The ranking methodology option allows you to select the Relative Strength measure that will determine your model rankings and its sensitivity to the changing Relative Strength picture of your universe. The options correspond to the columns displayed when viewing a Matrix
Buy Rank
Buy signals are a longer-term Relative Strength measure, and as a result, changes in Matrix rankings will take longer to develop than with X Rank or Total Rank. Put another way, buy rankings are more stable and may help filter out some of the shorter-term noise that might not be indicative of overall Relative Strength. Buy Rank is the default option and what many of the existing NDW models use. All else equal, Buy Rank will generally result in lower turnover and volatility than X Rank and Total Rank.
X Rank
X Rank measures the number of a security's RS charts vs the rest of the universe that are in a column of Xs. It is an intermediate-term measure of Relative Strength and will result in the most sensitive rankings of the three options. If you choose to rank your matrix by Xs you may choose to adjust another variable to help control the turnover and volatility (sell threshold, evaluation frequency, or matrix box size, for example).
X Rank may be suitable for a “switching model,” where you have a universe of 2 securities and you want to use a Relative Strength column reversal to determine when to buy one or the other.
Total Rank
Total Rank (Buys plus Xs) will generally be less sensitive than X Rank but more sensitive than Buy Rank. You may choose to use Total Rank to leverage the relative stability and inherent noise reduction of Buy signals while also incorporating Xs to speed up your model rankings slightly.