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<DIV><FONT color=#000000 size=2> This week I'm going to
discuss my third MetaStock Profit System Test - 03_Tema PDI - MDI, ADX
(Vol Required). This test is based on Wilder's directional movement
indicators. As the MetaStock manual indicates, Wilder says a buy signal
occurs when PDI - MDI moves above zero and a sell signal occurs when
PDI-MDI falls below zero. I started with that thought and experimented a
little. Wilder used 14 day periods to calculate his PDI and MDI
functions. Since I like Fibonacci numbers, I used 13 days instead.
Also I like to smooth my indicators so I used Tema smoothing. My custom
PDI - MDI formula then became:</FONT></DIV>
<DIV><FONT color=#000000 size=2></FONT> </DIV>
<DIV><FONT color=#000000 size=2> Tema PDI - MDI<BR> Periods :=
Input("Enter Tema Smoothing Periods",8,55,13);<BR>
Tema(PDI(13) - MDI(13),Periods)</FONT></DIV>
<DIV><FONT color=#000000 size=2></FONT> </DIV>
<DIV><FONT color=#000000 size=2> I started with the idea
that I would take the PDI-MDI crossover of an optimized number as my basic buy
and sell trigger. However, this number did not have to be zero and did not
have to be the same for entering long and entering short. After a lot of
trial an error I decide -1, -3, or -5 would be my enter long number and -5, -13,
or -21 would be my enter short number. This makes sense since the market
is biased to the up side, so entering a little under zero would get us in a
little earlier. Also down moves tend to be fast an extreme and this would
only let us in short for larger, faster down moves which is what I wanted.
Finally I wanted some way to reduce the number of false signals and I wanted to
do that with directional movement indicators only so this test would be
completely uncorrelated with my other tests. <BR>
For long positions, I notice that most up moves started when adx was low and
that adx climbed during the move to a max and then started to fall at the end of
the move. Therefore, I thought an adx max and min for a buy signal would
help reduce false signals. After some experimenting, I set the min at 8
and the max at 21. I also noticed that most good buy points occurred when
MDI and ADX were close together so I decided that the difference between the two
should be small. After more experimenting, I decided on the following for
my open long signal:</FONT></DIV>
<DIV><FONT color=#000000 size=2></FONT> </DIV>
<DIV><FONT color=#000000 size=2> Open Long:<BR>
Alert(Cross(Fml("Tema PDI - MDI"),opt1),13) AND<BR>
MDI(13) - ADX(13) <= 4 AND<BR> MDI(13) - ADX(13) >= -2
AND<BR> ADX(13) >= 8
AND<BR> ADX(13) <= 21</FONT></DIV>
<DIV><FONT color=#000000 size=2></FONT> </DIV>
<DIV><FONT color=#000000 size=2> To close my open long
position I wanted the PDI-MDI to be less than opt1. When a stock starts to
drop, the MDI starts to rise, so I wanted the MDI to be greater than a certain
number to close a position. Finally, since markets are biased upwards, I
also wanted the 55 day variable moving average to be dropping before I closed
the position. Therefore, the close long became:</FONT></DIV>
<DIV><FONT color=#000000 size=2></FONT> </DIV>
<DIV><FONT color=#000000 size=2> Close Long:<BR>
Fml("Tema PDI - MDI") < opt1 AND<BR> MDI(13) >
21 AND<BR> LLV(Mov(L,55,VAR),5) =
LLV(Mov(L,55,VAR),13)</FONT></DIV>
<DIV><FONT color=#000000 size=2></FONT> </DIV>
<DIV><FONT color=#000000 size=2> To open a short
position, I wanted the PDI-MDI to cross below a fairly high negative
number. I wanted confirmation in that the adx was still fairly high when
that happened. The answer was:</FONT></DIV>
<DIV><FONT color=#000000 size=2></FONT> </DIV>
<DIV><FONT color=#000000 size=2> Open Short:<BR>
Alert(Cross(opt2,Fml("Tema PDI - MDI")),8) AND<BR>
ADX(13) > 34</FONT></DIV>
<DIV><FONT color=#000000 size=2></FONT> </DIV>
<DIV><FONT color=#000000 size=2> To close the short
position, I only wanted PDI-MDI to be greater than a certain positive
number. I don't like a lot of confirmations for closing shorts. With
the bias being up, you need to close shorts fast. My close Short and
optimization became:<BR> Close Short:<BR> Fml("Tema
PDI - MDI") > 13</FONT></DIV>
<DIV><FONT color=#000000 size=2></FONT> </DIV>
<DIV><FONT color=#000000 size=2> Optimization:<BR>
Opt1: Min = -1 Max = -5 Step = 2<BR>
Opt2: Min = -21 Max = -5 Step = 8</FONT></DIV>
<DIV><FONT color=#000000 size=2></FONT> </DIV>
<DIV><FONT color=#000000 size=2> That's it. Any
comments or questions?</FONT></DIV>
<DIV><FONT color=#000000 size=2></FONT> </DIV>
<DIV><FONT color=#000000 size=2>JimG<BR> <BR>
<BR></FONT></DIV></BODY></HTML>
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From: "Adam Hefner" <VonHef@xxxxxxxxxxxxx>
To: "MetaStock" <metastock@xxxxxxxxxxxxx>
Subject: "Prompt For Dates"
Date: Fri, 26 Feb 1999 21:48:35 -0600
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My option to "Prompt For Dates" no longer works, has anyone else
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