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With the recent attention to Vidya, some may be interested in a system
which was published in TAS&C October 1995, vol.13 p.418 "Identifying
Powerful Breakouts Early" by Tuschar Chande.
1. Plot a 12-day Vidya of the close.
2. Plot 1% bands one either side of the Vidya line. This is a quickie
custom indicator in MS6.5, and can be used in other applications.
% Bands:
Pcnt:=Input("Enter percentage",0.1,10,1);
P*(1+(Pcnt/100));
P*(1-(Pcnt/100))
Drag them to the Vidya line until it is highlighted.
3. Set up a Dynamic Momentum Index (DMI) of the close in an inner
window.
4. Set up a 14-period RSI of the close in another inner window; use a
contrasting colour to the DMI.
5. Drag the RSI to the same inner window as the DMI and have horizontal
lines at 30, 50 and 70. Close the empty inner window.
6. Briefly, the rules call for going long when the close is above the
+1% line and DMI > 70; short below the -1% line and DMI < 30. Exit when
the close crosses the Vidya or on a stop. For details refer to the
article. Or use your own logic.
7. My preference is for a dotted Vidya line and solid 1% lines, plus 2%
lines in a pale colour. The trend of the DMI/RSI combo and divergence
between them and price seem to be helpful. Some futures and stocks
require greater or lesser percentage lines, which are easily changed on
the fly by right-clicking.
Harvey Pearce, Victoria, B.C., Canada
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