|
PureBytes Links
Trading Reference Links
|
<x-html>
<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN">
<HTML><HEAD>
<META http-equiv=Content-Type content="text/html; charset=iso-8859-1">
<META content="MSHTML 5.50.4030.2400" name=GENERATOR>
<STYLE></STYLE>
</HEAD>
<BODY bgColor=#ffffff>
<DIV><FONT size=2>Gitanshu :</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2>Thanks a lot for your explanation !</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2>Theo Lockefeer.</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2></FONT> </DIV>
<BLOCKQUOTE dir=ltr
style="PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV style="FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black"><B>From:</B>
<A title=OnWingsOfEagles@xxxxxxxxxxxxx
href="mailto:OnWingsOfEagles@xxxxxxxxxxxxx";>Gitanshu Buch</A> </DIV>
<DIV style="FONT: 10pt arial"><B>To:</B> <A title=metastock@xxxxxxxxxxxxx
href="mailto:metastock@xxxxxxxxxxxxx";>metastock@xxxxxxxxxxxxx</A> </DIV>
<DIV style="FONT: 10pt arial"><B>Sent:</B> Thursday, September 07, 2000 2:08
PM</DIV>
<DIV style="FONT: 10pt arial"><B>Subject:</B> RE: Interpretation of ATR</DIV>
<DIV><BR></DIV>
<DIV><SPAN class=840380312-07092000><FONT size=2>ATR is just like a
thermometer measuring a chart's temperature. By itself one ATR number tells
you nothing, it is when this number is put in the context of where it has been
in the past on the same chart that it starts having
meaning.</FONT></SPAN></DIV>
<DIV><SPAN class=840380312-07092000><FONT size=2></FONT></SPAN> </DIV>
<DIV><SPAN class=840380312-07092000><FONT size=2>By that definition,
</FONT></SPAN></DIV>
<DIV><SPAN class=840380312-07092000><FONT size=2></FONT></SPAN> </DIV>
<DIV><SPAN class=840380312-07092000><FONT size=2>Low ATR helps you trade a
larger size (or keep a tighter stop on same size).</FONT></SPAN></DIV>
<DIV><SPAN class=840380312-07092000><FONT size=2>High ATR tells you that your
stops need to be wider (or trade a smaller size & expect frequent
stop-outs).</FONT></SPAN></DIV>
<DIV><SPAN class=840380312-07092000><FONT size=2></FONT></SPAN> </DIV>
<DIV><SPAN class=840380312-07092000><FONT size=2>That is the trading
interpretation.</FONT></SPAN></DIV>
<DIV><SPAN class=840380312-07092000><FONT size=2></FONT></SPAN> </DIV>
<DIV><SPAN class=840380312-07092000><FONT size=2>The conceptual interpretation
is that volatility reverts to mean, so periods of historically low ATR will
likely not be sustained. Likewise, when ATR has been rising and stops rising,
you can expect range contraction to continue - until it
doesn't.</FONT></SPAN></DIV>
<DIV><SPAN class=840380312-07092000><FONT size=2></FONT></SPAN> </DIV>
<DIV><SPAN class=840380312-07092000><FONT size=2>But there are a multitude of
trading strategies and money mgt approaches that are built around the concept
of range expansion/contraction.</FONT></SPAN></DIV>
<DIV><SPAN class=840380312-07092000><FONT size=2></FONT></SPAN> </DIV>
<DIV><SPAN class=840380312-07092000><FONT size=2>This is how it is
interpreted/used, at least, by me.</FONT></SPAN></DIV>
<DIV><SPAN class=840380312-07092000><FONT size=2></FONT></SPAN> </DIV>
<DIV><SPAN class=840380312-07092000><FONT size=2>In the book, he basically
lists the calcs as a precursor to building the ADX.</FONT></SPAN></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT face=Arial size=2>Gitanshu</FONT><FONT
size=2></FONT></DIV></BLOCKQUOTE></BODY></HTML>
</x-html>
|