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One phrase continually pops out when I read TA books or software manuals.
..."wait for signals to be confirmed by price action". So whether it is an
expert advisor in AIQ, or a voting line in Omni Trader, or an indicator
based trading signal in Metastock, the advice is always ..."wait for signals
to be confirmed by price action".
But none of these programs have "price action" indicators, system testers,
or explorations, etc. It only seems to be covered in those "suspect" and
lurid books on how to "Make a Million in 30 days". By association, I viewed
price action as being suspect and not worthy of investigation.
However, here is one example of a "mixed" trading system that is on the
Equis formula page that is promising. Unfortunately, it is shown as an
exploration. One of the powers of Metastock is to graphically view complex
indicators. How then to we view price action or NR4 and Inside Day set-up
patterns graphically.
For those of you who would like to see a discussion of this Inside-Bar /
Narrow Range (IB/NR) price bar set-up look at Robert Miner's March 1997,
Traders Education Tutorial at www.dynamictrader.com
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1996 August TASC Trader's Tips - Connors and Raschke's Historical Volatility
System
Here is the Connors and Raschke's historical volatility system exploration
in August 1996 TASC Trader's Tips translated for MetaStock.
COLUMN FORMULAS
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Column A : Vol ratio
std(log(C/ref(C,-1)),5)/std(log(C/ref(C,-1)),99)
Column B : NR4 day
if(HIGH-LOW,<,ref(llv(H-L,3),-1),1,0)
Column C : Inside
if(HIGH,<,ref(HIGH,-1),if(LOW,>,ref(LOW,-1),1,0),0)
Column D : High
HIGH
Column E : Low
LOW
FILTER FORMULA
Formula:
when(colA,<,0.5) AND (when(colB,=,1) OR when(colC,=,1))
==========================================================
A while back there many set-up patterns presented in the 1234 formulas:
e.g.,
Lizard b
O >= L + ((H-L) * .75) AND C >= L + ((H-L) * .75) AND L <
Ref(LLV(L,9),-1)
Lizard s
O <= L + ((H-L) * .25) AND C <= L + ((H-L) * .25) AND H >
Ref(HHV(H,9),-1)
Using a binary "if()" statement or colour highlights, the set-up can be
graphically examined.
... will continue later
Best wishes
Walter
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