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<P>On standard deviation channels. Thank you for your help, Adam Hefner, mikelu,
Simon Roberts, and Ton Maas. Now I can plot the standard deviation. I thought
that a standard deviation curve would follow closely the prices values (1 or 2
standard deviations), but I might be wrong. Anyway thank you for your valuable
information. <BR></P></FONT><BR><FONT face=Arial>Manuel
Barquin<BR>Tel-Fax: (34 91) 563 92 80</FONT></DIV>
<DIV> </DIV>
<DIV> </DIV>
<BLOCKQUOTE
style="BORDER-LEFT: #000000 2px solid; MARGIN-LEFT: 5px; MARGIN-RIGHT: 0px; PADDING-LEFT: 5px; PADDING-RIGHT: 0px">
<DIV style="FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black"><B>From:</B>
A.J. Maas </DIV>
<DIV style="FONT: 10pt arial"><B>To:</B> <A
href="mailto:metastock@xxxxxxxxxxxxx";
title=metastock@xxxxxxxxxxxxx>metastock@xxxxxxxxxxxxx</A> </DIV>
<DIV style="FONT: 10pt arial"><B>Cc:</B> <A
href="mailto:ALEMANIA@xxxxxxxxxxxxxxxxxxxxx";
title=ALEMANIA@xxxxxxxxxxxxxxxxxxxxx>ALEMANIA@xxxxxxxxxxxxxxxxxxxxx</A> </DIV>
<DIV style="FONT: 10pt arial"><B>Sent:</B> Thursday, April 22, 1999 1:03
AM</DIV>
<DIV style="FONT: 10pt arial"><B>Subject:</B> Re: Building blocks - Trend
channels</DIV>
<DIV><BR></DIV>
<DIV>Repost, as the first did not make it to the List</DIV>
<DIV><BR>Regards,<BR>Ton Maas<BR><A
href="mailto:ms-irb@xxxxxxxxxxxxx";>ms-irb@xxxxxxxxxxxxx</A><BR>Dismiss the
".nospam" bit (including the dot) when replying.</DIV>
<DIV> </DIV>
<DIV> </DIV>
<BLOCKQUOTE
style="BORDER-LEFT: #000000 2px solid; MARGIN-LEFT: 5px; MARGIN-RIGHT: 0px; PADDING-LEFT: 5px; PADDING-RIGHT: 0px">
<DIV style="FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black"><B>From:</B>
<A href="mailto:anthmaas@xxxxxxxxxxxxx"; title=anthmaas@xxxxxxxxxxxxx>AJ.
Maas</A> </DIV>
<DIV style="FONT: 10pt arial"><B>To:</B> <A
href="mailto:metastock@xxxxxxxxxxxxx";
title=metastock@xxxxxxxxxxxxx>metastock@xxxxxxxxxxxxx</A> </DIV>
<DIV style="FONT: 10pt arial"><B>Sent:</B> woensdag 21 april 1999 1:23</DIV>
<DIV style="FONT: 10pt arial"><B>Subject:</B> Re: Building blocks - Trend
channels</DIV>
<DIV><BR></DIV>
<DIV><FONT size=2>
<DIV><FONT size=3>If the Standard Deviation Channel's button or the the
Regression's Button-set is not available, then</FONT></DIV>
<DIV><FONT size=3>on the MenuBar click View|Toolbars and apply check-click
the Regression option.</FONT></DIV>
<DIV><FONT size=3>(also another option is to use Insert from the MenuBar,
see further below).</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=3>Use the Standard Deviation Channel's button for drawing
the Standard Deviation Channel's Channel, </FONT>
<DIV><FONT size=3>eg place it at a point in the chart by a
left-click, whilst holding down the mouse-button, drag to the
right.</FONT></DIV></DIV>
<DIV> </DIV>
<DIV>
<DIV><FONT size=3>The same might apply to v5.11 (else time to upgrade?). My
personal preferences are for the Linnear</FONT></DIV>
<DIV><FONT size=3>Regression Channels(LRC), which are not available in
MetaStock, and (unlike the SDC's) provide for</FONT></DIV>
<DIV><FONT size=3>the </FONT><FONT size=3>TRUE Deviation and TRUE Direction,
eg it uses the Extremes made by the Price for its Channels</FONT><FONT
size=3>,</FONT></DIV>
<DIV><FONT size=3>eg both the support and resitance lines and where
another third line, the Median, then functions as</FONT></DIV>
<DIV><FONT size=3>the TRUE Linnear Regression Line used for indicating the
direction. </FONT></DIV>
<DIV> </DIV></DIV>
<DIV><FONT size=3>Regards,<BR>Ton Maas<BR><A
href="mailto:ms-irb@xxxxxxxxxxxxx";>ms-irb@xxxxxxxxxxxxx</A><BR>Dismiss the
".nospam" bit (including the dot) when replying.</FONT></DIV></FONT></DIV>
<DIV><FONT size=2><FONT size=2></FONT></FONT> </DIV>
<DIV><FONT size=2><FONT
size=2>===================================================================</FONT></FONT></DIV>
<DIV> </DIV>
<DIV><STRONG>Standard Deviation
Channel
</STRONG><FONT size=2>(from the MetaStock v6.52-Help)</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2><STRONG>Description</STRONG></FONT></DIV>
<DIV><FONT size=2>Standard Deviation Channels are calculated by plotting two
parallel lines above and below an x-period linear regression</FONT></DIV>
<DIV><FONT size=2>trendline. </FONT><FONT size=2>The lines are plotted x
standard deviations away from the linear regression trendline.</FONT></DIV>
<DIV><FONT size=2> </DIV></FONT>
<DIV><FONT size=2><STRONG>Interpretation</STRONG></FONT></DIV>
<DIV><FONT size=2>Price movements are characterized by swings from one
extreme to the other. Markets reflect the collective mood if
its</FONT></DIV>
<DIV><FONT size=2>participants.</FONT></DIV>
<DIV><FONT size=2>When market participants are overly optimistic, prices are
driven up at an unsustainable rate. Likewise, when market</FONT></DIV>
<DIV><FONT size=2>participants </FONT><FONT size=2>are overly pessimistic,
prices are beaten down at an unsustainable rate. The keywords here are
"extreme"</FONT></DIV>
<DIV><FONT size=2>and "unsustainable".</FONT></DIV>
<DIV><FONT size=2>Even the most raging bull markets or violent bear markets
will either pause for a breather or reverse temporarily. </FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>Markets tend to have an equilibrium point (i.e., a point
towards which prices tend to be drawn).</FONT></DIV>
<DIV><FONT size=2>- Linear regression analysis is helpful </FONT><FONT
size=2>in determining where this "balancing point" lies.</FONT></DIV>
<DIV><FONT size=2>- On the other hand, standard deviation analysis is
helpful in determining where the "extremes" lie.</FONT></DIV>
<DIV><FONT size=2> <BR>Elementary statistical analysis states that
approximately 67% of future price movement should be contained
within</FONT></DIV>
<DIV><FONT size=2>one standard deviation and approximately 95% within two
standard deviations.</FONT></DIV>
<DIV><FONT size=2>However, this assumes random, trendless data.
</FONT></DIV>
<DIV><FONT size=2>Since most markets show overwhelming evidence of
non-random, trending behavior, these 67% and 95% values are</FONT></DIV>
<DIV><FONT size=2>not as accurate.</FONT></DIV>
<DIV><FONT size=2>Standard Deviation channels, however, incorporate the
trend (as measured by the middle linear regression plot).</FONT></DIV>
<DIV><FONT size=2>Therefore, they provide a trend-biased assessment of
expected price movement.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>Standard Deviation Channels can be used to enhance several
types of technical analysis techniques.</FONT></DIV>
<DIV><FONT size=2>Here are some ideas:</FONT></DIV>
<DIV><FONT size=2>· Validate candlestick
patterns. </FONT><FONT
size=2> Enter long on bullish engulfing lines only if they form
below the bottom</FONT></DIV>
<DIV><FONT
size=2>
channel line.<BR>· Validate overbought/oversold
signals. Close long (or enter short) when the
Stochastic falls below 80, volume</FONT></DIV>
<DIV><FONT
size=2>
is above average, </FONT><FONT size=2>and prices have recently
fallen below the top channel line.<BR>· Validate support/resistance
breakouts. If prices have broken above a long-term resistance level,
yet volume is</FONT></DIV>
<DIV><FONT
size=2>
suspiciously light,</FONT><FONT size=2> wait until the prices break
above the upper channel</FONT></DIV>
<DIV><FONT
size=2>
on above average volume.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>
<DIV><FONT size=2><STRONG>Parameters</STRONG></FONT></DIV></FONT></DIV>
<DIV><FONT size=2>The parameters for the Standard Deviation Channel are
shown below.</FONT></DIV>
<DIV><FONT size=2>You can edit the parameters of </FONT><FONT
size=2>Standard Deviation Channels </FONT><FONT size=2>that are already
plotted by right-clicking on them and</FONT></DIV>
<DIV><FONT size=2>choosing Properties from the shortcut menu.<BR>You can
easily draw a parallel line next to a Standard Deviation Channel by choosing
Parallel Trendline from the</FONT></DIV>
<DIV><FONT size=2>shortcut menu.</FONT></DIV>
<DIV><FONT size=2>The shortcut menu is displayed by right-clicking directly
on the Standard Deviation Channel plotted on the chart.</FONT></DIV>
<DIV><FONT size=2> </DIV></FONT>
<DIV><FONT size=2>Price Field.
This is the price field (i.e., open, high, low, or close) to use when
calculating the</FONT></DIV>
<DIV><FONT
size=2>
Standard Deviation Channels.</FONT></DIV>
<DIV><FONT
size=2>Units. Enter
the number of standard deviations to shift the upper and lower channel
lines.</FONT></DIV>
<DIV><FONT size=2> </DIV></FONT>
<DIV><FONT size=2>Standard Deviation Channels require actual pricing data to
plot. When it is plotted on kagi, point & figure,
three</FONT></DIV>
<DIV><FONT size=2>line break, </FONT><FONT size=2>or renko charts, it uses
all the data in all the columns.</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2>The Parameters below includes one (or more) of the seven
controls shown in the Trendline Parameters page for</FONT></DIV>
<DIV><FONT size=2>many other line </FONT><FONT size=2>studies included in
MetaStock. <BR></DIV></FONT>
<DIV><FONT size=2>Start
Date. This is the date the
line study starts. You can modify this date by typing in a new one or
by selecting</FONT></DIV>
<DIV><FONT
size=2>
the line study</FONT><FONT size=2> and dragging the leftmost handle
left or right. <BR>Start Value. This is
the y-axis value at the starting point of the line study. You can
modify this value by typing in</FONT></DIV>
<DIV><FONT
size=2>
a new one or by</FONT><FONT size=2> selecting the line study and
dragging the leftmost handle up or down.</FONT></DIV>
<DIV><FONT size=2>End
Date. This is the date
the line study starts. You can modify this date by typing in a new one
or by selecting</FONT></DIV>
<DIV><FONT
size=2>
the line study</FONT><FONT size=2> and dragging the leftmost handle
left or right. <BR>End Value. This
is the y-axis value at the ending point of the line study. You can
modify this value by typing in a</FONT></DIV>
<DIV><FONT
size=2>
new one or by</FONT><FONT size=2> selecting the line study and
dragging the rightmost handle up or down.<BR>Left Extension.
Check this box if you want the line study extended to the left before the
Start Date. </FONT><FONT size=2>Even though a line</FONT></DIV>
<DIV><FONT
size=2>
study is </FONT><FONT size=2>extended,</FONT><FONT
size=2> it retains its original start and end dates so that the
original rendering of the trendline</FONT></DIV>
<DIV><FONT
size=2>
can be restored </FONT><FONT size=2>(if desired).</FONT></DIV>
<DIV><FONT size=2>Right Extension. Check this box if you want the line
study extended to the right beyond the End Date. </FONT><FONT
size=2>Even though a line</FONT></DIV>
<DIV><FONT
size=2>
study is extended,</FONT><FONT size=2> it retains its original start
and end dates.<BR>Snap to Price. Check this box if you
want the line study's ending points to automatically snap to the open, high,
low, or</FONT></DIV>
<DIV><FONT
size=2>
close prices</FONT><FONT size=2> when plotting and
dragging.</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2>
<DIV><FONT size=2><STRONG>Line Study </STRONG>(General)</FONT></DIV>
<DIV><FONT size=2>Line studies snap to the high price if the mouse pointer
is above the price bar. </FONT><FONT size=2>The end points</FONT><FONT
size=2> snap to the low price when</FONT></DIV>
<DIV><FONT size=2>the mouse </FONT><FONT size=2>pointer is below the price
bar.</FONT><FONT size=2> If the mouse pointer is between the high and low,
the line study's end point snaps</FONT></DIV>
<DIV><FONT size=2>to either the open or</FONT><FONT size=2> close
price</FONT><FONT size=2> depending on which one it's closest
to.</FONT></DIV></FONT></DIV>
<DIV> </DIV><FONT size=2>
<DIV><FONT size=2>Drawing a Line Study</FONT></DIV>
<DIV><FONT size=2>Line studies are drawn on a chart by either selecting the
desired button on the appropriate drawing toolbar or by
choosing</FONT></DIV>
<DIV><FONT size=2>the line </FONT><FONT size=2>study from the Insert menu
(See To draw a line study). Line studies are attached to the closest plot to
the mouse</FONT></DIV>
<DIV><FONT size=2>pointer when you</FONT><FONT size=2> first click to begin
drawing.</FONT></DIV>
<DIV><FONT size=2>You can change the plot a line study is attached to from
the Select Plot dialog </FONT><FONT size=2>(right-click on the line
study and choose</FONT></DIV>
<DIV><FONT size=2>Scaling</FONT><FONT size=2> to display the Select Plot
dialog). </FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>To draw the line study</FONT></DIV>
<DIV><FONT size=2>1. Choose the desired line study from clicking the
appropriate drawing toolbar Button or the Insert menu.<BR>2. If the
line study is trendline based, position the mouse at the starting point,
click and hold the left mouse button, and</FONT></DIV>
<DIV><FONT size=2> drag the </FONT><FONT size=2>line study
to an ending point.<BR>3. If the line study is not trendline based,
simply position the mouse at the location you want to anchor it and click
the</FONT></DIV>
<DIV><FONT size=2> left mouse button.</FONT></DIV>
<DIV></FONT><FONT size=2></FONT> </DIV>
<DIV><FONT size=2>For more information on other channel-based line studies,
see EnvelopePrice Channel, Raff Regression Channel,</FONT></DIV>
<DIV><FONT size=2>Standard Error Bands, </FONT><FONT size=2>and Standard
Error Channel.</FONT></DIV>
<DIV><FONT
size=2>===================================================================</FONT></DIV></BLOCKQUOTE></BLOCKQUOTE></BODY></HTML>
</x-html>From ???@??? Fri Apr 23 10:10:50 1999
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Date: Fri, 23 Apr 1999 09:06:58 -0700 (PDT)
From: Frank Wang <fwang@xxxxxxxxxxx>
To: metastock@xxxxxxxxxxxxx
Subject: Re: Some indicators should work....
In-Reply-To: <000301be8d9b$92df2f20$8e51b5d1@xxxxxxxxxxxxxxx>
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One fundamental problem with static indicator like MACD or moving average
etc is that most of them are linear. However, the market is non-linear
and non-stationary. A given indicator may work for a while, but given
time, most of them will under perform. For example, currency was a major
issue surrounding the 87 crash. But today, currency is hardly an issue.
Market changes its characteristics over time. Your MACD may work for a
while, but will under perform in another period of time. The public
psychology changes with time. They tend to focus on specific issues for a
given period of time.
Frank Wang
On Fri, 23 Apr 1999, Nicholas Kormanik wrote:
> "traders spend much too much time creating indicators. None of these
> indicators in the long run will give you more than a 50:50 chance at making
> money."
>
> I find it hard to believe that various indicators don't perform better than
> others. Take the MACD, for instance. I think it would yield greater than a
> zero return over time, if used properly.
>
> Haven't you found *some* indicators that you have developed confidence in?
>
> Thanks,
> Nicholas
>
>
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