|
PureBytes Links
Trading Reference Links
|
The comments of Mr. Fiedor are unnecessary. There are several of us who
find Jim's words to be thoughtful and helpful. We ASKED him to expound on
his strategies. If someone doesn't appreciate what he has to say, the the
affected person need only move on without comment. Not every message is
going to be helpful to every person.
Dan
-----Original Message-----
From: bill fiedor <wfiedor@xxxxxxxxxxx>
To: metastock@xxxxxxxxxxxxx <metastock@xxxxxxxxxxxxx>
Date: Tuesday, November 17, 1998 9:26 PM
Subject: Re: Building Blocks - Charts, Trendlines, & Channels
>Wordy people are wishfull people [bill fiedor]
>
>Jim Greening wrote:
>
>> All,
>> Before I discuss trend lines and channels as I promised, I want
>> to say a few words about the type of charts. Most people use H,L,C
>> bar charts for their charting. I don't, I use CandleVolume charts. I
>> always thought that having an arbitrary time period such as a day for
>> the x axis of a price time chart didn't make a lot of sense. When
>> Arm's wrote his EquiVolume book back in the 60s he made his x axis a
>> function of volume per unit time. This made a lot of intuitive sense
>> to me. The more volume in a given trading period, the wider the bar.
>> I've been using volume based charts every since then. When MetaStock
>> started using CandleVolume charts I switched to them. In CandleVolume
>> charts, the width of the candle is a function of volume, just like
>> Arm's equiVolume charts. I thought the additional information on the
>> candlestick should be valuable, although I'll be the first to admit
>> that I have never gotten any consistent results based on only
>> CandleStick patterns. I keep using CandleVolume charts because I like
>> the way they look and maybe, just maybe, I'll run across that magic
>> pattern some day <G>.
>> The reason I go into this, is that if you are using trend lines
>> or channels for signals, you will get different signals and different
>> results with H,L,C bar charts and CandleVolume charts. I'm very
>> comfortable using CandleVolume charts and happen to think that they
>> give better results than H,L,C bar charts. Having said that, I also
>> have to say that I have absolutely no proof of that. I've never done
>> a systematic study and haven't seen any done by others. But I feel
>> they are better and it's important to go with what you believe <G>.
>> For constructing trend lines I prefer Trader Vic's methodology.
>> For a Trader Vic up trend line, start with the lowest low in the
>> timeframe being considered. Draw a line to a low before the highest
>> high in the time frame and extend the line to the right. It's
>> important that you pick the right low to draw the line to. It must be
>> before the highest high in the timeframe and it must be the one low
>> that will allow you to draw a line that doesn't intersect any data
>> before the highest high. A down trend line is just the mirror image.
>> You start with the highest high in the timeframe being considered.
>> Draw a line to another high before the lowest low such that the line
>> does not pass through any data and extend the line to the right. To
>> construct the trend channel, draw a parallel line on the other side of
>> the data that only touches the data at the extreme point. That is it
>> doesn't intersect any other data points. This is easy with MetaStock.
>> You can hold the CTRL key down, then hold the left mouse key down once
>> you are on the original line and drag a parallel line to where ever
>> you want it.
>> I use these Trader Vic type channels for my long (years) and
>> intermediate term (few months to over a year) channels. I use the
>> channels to get my buy signals and set my stops. If they are wide
>> enough, I may even use them for setting my targets, but that will be
>> the subject of a later post. Right now I want to just concentrate on
>> how I construct my trend channels. There is a problem with using
>> Trader Vic type channels for Short term (days to few months) channels.
>> That problem is that you will tend to get too many false breakout
>> signals for a data set that hasn't gone through one or two significant
>> corrections. To try to overcome this problem for short term channels,
>> I use the Standard Deviation channels built into MS6.5. The problem
>> with this type of channel is to know where to start and end your
>> channel. I did not want this to be arbritary, so after some
>> experimenting, I decided on the following. For up trend channels, I
>> start my channel immediately to the left of the lowest low in the
>> timeframe being considered just like Trader Vic. Then I end my
>> channel immediately to the right of the highest high in the time frame
>> being considered. Initially, I set the deviation at 2 and extend the
>> channel to the right. Anytime a new high is hit, I'll drag the right
>> end of the channel just to the right of that new high. As soon as I
>> get a decent reaction in the stock data, I'll check to see if I should
>> change the deviation. I'll use 1, 1.3, 1.5, 1.8, or 2 for the
>> deviation, using the lowest number that will bound all the data
>> between the end points without intersecting any. After a few months
>> with at least two good reactions, I switch to Trader Vic type trend
>> lines.
>> That's it. That's the way I construct my trend channels so there
>> isn't any arbitrary settings. Any questions or suggestions?
>>
>> JimG
>
>
|