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Vector Vest review (www.vectorvest.com)
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Vector Vest review (www.vectorvest.com)

  #1 (permalink)
Elite Member
shreveport
 
Futures Experience: Advanced
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Posts: 7 since Mar 2012
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Vector Vest review (www.vectorvest.com)

I'm sure everyone here is aware of VectorVest and has received mail or email from them at some point over the years. There information seems to be very accurate and reliable. Their timing indicator indicating the market is close to turning is very accurate. I would like to know if there is anyone here who has used VV for trading, swing or position trading and made money. Or, have you used VV information and combined it with your own strategy and made money. Their information seems to be too reliable not to be able to make money with it. I've only tried their trial's a couple of times. Only serious traders with experience using VV please reply. Don't want to get into ongoing debate about how good or bad, etc. about VV. I think we will all be better served from posts by those who have some real input to offer us. Thanks.

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  #2 (permalink)
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  #3 (permalink)
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Platform: TradeStation, NinjaTrader, Market Delta, TOS, StreetSmartEdge, OptionXpress
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Wow... nobody ever replied to this thread?

I'm also interested in this information. I've used IBD and managed my own long term portfolio with relative success, but it's time consuming (and I don't use IBD's market sentiment very closely because they are always late, but gives me an extra confirmation - if I'm long and the market is in uptrend - or prevent buying more stocks if in a correction or uptrend under pressure).

Would love to hear someone with real-life experience using this tool. As usual researching in the internet reviews go from it's a scam to the best tool in the world. And I'm aware you can do a trial, I just don't want waste time before hearing some good feedback as you can spend your entire life on trials these days...

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  #4 (permalink)
Elite Member
Chicago, USA
 
Futures Experience: Advanced
Platform: TradeStation, NinjaTrader, Market Delta, TOS, StreetSmartEdge, OptionXpress
Favorite Futures: ES, currency futures, options, stocks
 
Posts: 182 since Dec 2010
Thanks: 283 given, 246 received

My review...

Ok… since I didn’t hear from anybody’s experience on VV. I decided to sign up for VV and test it myself. So far, I seem to like it quite a bit. The platform is simple and easy to use, and allows you to do all kinds of backtests that include some ‘fundamentals’, which I think is very nice. In few minutes, I loaded one of my portfolios and realized there were better stocks out there that I could buy.

Keep in mind that VV is suited more to an investor than a trader. So, I don’t think it’s a platform we would compare to TradeStation or TOS. It’s geared towards a person looking into a more long term type investment. So, as most fund managers can’t even beat the S&P, I would say anything above 10-15% annually should be great for most people (again this is not trading, and I’m assuming people would be investing large quantities of money for retirement, next house, etc…).

Back to the platform, they have their own rating system, based primarily on 3 variables (RV, RS, RT) and a composite variable called VST (definitions copied below from their web site):

Value: Value is a measure of a stock's current worth. Value is computed from forecasted earnings per share, forecasted earnings growth, profitability, interest, and inflation rates. Value increases when earnings, earnings growth rate and profitability increase, and when interest and inflation rates decrease. VectorVest advocates the purchase of undervalued stocks. At some point in time, a stock's Price and Value always will converge. Although, this is not one of the 3 key variables, they recommend buying ‘undervalued’ stocks.

RV (Relative Value): RV is an indicator of long-term price appreciation potential and measured on a scale of 0.00 to 2.00. This indicator is far superior to a simple comparison of Price and Value because it is computed from an analysis of projected price appreciation three years out, AAA Corporate Bond Rates, and risk. RV solves the riddle of whether it is preferable to buy High growth, High P/E stocks, or Low growth, Low P/E stocks. VectorVest favors the purchase of stocks with RV ratings above 1.00.

RS (Relative Safety): RS is an indicator of risk and measured on a scale of 0.00 to 2.00. RS is computed from an analysis of the consistency and predictability of a company's financial performance, debt to equity ratio, sales volume, business longevity, price volatility and other factors. A stock with an RS rating greater than 1.00 is safer and more predictable than the average stock in the VectorVest database. VectorVest favors the purchase of stocks of companies with consistent, predictable financial performance.

RT (Relative Timing): RT is a fast, smart, accurate indicator of a stock's price trend and measured on a scale of 0.00 to 2.00. RT is computed from an analysis of the direction, magnitude, and dynamics of a stock's price movements over one day, one week, one quarter and one year time periods. Once a stock's price has established a strong trend, it is expected to continue in that trend for the short-term. If a trend dissipates, RT will gravitate toward 1.00. RT will explode from bottoms, dive from tops, and reflect changes in price momentum. VectorVest favors the purchase of stocks with RT ratings above 1.00.


VST (VST-Vector): VST is the master indicator for ranking every stock in the VectorVest database and measured on a scale of 0.00 to 2.00. VST is computed from the square root of a weighted sum of the squares of RV, RS, and RT. Stocks with the highest VST ratings have the best combinations of Value, Safety and Timing. These are the stocks to own for above average, long-term capital appreciation. VectorVest advocates the purchase of safe, undervalued stocks rising in price.

They also have a ‘main screen’ or ‘Home’ screen that like IBD’s ‘Big Picture’ gives you an overview of the market and if it’s safe or not to buy stocks. They have few indicator based (they call it rule-based) indicator systems to alert of market’s turning point. These are the key signals based on how fast or early they will prompt for a turn (of course the faster, more signals, and more fake outs as any other indicator based system): ‘RT Kicker Combo’ (RTC) ), ‘Green Light Buyer’ (GLB), or the ‘Confirmed Market Call’ (CC).

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).

VectorVest home screen above.

Experience so far:
After downloading the software and watching the instructional videos, it was super easy to be able to use VV effectively. I don’t think I got up to speed that quick in any other platform I used before. It literally just takes you few hours and you will be able to explore quite well the features of the platform.

So, my next step was to test some ‘portfolios’. I decided to run the portfolios they have on the basic instructional videos, since the results were impressive. I run a couple of them and guess what, my results were different, and also if I run those portfolios on other periods of time the results weren’t that great. At this point my blood pressure started to climb, and I thought, ok… maybe I have another company just trumpeting how good their software is, and picking and choosing specific times when things just works well and I’ve seen this movie many times before. I picked up the phone and called Technical Support. Surprisingly, the person on the phone was very knowledgeable and recreated the same backtests as I did, and explained test by test why the results were different if you run a test in a different point in time (we looked at which stocks were bought and sold at specific times). Things as simple as stock splitting, delisting and other market events will cause backtests to depend on the time they are run, which made sense to me.

So my next step was to recreate the ‘canned’ recommended portfolios as they are run to the current date, and I should get very similar results, and they did. I’m posting some of them here, so if you have questions or ideas for better backtests, let me know and I will be glad (time permitting) to run them and post. They don’t have their own Forum, so I guess if there is a larger group of users of VV we could exchange ideas here. They do have ‘in person’ user groups meetings, and I plan to attend the next one near my location to exchange experience with people that have been using this software for years. I’m also planning to meet a person that uses this for over 5 years in a few days.

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  #5 (permalink)
Elite Member
Chicago, USA
 
Futures Experience: Advanced
Platform: TradeStation, NinjaTrader, Market Delta, TOS, StreetSmartEdge, OptionXpress
Favorite Futures: ES, currency futures, options, stocks
 
Posts: 182 since Dec 2010
Thanks: 283 given, 246 received

My own backtest of canned RTC - Great Growth Stocks

The recommended trading systems are called Sure-Fire success. As I said in my previous post, instead of just plotting their results I thought would be more interesting for me to recreate the rules of their system and run against their database (so I can also change time span, etc.) and use it as a learning experience (and to be honest I’m always skeptical and wanted to see each traded stock, when bought, sold, etc. using my own ‘recreated’ rules for the system).

This one is called RTC-Great Growth Stocks:
Name: RTC-Great Growth Stocks
Signal: RT Combo up
Stop Loss: 10% Trailing, 50% Target Gain
Max # of Positions: 10
Turn Action: No action on Turn
Initial Capital: $100,000.00
Commissions: $9.95

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I thought this was very interesting, in a bit more than 3 years (12/30/2011 to 02/13/2015) it gave an ARR of 28.62% and a CROR of 22.69% with a max drawdown of only 8.66%.

The application also creates a nice summary report:

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  #6 (permalink)
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Platform: TradeStation, NinjaTrader, Market Delta, TOS, StreetSmartEdge, OptionXpress
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My own backtest of GLB-Safe and Sound stocks

This canned portfolio looks for as the name says ‘safe and sound’ stocks like Apple, Starbucks, Ross, TJX, etc. It gears towards the more prudent investor, that doesn't want to be buying and selling a lot of stocks (more of a buy and hold type style).

Here are the basic rules I had to recreate and the results.

Name: GLB – Safe and Sound
Signal: GLB Up
Stop Loss: VST < 1
Max # of Positions: 20
Turn Action: No Action on Turn
Initial Capital: $100,000.00
Commissions: $9.95

Btw, I could put the entire list of transactions, but I’m going to refrain from that as I’m not sure if that would be allowed according to their subscription agreements. What I’m sharing here are things I've seen in public VV webcasts. So, I don’t think I should be infringing any subscription agreement. More likely I may be helping their case, as here is a user recreating and showing the validity of their portfolios…

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I found this one to be interesting also. Look at the commissions during the 3 year period, it is very low. The stocks selected were triggered in the initial backtest date, and there was very little changes during the entire period as a sell would only be triggered if the VST would turn lower than 1 (remember the VST, is the composite of RV, RS and RT). ARR and CROR were good also.

I should say that I tried several of my own ideas during my brief period with VV, changing the stops, targets, searches (they have maybe a hundred or more canned searches), and these canned portfolios do seem to be something they’ve worked for a while to optimize as I was not able (again during my brief tests) to beat those so far for such a large period of time. The rules of the Sure-Fire (the canned ones) are so simple that I thought I would be able to quickly find something better, but I guess I’m wrong. If I find one with my own rules and search that beats their 5 canned ones I will post it here. And again, if you have your own suggestion I will be happy to give it a try.

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  #7 (permalink)
Elite Member
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Futures Experience: Advanced
Platform: TradeStation, NinjaTrader, Market Delta, TOS, StreetSmartEdge, OptionXpress
Favorite Futures: ES, currency futures, options, stocks
 
Posts: 182 since Dec 2010
Thanks: 283 given, 246 received

My backtest of a long/short aggressive canned portfolio

Now I wanted to check one of the canned portfolios (Sure Fire) that would be more aggressive on buying, but also on selling/shorting. So I recreated the CC-S&P500 WINNERS VERNS VULTURES portfolio. This portfolio uses as the name says S&P500 stocks with great VST for Confirmed Call Up signals, and go short on vultures stocks for Confirmed Call Down signals. It’s intended to be traded during Confirmed Up signals with a 50% gain and 10% loss Stop Combination. It’s as said complementary short search with a 10% trailing stop. If you didn’t notice so far, this one will trigger on bear signals also (Confirmed Call Down) shorting very bad stocks in the Vern’s vultures search, while the other ones (GLB-Safe and Sound and RTC-Great Growth Stocks) just went long and sold when stop or target reached.


Name: CC -S&P500 WINNERS G/L 50/10 / VERNS 10% TS
Signal: Confirmed Call Up
Search: CC – S&P 500 Winners
Stop Loss: 50% Gain 10% Loss
Turn Action: Close all short positions
Signal: Confirmed Call Down
Search: Vern’s Vultures
Max # of Positions: 5
Stop Loss: 10% Trailing
Initial Capital: $100,000.00
Commissions: $9.95

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I backtested this one during the same period they have in their database (12/18/2012 to 02/13/2015) which is a little more than 2 years. As we have been in a very bullish period there wasn’t much activity mainly in the short side (check the very low commissions) and the ARR and CROR are excellent (43% and 36% respectively). Drawdown is also small (10%). Not sure why they chose the smaller period on this one.

I guessed this portfolio would work better during volatile times although most likely not as great returns, so I decided to run this backtest during the great recession covering 2008-2009. So I started the backtest in 2006 and run until Feb 2015. Results are below.

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As you can see this portfolio, because it takes advantage of going short on down signals was able to sustain a CROR of 10.87% during the 9 year period. The drawdown was as expected much higher (27%) due to the extreme volatility of the 2008 2009 years.

Before I forget, I should also mention that VV allows you to integrate with TradeKing for automatic execution (which I don't plan to do at the moment). I contacted them, and they may be integrating other brokers in the future. Right now, I will just use their alerts for when to buy/sell/short a stock with my current brokers.

Ok… I will stop here now as I have a lot to do to prepare for my work week. I will wait for questions before I post more things about VV. Not sure how many people here are interested in longer term, larger capital type investments. I guess the posts above gave a good idea of the software.

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  #8 (permalink)
Elite Member
chapel hill, nc
 
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Hello dstrader - I appreciate your ports on VV. I think of trying VV every time I get their big multi-page flyer in the mail! I have a request to you - Could you show an overlay/comparison of VV Composite to S&P500 index? In other words, can we trade SPY following the timing of VV Composite? Or is there a single/synthetic instrument that can be used to trade VV Composite? Thank you very much.

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  #9 (permalink)
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Futures Experience: Advanced
Platform: TradeStation, NinjaTrader, Market Delta, TOS, StreetSmartEdge, OptionXpress
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Posts: 182 since Dec 2010
Thanks: 283 given, 246 received

Yes, you can...
As a matter of fact I run several tests with different 'signals'. See below.

First, let's see what would happen if you buy SPY during the period and do not touch it:

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As you can see above, during the period of the backtest (12/30/2011 to 02/13/2015) you would have your $100k grow to $164K (CROR of 17.19%) if you just bought $100K on SPY and hold it.

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  #10 (permalink)
Elite Member
Chicago, USA
 
Futures Experience: Advanced
Platform: TradeStation, NinjaTrader, Market Delta, TOS, StreetSmartEdge, OptionXpress
Favorite Futures: ES, currency futures, options, stocks
 
Posts: 182 since Dec 2010
Thanks: 283 given, 246 received


Now, let's try to buy SPY when we get a 'Confirmed Call' signal (their slowest signal) and go to cash when we get a down signal.

This is what you get:
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So, your $100k now is worth 120K during the 3 years approximately. A CROR of 6.01%. You end up making less money.
This makes sense to me, because if it was that simple with just a signal to beat the market we all would be rich.

I would expect even worse if we short when we get a 'Confirmed Call' signal. This is what we get (long SPY on CC/up, short CC on CC/down):

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Your $100K is now worth $87K. So as expected you end up losing money during the period (confirming that buying and holding during a bullish period is probably your best strategy)

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