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Alan:
Andrews Pitchfork seems to give signals similar to Raff Regression channel.
Raff Regression Channel has the BIG advantage of being objective, while
Andrews Pitchfork is somewhat subjective.
A variation on Raff Regression channel is to draw a linear regression line
and then put parallel trend lines somewhere close to the highs and lows.
This overcomes what I consider a mathematical weakness of the Raff
Regression Channel: if there is a bump up or down in the prices, the Raff
Channel tends to be too wide, particularly on the oposite side to the bump.
Chande and Kroll in the "New Technical Trader" point out that all
price-only based indicators are highly correlated. Hence a
complex/complicated indicater will give no better signals than a simple
one. You can see this for yourself. Take a stock chart and plot several
oscillator indicators one above the other, you may have to adjust the
parameters so that they are similar. The indicators will all give similar
signals.
Lionel Issen
At 05:21 AM 6/11/97 -0000, Animal Mother wrote:
>I've been using--and continuing to experiment with--the RRC, without
having ever read anything in any books about it. I've been using it pretty
much as I would a typical (which for me is drawn Trader Vic style) trend
channel. For an up trend, I begin the channel at a reaction low at some
point in the past (often at a major reversal point) and end it at the most
recent reaction low. I reverse this for down trends. I've experimented
with starting at the low, and ending at a recent high, with sort of blechy
results. . . .
>
>I'd like to know how others draw these channels.
>
>Also, anyone use Andrews Pitchforks? All I know I read in a very
superficial TASC article a few months back. The only time I seem to get
decent signals is when prices make tidy minor reactions. Any
experiences/hints here?
>
>I like using trendlines to trade. In fact, I haven't found any of the
esoteric indicators (R-Squared, Slope) to give better signals (worse, in
fact, since I never got them to work for me) than a combination of MA's (I
use 5, 13, 21, 55), trendlines, and a momentum indicator, either MFI, ROC,
or RSI, whichever has been giving the best signals most recently for any
given stock. I sometimes check one momentum indicator against the
other--they aren't all the same, regardless what the books say, especially
when volume is in the formula.
>
>I look forward to reading some of your responses.
>
>
>Alan M.
>___________
>
>"Better you than me."
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