EdgeWare FastBreak Standard Version 5 - Manual (Page 85)

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When using the parabolic stop, FastBreak will not purchase a fund if it is trading below
its parabolic because the fund would be stopped out the following day.
Graphically, the mutual fund NAV and corresponding parabolic value look as follows:
Parabolic
0
10
20
30
40
50
60
0 100 200 300 400 500
Trading Days
NAV, $
NAV
Parabolic
Kase Dev-Stop
The Dev-Stop system was developed by Cynthia Kase and is explained in her book Trad-
ing with the Odds. The Dev-Stop can be used to trade both long and short positions.
FastBreak uses the system only to generate sell signals. The advantage to the Dev-Stop
is that the stop point is adjusted for the volatility of the fund. More volatile funds have
wider stops than less volatile funds. The fund is sold when the NAV drops below the
Dev-Stop value. The Dev-Stop formula can be summarized as follows:
Dev-Stop = Trade_high - ATR - #SD x SD
Where:
Dev-Stop = Dev-Stop value
Trade_high = NAV high since the trade began
ATR = Average True Range
#SD = Number of standard deviations on true range
SD = Standard deviation of the true ranges
The ATR is the average of the daily true ranges. Since mutual funds do not have a daily
range (only closing prices) as stocks do, FastBreak calculates a synthetic true range by