Discerning Portfolio Patterns Using Data Animation by Bruce Peterson, PhD
Here is a method using animation that helps you visualize
patterns of stock behavior for an entire portfolio.
Traders have long used technical indicators and
charts to identify patterns characterizing trading
opportunities for individual stocks. With the
advent of fast computers and easily available historical data, the number of indicators and charts available
has greatly expanded. This can become burdensome when
tracking a portfolio with many stocks. A dozen stocks with
five charts each result in 60 charts to be reviewed and actions
A VISUAL TREAT
Data animation is a method to present stock data for the portfolio
as an interactive animation. Standard static charts plot a
technical indicator as a function of time in a time series plot.
In data animation, time is an implicit variable used to index
a sequence of animation frames. Key independent technical
indicators are used to define the axes of a three-dimensional
plot in each frame. A symbol for each stock in the portfolio
is placed in the plot according to the value of its technical
indicators at that time.
A portfolio trading policy is the set of rules used to select an
action such as buy, sell, short, cover, or watch to be performed
with stocks in the portfolio. A policy based on static charts
is typically set with empirical pattern recognition methods. These are difficult to implement consistently or algorithmically
within a portfolio. Trade actions may
be instigated based on different patterns for different
stocks. Empirical patterns may be difficult to code
in a form sufficiently precise for a computer.