit Your Graph pop-up appears and you should be able to see
the graph of yahoo in the background.
Either click Add Study or type: 1 .
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Figure 7
The Studies List pop-up window appears. Press to view all the possible
studies that can be used.
In this case we will just select a Simple Moving Average (SMAvg) .
Either click Simple Moving Average (SMAvg) or type: 1 .
The Edit Your Graph pop-up window appears again. Either click menu or type:
.
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Figure 8
The plot of Yahoo weekly prices and a simple moving average appears.
Let s change the moving average to a 14 week duration.
On the upper left hand corner of the screen click Edit: Existing Study.
Figure 9.
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Either click SMAvg (5) on Price or type: 2
Figure 10
Either click Change Properties or type: 1
Figure 11
Change the Period to 14 weeks.
Type:
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Figure 12
A plot of the 14 week moving average now appears on your plot.
Let s try adding an exponential moving average to the plot.
Click Edit: Add Study: Exponential Moving Avg (EMAvg)
Change the properties of the exponential moving average to be a 14 week time
frame so it can be compared to the simple moving average. This can be done the
same way you changed the properties of the simple moving average.
Once completed your plot should look something like this.
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Figure 13
The dotted line in the above figure represents the exponential moving average.
Notice that the exponential moving average is more sensitive to price changes
than the simple moving average.
You may have already noticed that there are three buttons on the upper left hand
corner of the screen- Worksheet List, Edit, and Options. We have already used
some features of the Edit button. Below is a description of each button.
o Worksheet
This button displays a list of worksheets that have been created for
easy access.
o Edit
Title- Changes the title of the worksheet.
Add Study- Add a technical analysis study to the current
worksheet.
Existing Study- Allows you to change a study that has already
been created.
Dates/Periods- Changes the dates or the periods of the price data
displayed.
Add New Data- Adds data such as a volume histogram, implied
volatility, and call/put volume.
Defaults- Changes the default security for your worksheet.
o Options
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Send Worksheet- Sends the graph via Bloomberg email to another
Bloomberg user.
Delete Worksheet- Deletes the worksheet you are currently
working on.
Copy Worksheet- Copies the existing worksheet and sends it to
another template.
Go back to the worksheets page by type: G
Figure 14
Your Yahoo Plot should now appear on the worksheet menu as shown in the
above figure.
The same study that was done for yahoo can be applied to any other security.
Notice that each worksheet is labeled G1, G2, G3 (Your yahoo plot might have a
different label depending on if prior worksheets were created during your
session.). If you want to apply your yahoo study on IBM stock type the following:
IBM G3 .
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Figure 15
The same studies that were selected for Yahoo stock is now applied to IBM stock.
Below the Worksheet, Edit, and options buttons there are several other buttons
that are listed across the screen that have some useful utility. Before we start
going over each of these buttons it is important to make sure your technical
analysis defaults are set up correctly. Type: TDEF
Use the button to view the fourth page of the screen.
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Figure 16
Setup your defaults to match the defaults in the above figure.
Go back to the IBM worksheet. Type: IBM G3
The following will describe each of the buttons on the top of the screen below the
three main buttons.
o Show Legend- A legend will be displayed if this button is selected.
Last price- The last price that is displayed within the time frame.
High Price- The highest price that is displayed within the time
frame.
Average- Average of all price data displayed within the time
frame.
Any other statistics on studies you have added to your graph. In
this case the closing price of the 14 week simple and exponential
moving averages.
Figure 17
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o Track Mouse- This feature changes the mouse pointer to a cross hair and
allows you to track the date (bottom of screen) and the price (right side of
the screen) of the location of the cross hair. By turning on this feature the
Legend button will automatically turn on displaying statistics of the price
data where the crosshair is.
o Annotations- several of the graphical features in Bloomberg can be found
here.
Trend Line- Use this feature to draw trend lines on your graph.
This can be done by clicking the area of the graph you want the
trend line to begin and then dragging over to where you want the
trend line to end. If you would like to create a continuously
extending trend line simply click the point where you want the
trend line to intersect and rotate the line accordingly by moving the
mouse. Below is an example of a trend line drawn on our IBM
study.
Figure 18
%Change- Percent Change is used to easily calculate the percent
change from one designated level of the graph to another. This can be
done by clicking and dragging to the two desired levels. Below is an
example of a percent change graphic.
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Figure 19
Fibonacci- There are two choices for a Fibonacci study- Retracement
and Projection. They are the exact reverse of each other. Click your
mouse on the graph and drag until the desired position of the Fibonacci
levels is achieved. Below is an example of a Fibonacci retracement for
IBM stock.
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Figure 20
Regression- There are three choices for a Regression study-
Regression, Regression+1SD, and Regression+2SD. A regular
regression will plot the linear regression line for a designated area of
the graph. The 1SD and 2SD stand for 1 standard deviation and 2
standard deviations from the regression line. The below plot shows an
example of all three types of regression lines.
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Figure 21
Arrow/Circle/Rectangle- Select any one of these features to draw an
arrow, circle, or rectangle on your plot.
Magnet- Magnet helps you connect the maximum or minimum price
to a trend line you are attempting to draw. Generally, this feature
should be turned on when drawing trend lines to maintain accuracy.
Copy- This feature copies an existing annotation for use somewhere
else on your graph.
Delete- Deletes an existing annotation.
Delete All- Deletes all existing annotations. A screen will pop up
asking if you really want to do this to ensure that you select this
feature by accident.
o News- There may be a point on your graph that exhibits a large decrease or
increase in the price of a stock. If you want to view the news for the given
security on that specific day then turn on this feature. Click the price where
you want to see the news for that give day. A screen will pop up with the
headlines for that day. Type to go back to your graph.
o Zoom- This feature can be used to zoom in on a particular area of the graph.
Using your mouse, click and drag the mouse to form a rectangle around the
area where you want to zoom in. When you have selected the area, release the
mouse, and the graph now zooms into that particular area. Double-clicking
into the middle of the chart resets the original chart defaults.
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o Study- This feature is useful when your graph starts to become cluttered and
you want to temporarily remove some of the annotations or studies you have
created. Click the annotation/study you want to temporarily hide from this
study menu.
BTST
Bloomberg has a very nice feature to compare technical buy/sell signals for a
specific security and time frame and to determine which indicators tend to be the
most effective for different industries and volatilities. This feature can be accessed
using the BTST command.
Type: THQI BTST (THQ Inc. is a developer and publisher of
interactive entertainment software.)
The following screen should pop up.
Figure 22
The BTST screen shows a menu of the technical analysis technique employed as
well as the number of trades executed, Profit/Loss, and the parameters of the
specific indicator. (NOTE: A number in parentheses in the Profit/Loss column
indicates a loss.). At the bottom of the screen the Profit/Loss of a Buy and Hold
Strategy is displayed for comparison purposes. Note that for this particular
security, 3 of the techniques listed outperformed a buy and hold strategy. Of
course commissions were not taken into account in this example.
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There are several parameters that need to be filled in at the top of the screen. The
following will describe each of these parameters.
o Date Range/ Period Used to specify the date range and the frequency of
price samples that will be used for each of the techniques.
o Investment- Specifies your initial investment.
o Trading Approach- There are three choices for your trading approach:
Long and Short, Long positions only, and Short Positions only. Long
positions will only trade when the technique indicates a buy signal. Short
positions will only trade on a sell signal. Long and Short positions will
trade both on buy and sell signals.
o Trade Price- Specifies whether you would like the price of the security to
reflect today s close or tomorrow s open.
o Parameters- You may not like the default study parameters that
Bloomberg uses. If this is the case, select User defaults from this menu. In
order to change the defaults of the techniques you must go to the TDEF
page and make the necessary changes. Type: TDEF . Make sure that
your changes have been saved before going back to the BTST screen.
o Commission Type/Commission Rate- This is an area that should not be
overlooked when trying to identify a good technique to use. If this field is
not filled in, often times a technique will indicate substantial profits with
multiple trades. Of course the commission costs on executing multiple
trades will eat up some of this profit leading to misleading results if some
type of commission is not entered. Depending on which medium you are
trading through the commission could be based on a per share, per trade or
a flat percentage basis. Select the field that best represents your situation.
o Slippage- The difference between estimated transaction costs and the
amount actually paid.
TCAN
There are several websites that can utilize technical analysis techniques. Using the
TCAN command will present a list of such websites. A popular one to go to is
www.bigcharts.com.
RECOMMENDED RESOURCES
There are several resources available that can be used to assist you in
understanding the main concepts of technical analysis.
Bloomberg
o NI TA: This command will allow you to view articles posted daily on
technical analysis. Articles on equities, indexes, treasuries, futures, and
currencies will be included.
Websites
o http://www.equis.com/Education/TAAZ/ : This is an excellent
introduction to technical analysis by Steven B. Achelis.
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o http://www.investopedia.com/university/technical/ : This is another
excellent introduction that focuses on the tools used in technical analysis.
Books- The Georgia Tech library has copies of all these books.
o Technical Analysis Explained: The successful Investor s Guide to
Spotting Investment Trends and Turning Points. Author: Martin J. Pring
o Technical Analysis of the Financial Markets: A Comprehensive Guide
to Trading Methods and Applications. Author: John J. Murphy
o Technical Analysis of Stock Trends. Author: Robert D. Edwards and
John Magee
o The Technical Analysis Course: A Winning Program for Investors &
Traders. Author: Thomas A. Meyers
o Timing the Market: How to Profit in Bull and Bear Markets with
Technical Analysis. Author: Curtis M. Arnold
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