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What you are talking about doing can't be done in Metastock directly,
other than by observation. To answer the questions you're asking
there are historical testing software packages that can look back
over history and calculate probabilies, or whatever you want.
However, all the thresholds change over time. What works during this
five year period might well be different for the next five year
period.
Other issues include the number of false signals and whipsaws you're
willing to tolerate, the speed of the indicator, the time frame and
the market trend at the time. Many pros adjust their thresholds in
concert with current trading conditions. That takes lots of
experience.
Almost all indicators have published thresholds. Many of them can be
found in Technical Analysis from A to Z, so you don't have to
reinvent the wheel.
Many thresholds are published in articles you can find on the web.
You can have three choices, trust the thersholds published, count
your events by hand, or spend a few thousand dollars and hours on
historical testing software.
I just finished consulting on one fundamental applications package
that's the best I've seen. The basic model screening package is $5000
a year. The historical testing software for it is an additional $8000
a year. With it, you can back test any set of fundamental variables
and how they have impacted stock prices during any time period over
the last 50 to 75 years. Cool stuff! I was really close to buying it
for my own use.
The same kind of packages exist for TA.
No matter what question you can think of, somebody has already tested
it and researched it. If you can find that person, they'll tell you
the answer to your question and save you a lot of time. No, I don't
know the phone number of that person.
JO
--- In Metastockusers@xxxxxxxxxxxxxxx, "Daniele Bevilacqua"
<daniele.bevilacqua@xxxx> wrote:
> Hi,
>
> in order to decide which threshold to use to validate an indicator,
so far I have been eyeballing them on charts of a lengthy period of
time and drawn very empirical (to say the least) conclusions. I am
wondering if there is a better way to do this - there must be, I
assume...
>
> What I would like to do, is find the percentage of time that the
indicator in question has been above (or below) a certain value for a
specific security, eg since Jan 00 the RSI of YYY, Inc. has been
above 70 only 3.5% of the time.
>
> Even better, what is the value below which fall 95% (or 90% etc.)
of the observations of the indicator in the time frame specified.
>
> Any suggestions?
>
> many thanks in advance
>
> Daniele
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