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<DIV><FONT color=#000000 size=2>All,<BR>
I've had a little more time to work on the PV Binary wave test. In my last
post I added the first two formulas together then copied them into a simple zero
cross over test to check the sensitivity of the weightings for short,
intermediate, and long term data. I had started off assuming that the
longer term trends should carry more weight and had weighted the short,
intermediate, and long term equations with a 1, 2, and 3 multiplier
respectively. I was surprised to find that when I tested the formula on
several of my stocks that it worked better if the short and intermediate term
were weighted about the same and more then the long term. So I changed my
multiplier to 2, 2, and 1 respectively. That gave me the first PV Binary
Wave relationship as follows:<BR> <BR> PVBW01 (Highs &
Lows)<BR> If(HHV(L,8) = HHV(L,21),2,0)
+<BR> If(HHV(L,21) = HHV(L,55),2,0)
+<BR> If(HHV(L,55) = HHV(L,233),1,0)
+<BR> If(HHV(H,8) = HHV(H,21),2,0)
+<BR> If(HHV(H,21) =
HHV(H,55),2,0) +<BR>
If(HHV(H,55) = HHV(H,233),1,0) +<BR> If(LLV(H,8) =
LLV(H,21),-2,0) +<BR> If(LLV(H,21) = LLV(H,55),-2,0)
+<BR> If(LLV(H,55) = LLV(H,233),-1,0)
+<BR> If(LLV(L,8) = LLV(L,21),-2,0)
+<BR> If(LLV(L,21) = LLV(L,55),-2,0)
+<BR> If(LLV(L,55) =
LLV(L,233),-1,0)<BR>The idea here is that we are using the HHV function to see
if the highest lows and highest highs have occurred recently. If they have
we can say that we are having higher highs and higher lows which is bullish and
we assign each formula which is true a +2 or +1 depending on whether it is
short, intermediate, or long term. Similarly, we use the LLV function to
check for lower highs and lows and assign the appropriate negative values if
true.<BR> I also added together and checked our high
volume move and new 233 day high or low and checked their sensitivity.
Again I used the weightings that generally gave the best results on the stocks I
checked. The second PV Binary Wave relationship becomes:<BR>
<BR> PVBW02 (High Vol Move)<BR>
If(Mov(V,3,S) > 1.02*Mov(V,21,S),1,0) *<BR>
If(C > Ref(H,-1),2,0) + <BR> If(Mov(V,2,S) >
1.02*Mov(V,21,S),1,0) *<BR> If(C <
Ref(L,-1),-2,0)<BR>The theory here is that a close above yesterdays high is
bullish if it happens on good volume. Conversely, a close below yesterdays
low is bearish if it happens on good volume.<BR> The
third PV Binary Wave relationship becomes:<BR> <BR>
PVBW03 (New 233 Day High or Low)<BR> ((If(Mov(V,2,S) >
1.02*Mov(V,21,S),1,0)) *<BR> If((H = HHV(H,233)),3,0))
+<BR> ((If(Mov(V,2,S) > 1.02*Mov(V,21,S),1,0))
*<BR> If((L = LLV(L,233)),-3,0))<BR>The theory here is
that a stock making a new 233 day high or low is very bullish or bearish,
respectively. That's because it is considered to be in uncharted waters
without in overhead or underlying resistance.<BR>
Finally I wanted a look back indicator. I started with a 21, 55, and 233
day look back of the close and made it bullish or bearish just on comparing the
two closing prices. However, when I got to thinking about this I thought
it was just another way of getting the same results as our first binary
wave. What I really wanted was momentum, so I came up with the idea of
subtracting the two closes, assigning different weightings (our old 2, 2, 1)
relationship, and then dividing by the closing price to normalize the results so
there wouldn't be differences between low and high priced stocks. The
final PV Binary Wave relationship then becomes:<BR> PVBW04 (Price
Look Back)<BR> (2*(C-Ref(C,-21)) + 2*(C-Ref(C,-55)) +
(C-Ref(C,-233)))/C<BR>Yes I know that's an analog, not a binary relationship,
but I've never been a purist at anything <G>.<BR>
The next step is to add and smooth the PV Binary Wave. I do that with the
following two equations:<BR> <BR> PVBW
Add<BR> Fml("PVBW01") +
Fml("PVBW02") + Fml("PVBW03") +<BR>
Fml("PVBW04")<BR> <BR> Tema PV Binary
Wave<BR> Tema(Fml("PVBW Add"),13)<BR>The first
equation is the same as we had before where we just add up the results.
The second equation has a shorter smoothing period because I found that worked
better for most of the stocks I looked at with the simple zero cross over test.
<BR> I'll attach a MS6.5 import file with the
formulas. The import instructions are on p 215 of the MetaStock V6.5
manual. As you can see the names are unique and shouldn't overwrite any of
your formulas unless you have some with the same names. Please play with
them and let me know what you think. In the next post, I'll give some
ideas for a better test and exploration of the PV Binary Wave.</FONT></DIV>
<DIV><FONT color=#000000 size=2></FONT> </DIV>
<DIV><FONT color=#000000 size=2>Jim<BR></FONT></DIV></BODY></HTML>
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