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The goal of many indicators is to determine the true trend of the
security in the presence of noise.
MS has pre-programmed 3 indicators that fit price to a straight line:
Lin Reg Ind
Lin Reg Slope
Lin Reg Trendline
My observation was that prices rarely move in a straight line, much
more common is that the price action is curved - like a section of a
parabola. (A straight line is a special case of a parabola with the
x^2 term equal to zero)
After programming the fit to a quadratic, I found that it more
accurately determined the markets trend, with significantly less lag
than a fit to a straight line.
After normalizing prices to $100 and calculating the first derivative
of the quadratic at the most recent bar, I found that I had a
accurate, fast responding ranking system that worked well with ETF's.
My portfolio of the top 4 ranked ETF's (out of a universe of 20 ) is
up 22% YTD with a max drawdown of 6%.
I trade the above system in 5 accounts for my family. I am a private
investor - nothing for sale - no website.
Ed Hoopes
--- In equismetastock@xxxxxxxxxxxxxxx, "david" <dwei9361@xxxx> wrote:
>
> If anyone uses parabolic trend lines as part of a systematic approach I
> would be very interested, as I can not see the logic behind them ... it
> seems to me 'curve fitting' literally.
>
> Regards
>
> Dave
>
> -----Original Message-----
> From: equismetastock@xxxxxxxxxxxxxxx
[mailto:equismetastock@xxxxxxxxxxxxxxx]
> On Behalf Of Jose Silva
> Sent: Tuesday, 22 November 2005 5:17 PM
> To: equismetastock@xxxxxxxxxxxxxxx
> Subject: [EquisMetaStock Group] Re: Parabolic trend "line"
>
> Ron, Ed, plotting a parabolic fit is not impossible using MSFL - it
> just requires a little imagination and a lot of free time.
>
> However, since abstract mathematical plots are generally considered an
> absolute waste of *valuable time* and effort, and since it has little
> or nothing to do with actual trading, you won't find much of that
> around here.
>
> For complex parabolical(!) plots, try dedicated maths software such as
> Statistica 7. http://www.statsoft.com/v7.htm
>
>
> jose '-)
> http://www.metastocktools.com
>
>
>
>
>
> --- In equismetastock@xxxxxxxxxxxxxxx, "Ed Hoopes" <reefbreak_sd@xxxx>
> wrote:
> >
> > It was just this problem that led me to change my TA software from
> > MS to AmiBroker. Plotting a best fit parabola to a data set
> > requires the solution of 3 equations in 3 unknowns - far beyond the
> > capabilities of MS - FL.
> >
> > I was frustrated realizing that I would have to buy the MS MDK PLUS
> > purchase a programming language - $$$$. I Googled for things like
> > "Tech analysis software" etc. AmiBroker's Website came up and I
> > realized that programming a parabolic fit would be possible. I
> > created a Function in AFL that does the parabolic fit, and have
> > incorporated it into several indicators.
> >
> > I recommend you pursue a parabolic fit indicator, it works really
> > well.
> >
> > Ed Hoopes
> >
> > PS
> > I still read this board since I am in a MS users group - even though
> > I don't use MS any more.
> >
> >
> > --- In equismetastock@xxxxxxxxxxxxxxx, "Ron Berlin" <rsb_44@xxxx>
> > wrote:
> >
> > In Trend Trading Guppy mentions a parabolic trend line drawing tool.
> > It's not in MS and the ellipse tool doesn't do the job.
> >
> > Is there a work around? I'd like to have that feature.
> >
> > TIA
> > Ron
>
>
>
>
>
>
>
>
>
> Yahoo! Groups Links
>
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