|
PureBytes Links
Trading Reference Links
|
Preston;
I think I learned more from your explanation about the gobbledegook
that we refer to as Metastock Formula Language than in hours of
struggling through the books. Thanks.
-- Keith
--- In equismetastock@xxxxxxxxxxxxxxx, pumrysh <no_reply@xxx> wrote:
>
> Gladly Paul,
>
> The theory:
> In order to establish a normal value for something we need to look
> at its extreme low and high values over a period of time. It really
> doesn't matter what it is. In the case of rain we look at the
Palmer
> Index, which is what Mark had asked about. Its another way of
saying
> on average what value should we be seeing...are we above or below
> that. 50 is the norm.
>
> The principle:
> Let's look at the indicator line by line using the following
>
> {1}(Fml( "Zero Lag MACD" )
> {2}-LLV(Fml( "Zero Lag MACD" ),48))
> {3}/(HHV(Fml( "Zero Lag MACD" ),48)
> {4}-LLV(Fml( "Zero Lag MACD" ),48)
> {5}+.0000001)*100
>
> Lets first look at line 3 and 4. Here we take the highest value
over
> 48 days and the lowest value over 48 days. This is now our range.
>
> Lines 1 and 2 establish where we are today. It will tell us how far
> we are from the bottom.
>
> Next we need to establish some type of value that we can relate to
> in a percent. So in line 3 you will note a division sign which is
> used to divide our range into our present position. The resulting
> output would be in decimals.
>
> In line 5 we do two very important things. We first add .0000001 to
> our range value. This is done to eliminate a division by zero
error.
> We could have also used +prev-prev to do the same thing, again for
> the same reason. Finally we are going to multiply our result by
100.
> This gives us a scale that is from 0 to 100.
>
> Normalizing or indexing in this fashion is a great way to determine
> what an indicator is doing. There are problems with the method
> though that you should consider. One is the period of time. In our
> case we are only looking at 48 days worth of values. You really
need
> to consider whether this is going to be an appropriate amount of
> time to establish a norm. A true statistician may feel that this is
> not enough time and may wish to increase the lookback period.
>
> Another problem with this form of normalizing is the range. We are
> basically range bound between 0 and 100. You will notice often
times
> that the indicator flatlines at either the top or bottom. This is
> when you are range bound. Its important to consider what is
> happening at these points. If it happens often then it is possible
> that you are using a lookback that is too short.
>
> Another way of correcting the problem is to use a different scale.
> Instead of the 0 to 100 scale where 50 is your midpoint, you could
> use a bipolar scale. The midpoint of a bipolar scale is 0 with a
> positive and a negative deflection. The beauty of using this scale
> is that you now are using a +/- scale of 100. It will allow for a
> much wider scale.
>
>
> Hope this helps,
>
> Preston
Yahoo! Groups Links
<*> To visit your group on the web, go to:
http://groups.yahoo.com/group/equismetastock/
<*> Your email settings:
Individual Email | Traditional
<*> To change settings online go to:
http://groups.yahoo.com/group/equismetastock/join
(Yahoo! ID required)
<*> To change settings via email:
mailto:equismetastock-digest@xxxxxxxxxxxxxxx
mailto:equismetastock-fullfeatured@xxxxxxxxxxxxxxx
<*> To unsubscribe from this group, send an email to:
equismetastock-unsubscribe@xxxxxxxxxxxxxxx
<*> Your use of Yahoo! Groups is subject to:
http://docs.yahoo.com/info/terms/
|