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Anybody tried using TC2000's new moving average based on relative strength
in Metastock?
I developed a good indicator to identify trends in stocks, but TC2000's idea
of using a 10 and 30 day moving average of relative strength (vs. SP500,
NASDAQ, etc.), works as well or better than mine. Using moving averages
based on the stocks relative strength to a broader market average eliminates
market gyrations from the equation and allows the moving averages to be
sensitive only to stock performance relative to the index. I programmed
this into Metastock by plotting a relative strength indicator in white
(making it invisible on white background), and created 2 moving averages
based on this indicator (10 and 30 exponential). When the 10-day crosses
above the 30 day, this is assumed to be bullish, and you look to be bearish
when it crosses back below the 30-day line. Obviously, the two moving
averages can be any number, but these seem to work well.
I tested this setup on many Nasdaq stocks by programming an expert with my
indicators (not TC2000) and comparing the trend changes to mine visually,
and saw that they were very similar. My system is very accurate for finding
trends, and entry points, so I'm assuming this TC2000 setup is as reliable.
I haven't found a way yet to program relative strength into a system test,
so if anybody knows how I'd appreciate learning the secret. I used the
SP-500 as the comparison to Nasdaq stocks because it correlates well with
the Nasdaq, but isn't as volatile.
My trading system only uses the trend as one piece and several other
indicators for entry and exit, but I believe this indicator is as close to
perfect for determining trends as you'll find.
Dave D.
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