%R and Stochastics

["Harley Meyer" <meyer093@xxxxxxxxxxxxxxx>]

Ben,
Some time ago I put together some things on Williams %R & Stochastics. Most 
occilators have the same intuitive results and hopwfully this will give a bit 
of insight. This doesn't specifically address days but in a round about way you 
should be able to put 2 and 2 together and relize that the days depend on the 
number of days in the cycle on the chart.

Also I guess I still owe some comments on convergence-divergence. Some day I 
will get around to it. The summer has been very busy.

Harley Meyer

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From: Harley Meyer
Date: Thu, 20 Mar 1997 12:51:41 
To: metastock-list@xxxxxxxxxxxxx
Subject: %R and Stochastics

A while back there were some comments about Williams %R and Stochastics and the 
fact that they were related some how.

Well thanks to our Mr. Forman at Equis I have some answers. This will probable 
end up being typed in two parts. First of all a stochastics with a 1 day 
slowing factor is the same graph as the Williams %R. So if you are like me, who 
had been using both for a confirmation as an upturn or downturn. You may want 
to find something else. Since thay are the same.

In a very general since we will take a glass an add some water. Now if you look 
at the glass. Is the glass half full or half empty? Well it doesn't matter.

So lets say that the stochastics represents the glass half full, i.e, 
measuring the water in the glass.
For the stochastics the top of the glass represents the highest high value and 
the bottom the lowest low value. The close is represented by the top surface of 
the water. As we add or remove water the close moves up and down in the glass. 
And this represents the stochastics oscillating up and down.

So lets take two extreme cases:  the glass full and the glass empty.
If the glass is full of water then the stochastics oscillator reads 100 since 
the water is near the highest high value. If empty it reads zero.


Now lets say that the Williams %R represents the glass half empty, i.e, 
measuring the air in the glass.
Now lets say that for the Williams %R the bottom of the glass represents the 
highest high value and the top the lowest low value. (Note that this is the 
exact opposite as the stochastics.) The close is also represented by the top 
surface of the water. Also as we add or remove water (or air) the close moves 
up and down in the glass. And this represents the Williams %R oscillating up 
and down.

Again lets take two extreme cases:  the glass full and the glass empty.
If the glass is full of water then the Williams %R oscillator reads zero since 
the air is near the highest high value. If empty it reads 100 since the glass 
is full of air.

So no matter how we look at the glass the close is always the surface of the 
water. So the stochastics with a 1 day smoothing and the Williams %R are 
identical over the same number of days. They look at the same problem just from 
to seperate points of view.

Mathematically here is another example.

Lets say the stochastics (%K) is represented by 1/4 and the %R is represented 
by -3/4.

In general we have this relationship 

%K - %R = 100.

In our math example this relates to

1/4 - (-3/4) = 1.
If we multiplied both sides by 100 it looks more like the general formula.

Next typing I will type about one way to use stochastics from what Mr. Forman 
at Equis had sent me. Convergence and divergence. And will give show some 
classic examples.

A side note a friend of mine and I were looking at MU and he had drawn a 
channel. I had showed him how to use Jim Greenings' method of drawing channels. 
In our discussion I had mentioned that the superposition stochastic pretty much 
told me when to short. Well we looked at the channel and the stochastics and 
learned that the superposition stochastic did a very good job of finding the 
top and bottom of a channel.

My guess is that others will use the CCI or Fibinoti (sp) to get the same 
results. But what I had learned that at least the superposition stochastic 
works well in the channel. From what Mr. Forman sent me and what I will explain 
next time is the convergence and divergence.


Harley Meyer
meyer093@xxxxxxxxxx


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Harley Meyer
meyer093@xxxxxxxxxx