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--- In equismetastock@xxxxxxxxxxxxxxx, "vinst1" <vinst1@xxxx> wrote:
> Hi,
> For a stock with a high-low (or low to high) period of n bars, what
> would be appropriate lengths of :
> 1) RSI
> 2) stochastic
> 3) simple moving average.
>
> Till now I have been using RSI and stochastic lengths of 14 periods.
> I appreciate getting your opinion on having more appropriate period
> lenghts for each stock.
> thanks,
> vin
Arbitrarily specified lookback periods are pure guesswork. They might
work, they might not. That's pretty meaningless, not to mention risky
for real money trading. The usual definition of an "optimal moving
average" is one with the lookback period that (usually along with
other "optimized" indicators) yields the highest profit and/or lowest
risk for a particular trading strategy applied to a particular set of
market data. IOW it's a purely ad hoc and temporary solution in
general.
But there is some evidence that real-time optimization of a moving
average may be possible. IOW you may be able to dynamically the
lookback of a moving average on a bar-by-bar basis for a particular
market without regard to whatever trading strategy you might wish to
apply. Adaptive moving averages (aka variable moving averages) are one
attempt to do this: the smoothing factor changes to account for
current market volatility. But the irony is that AMAs still need a
specified lookback period before they can work. So finding a way to
dynamically vary the lookback of an AMA would give a truly optimal or
near-optimal MA.
Unfortunately you won't be able to do it with MetaStock, because MS
doesn't allow dynamic parameters. A fatal flaw for sure, seeing as how
that's the wave of the future in TA.
Sorry I didn't address the RSI topic but I'm a trend follower, not a
counter-trend trader. :-)
Good trading,
kut2k2
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