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<DIV>Check out the Custom formula below.<BR><BR>Regards,<BR>Ton Maas<BR><A
href="mailto:ms-irb@xxxxxx";>ms-irb@xxxxxx</A><BR><BR>=======================================<BR><BR><STRONG>Parabolic
SAR - J. Welles Wilder </STRONG>(taken from MetaStock
v6.52-Help)<BR><BR>-Intro
-Parameters<BR>-Interpretation
-Custom Formula (Function)<BR><BR>Intro<BR>The Parabolic Time/Price System,
developed by J. Welles Wilder, is explained<BR>thoroughly in his book, New
Concepts in Technical Trading Systems<BR>(see Suggested Reading). This
indicator is used to set price stops and is often<BR>called the
stop-and-reversal (SAR) indicator.<BR><BR>Interpretation<BR>If you are long
(i.e., the price is above the SAR), the SAR will move up every
day,<BR>regardless of the direction the price is moving. The amount the
SAR moves up<BR>depends on the amount that prices move.<BR>The Parabolic SAR
provides excellent stops(exit points). You should close long<BR>positions
when the price falls below the SAR and close short positions when the<BR>price
rises above the SAR.<BR>The Parabolic SAR is plotted as shown in Wilder's
book.<BR>Each SAR stop level point is displayed on the day in which it is in
effect.<BR>Note that the SAR value is today's, not tomorrow's stop
level.<BR><BR>Parameters<BR>The parameters for the Parabolic SAR are shown
below. These parameters are<BR>specified at the time the indicator is
plotted. You can edit the parameters of an<BR>existing plot by
right-clicking on the indicator and choosing Properties from the<BR>shortcut
menu.<BR><BR>Step.
As a trade makes new highs/lows, the Parabolic SAR will rise/fall
according<BR>
to the SAR step size. For example, if the trade makes new highs for
three<BR>
consecutive days, then the SAR step increases by 0.02 each
day<BR>
(i.e., 0.02 to 0.04 to 0.06, etc.). The author (Welles Wilder) recommends
a<BR>
step size of 0.02 for most securities.<BR><BR>Maximum. Enter the
maximum value the SAR Step can obtain. The
author<BR>
recommends an SAR Maximum of 0.20 for most securities.<BR><BR>Custom Formula
(i.e. the
FUNCTION)<BR>NAME:
Parabolic
SAR<BR>SYNTAX:
sar( STEP, MAXIMUM )<BR>DESCRIPTION: This FUNCTION calculates the predefined
Parabolic SAR indicator.
<BR>EXAMPLE: sar( 0.02, 0.20
)</DIV>
<DIV> </DIV>
<DIV>See Plotting an Indicator - for more information on plotting indicators (p.
135).</DIV>
<DIV>See Option Delta, Gamma, Price, Theta, Vega and Parabolic SAR - for
more information</DIV>
<DIV>
on the Parabolic SAR parameters (p. 469-472 + 162-163). </DIV>
<DIV> </DIV>
<DIV>=======================================<BR><BR><U><STRONG>Parabolic SAR by
J. Welles Wilder<BR><BR></STRONG></U>The full explanation of the Parabolic "Stop
and Reverse" is in J. Welles Wilder, Jr.'s</DIV>
<DIV>book "New Concepts in Technical Trading Systems", 1978. This is
considered by many</DIV>
<DIV>to be a classic, as it has several other "new" technical
indicators.<BR><BR>The SAR assumes that you are always in the market, either
long, or short, hence, the</DIV>
<DIV>stop out point also becomes the new entry point, opposite to the direction
you were</DIV>
<DIV>previously in.<BR><BR>From Wilder's book:<BR><BR>"The general equation,
then, is as follows:<BR>SAR(tomorrow) = SAR(today) + AF(EP(trade) -
SAR(today))"<BR><BR>AF is the acceleration factor, or "step" that MS uses
as a variable. EP is<BR>the extreme price point for the trade made so
far. (If long, EP is the<BR>extreme high price for the trade; if short, EP
is the extreme low price for<BR>the trade.) In Wilder's formula, the AF
starts at .02, and increments by that<BR>amount until it reaches a maximum of
.20, hence the parabolic tendency of the<BR>SAR. MS allows you to adjust
either the step, or the maximum.<BR><BR>This formula continues on until you are
stopped out, which in this system<BR>reverses your position. On taking an
initial position, you need to know where<BR>to begin the SAR(today). If
you have entered long, then the SAR(today) is<BR>equal to prior LO SIP (lowest
significant price), which Wilder describes as<BR>the lowest low of the prior few
days. He doesn't pin it down. If your initial entry<BR>is a short
position, then the SAR(today) is equal to the prior HI
SIP.<BR><BR>========================================</DIV><FONT size=2>
<DIV align=left>
<H2><A href="http://www.tradertalk.com/tutorial.html";><FONT
color=#800000>TraderTalk Technical Tutorial</FONT></A><FONT size=4><FONT
size=2> <FONT color=#0000ff><FONT
size=5>- </FONT> </FONT></FONT><A
href="http://www.tradertalk.com/tutorial.html";><STRONG>http://www.tradertalk.com/tutorial.html</STRONG></A></FONT></H2></DIV>
<CENTER>
<HR>
</CENTER>
<H2>Wilder's Parabolic</H2>
<DIV>The Parabolic System also called the Stop and Reverse (SAR) system is
another pearl originating from the fertile and generous mind of J. Welles Wilder
Jr. </DIV>
<P>The SAR system is different to almost all technical trend following systems
in that it is a function not only of price change but also of time. It is so
constructed that once the trade is initiated it allows time for the market to
react to the change in trend and then as the trend gets underway the Stop
progresses with the market, slowly at first and accelerating as the market trend
does. The Stop may at intervals stand still as the trend consolidates but the
Stop never backs up or reverses. After a specified time has elapsed (ten new
price highs in bull markets or ten new lows in bear markets) the progression of
the Stop becomes a function only of price.
<P>When the Stop is triggered it was originally intended to be an automatic
reverse trade. However, the SAR is a trend following system and in a range
market the whipsaws can be murderous. So Wilder later qualified the use of SAR
signals with his ADX system so that only SAR signals in the direction of the
trend should be taken to open positions. Closure of positions by the SAR are not
to be taken as entry of reverse trades. Because of the importance of correlating
the SAR signals with the appropriate market environment as indicated by the ADX
we consider it essential you understand the ADX, hence last month's technical
tutorial apparent digression from trend following technical analysis.
<P>
<H3>Parabolas, French Curves and Profits </H3>
<DIV>To understand the mechanics of the system we must assume and accept that a
previous trend has reversed by the triggering of an appropriate SAR point. Once
this has occurred we are now in a trade. The first SAR is the extreme point
reached in the previous trend, i.e. if we've just gone long the initial Stop is
the extreme low of the previous down trend shortly before we were signalled to
go long; if we've just gone short then the initial Stop is the extreme high of
the previous up trend shortly before we were signalled to go short. We will
abbreviate this initial Stop point using Wilder's notation and call it SIP. Once
the trade has been opened and the SIP established the SAR for each time period
(week, day, hour or whatever time frame you are working in) is calculated as
follows: </DIV>
<P>
<DL>
<DT>A. If Long:
<DD>
<DD>For each time period take the difference of the high of the period and the
SAR for the period (so for time period 2, e.g. day 2 - take the difference of
the high for day 2 from the SIP) and multiply this number by Wilder's
acceleration factor (AF). This total is then added to the SAR for the period
(i.e. to the SIP for day 2) and this will give the SAR for the following
period (i.e. the SAR for day 3 to continue the example). This can be
summarized as
<DD>(High of the period - SAR for the period) x AF + SAR for the period = the
SAR for the next period.
<DD>e.g. (High of day 2 - SIP) x AF + SIP = SAR after day 2 for day 3.</ DL>
</DD></DL>
<P>Wilder's acceleration factor (AF) is 0.02 for the initial calculation.
Thereafter the AF is increased 0.02 every period there is a New High made. If a
new high is not made then the AF is not increased from the last SAR. This
continues until the AF reaches 0.2. Once the AF reaches 0.2 it stays at that
value for all future SAR calculations until the trade is stopped out.
<P>
<DIV>
<DT>B. If Short:</DT>
<DL>
<DD>For each time period take the difference between the low of the period and
the SAR for the period and multiply this number by the AF and subtract this
total from the SAR for the period and this will be the SAR for the next
trading period.
<DD>i.e. (Low of the period - SAR for the period) x AF - SAR for the period =
the SAR for the next period.
<DD>e.g. (High of day 2 - SIP) x AF - SIP = SAR after day 2 for day 3.
</DD></DL></DIV>
<P>The AF is initially 0.02 and changes by 0.02 intervals until it is 0.2 but
the change in the AF is made only after each New Low of a period is made. The AF
is never increased above 0.2.
<P>
<H3>Rules of Advancement </H3>
<DIV>The SAR is never advanced into the previous period's range or the current
period's range. </DIV>
<P>If Long using daily data: Never move tomorrows applicable SAR above
yesterdays or todays low. If the calculated SAP is higher than either of these
lows then use the lower low of these two days as the SAR and use this value for
SAR calculation for the next day.
<P>If Short using daily data: Never move the SAR below the high of yesterday or
today. If the calculated SAR is lower than either of these values then use the
higher high of these as the SAR for the day and for the future calculation for
the following day's SAR.</P></FONT>
<CENTER>
<H2 align=left>Using the Parabolic System</H2></CENTER>
<DIV><FONT size=2>The system is a highly effective system in trends. It is a
wicked distributor of your money to your broker and other players in ranging
markets, it is after all a zero sum game, one wins only at the expense of
someone else's loss. So on no account use it as an automatic SAR (see Wilders's
Parabolic). </FONT></DIV>
<P><FONT size=2>The beauty of the system in trends is that it gives an initial
stop that is logically correct. The Stop moves very slowly at first allowing for
market realignment to the new trend, then accelerates as the market trend moves.
</FONT>
<P><FONT size=2>The best way to use this system is to use the system to enter
the market in the direction of the trend and use the Stops on reversal to exit
the market and stand aside until the trend is identified (either resumption of
the previous trend or confirmation of a new trend) and the appropriate Parabolic
system signal to enter is given. </FONT>
<P><FONT size=2>One of the best ways to use the Parabolic system is in
combination with the ADX indicator. </FONT>
<P><FONT size=2>If the ADX indicates the market to be trending then Enter on SAR
signals compatible with the trend; Exit on those incompatible with the trend.
When the ADX is greater than 20 and pointing UP take those SAR signals
compatible with the trend. Remember an ADX higher than 20 and moving up is
indicative of a trend in force, be the trend UP or DOWN. When the ADX is moving
down use SAR signals to exit the market for now the ADX shows that the market is
detrending. You can often successfully enter a trend early in its emergence from
a range if the ADX has moved up for three consecutive periods from the 16 level,
particularly if the rising ADX crosses up above the lower DI line (DI ) moving
down (our safe to add position noted last month). </FONT>
<P><FONT size=2>The AF is increased a total of 10 times from 0.02 at the outset
to 0.20 as the final and ongoing AF. The AF is the number of New Highs (Lows)
multiplied by 2, e.g. the 5th New High (Low) the AF is 0.10 = 0.02 x 5. This 10
New Highs(Lows) just happens to be an important market observation in Japanese
Candlestick charting dating back to the rice markets of 1750. The ten new price
lines' or Shinne 10 te' is recognized by Candlestick chartists as a trend long
in the tooth and a time to consider taking profits or at least bringing in your
Stop. I'm pretty sure Welles Wilder was not aware of Candlestick charting back
in 1978. However, it shows two things. First, that keen observations of markets
in 1750 or 1950 and even in 2050 will reveal important trading principles;
second that people in two different cultures separated by almost 250 years still
behave very much the same; human greed and fear put a floor and a cap on the
market. Good technical analysis endeavors to discern the likely future mood of
the human masses who make up the market and to profitably trade on these
insights of market action. </FONT>
<P><FONT size=2>Wilder used an AF of 0.02 but allowed that one could fiddle with
the number between 0.018 and 0.021. I've found an AF of 0.05 to be very useful
in short term trading, it reduces the lag considerably. Occasionally you may be
stopped out prematurely but it is usually very easy to recognize the experience
as a correction of the trend and reenter advantageously. Using an AF of 0.05
with a 15 minute chart using Bollinger Bands (BB) about a 40 period MA is a good
basis for a day trading system. When prices are above the 40 MA you only take
long signals, when prices are below the 40 period MA you only take the short
signals. This can be further refined by taking reversal trades when prices are
at the BB extremes. If you are prepared to keep positions on overnight and in
effect trade short term, the same system and criteria can be used using half
hourly charts very effectively and with far less lag than if you use the SAR
with the ADX as collaborator. </FONT>
<P>
<DIV><FONT size=2><FONT size=2>
<HR>
</FONT></FONT></DIV>
<DIV align=center><FONT size=2><FONT size=2><A
href="http://www.tradertalk.com/tutorial.html";>TraderTalk's Technical Tutorial
Website</A></FONT></FONT></DIV>
<DIV align=center><FONT size=2><FONT size=2>© Copyright 1997 <A
href="http://www.tradertalk.com/DWD.html";><I>D.W.
Davies</I></A></FONT></FONT><FONT size=2><FONT size=4><B>
</B></FONT></FONT></DIV><FONT size=2>
<HR>
<DIV> </DIV>
<DIV></FONT> </DIV>
<DIV>----- Original Message ----- <BR>From: <<A
href="mailto:bruce@xxxxxxxxxxx";>bruce@xxxxxxxxxxx</A>><BR>To: <<A
href="mailto:metastock@xxxxxxxxxxxxx";>metastock@xxxxxxxxxxxxx</A>><BR>Sent:
woensdag 14 april 1999 3:53<BR>Subject: SAR - Starting AF<BR><BR><BR>> In
MetaStock the Acceleration Factor (AF) has 3 variables:<BR>> (a) the Starting
AF (b) The increment or Step AF, and (c) The AF Maximum.<BR>> In the
Parabolic SAR in MetaStock (b) & (c) can be changed readily; can anybody
<BR>> help me to find a way to vary the Starting AF which is fixed at 0.02
?<BR>>
Many
thanks,<BR>>
Bruce
Barnard<BR>>
bruce@xxxxxxxxxxx<BR>>
<BR><BR></DIV></BODY></HTML>
</x-html>From ???@??? Sat Apr 17 09:11:47 1999
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Message-ID: <006b01be88e7$171dbb80$a04479c3@xxxxx>
From: "A.J. Maas" <anthmaas@xxxxxx>
To: <metastock@xxxxxxxxxxxxx>
References: <4.1.19990412115415.0098b180@xxxxxxxxxxxxxxx>
Subject: Re: TA Progs & Y2K
Date: Sat, 17 Apr 1999 16:52:17 +0200
Organization: Ms-IRB
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Norton 2000-pack suite perhaps?
Regards,
Ton Maas
ms-irb@xxxxxx
----- Original Message -----
From: George Ashton <golden1@xxxxxxxxxx>
To: <metastock@xxxxxxxxxxxxx>
Sent: maandag 12 april 1999 3:56
Subject: TA Progs & Y2K
> I seem to recall that their was a site mentioned on this list that
> evaluated Technical Analysis programs for Y2K. Any recall it?
>
> George.
>
>
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