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I've tested most of Ehlers tools. Like Ed said, they're the same as
every other TA indicator.
Basically all TA indicators are based on volume and/or price. There is
only so much information that can be extracted from those two
variables no matter how they are tortured mathematically. You can't
get the data to confess to something it doesn't know, like what's
going to happen tomorrow.
The two things that impact trading results the most are first, the
market conditions. You can check that using the S&P 500 with a couple
of simple moving averages of your choice, weekly or daily. Don't trade
if the 4 week MA is below the 8 week MA. That alone will improve the
performance of whatever you're using, and it will save you a lot of
money.
The second thing is trading from the right pool of stocks. The best
pool to trade from is a prescreened group that has been analyzed based
on fundamental analysis or quantitative analysis prior to applying TA.
TA by itself isn't worth a whole lot, despite what people who sell TA
stuff might say, or scream, depending on which one it is.
However, TA can be useful as a tool to decide which 5 stocks look good
for the current time period out of a group of 25 stocks that have high
quant or fundamental values.
John Ehlers is a nice guy and I enjoyed his books, but what he's got
isn't magic. It can't find the two stocks that are going to go up when
the rest of the market is going down.
However, when the majority of stocks are going up, as in uptrend, then
his tools, just like every other TA tool, can find stocks that are
going up. Duh!
As far as whether Zweig has a good list, or George Washington has a
good presreened list is another issue.
I like Value Line T100, IBD 100, S&P Neutral 25, S&P Platinum and Ford
Equities top 20. Why? Because they've all got long and successful very
public and audited track records.
However, if George Washington's list has proven excellent over long
periods of time, then George's formula's for quant and fundamental
analysis work, and the pool is valid. However, even that pool won't do
you any good in a downtrend. (Yeah, I know we're all going to short in
downtrends!)
The boys on Motley Fools Mechanical Investing board are pretty sharp
when it comes to quants and FA analysis. They have back testers, etc.
You can read something like 10,000 posts on there and pretty well
figure out what's going on. That's how I learned about FA and QA testing.
If you really like the mathematical approach and you are a true
believer that it will give you an edge, you might look at David
Sepiashvili's work in time series. His stuff tests out pretty good if
you can figure out how to code it. He used to have a website
www.alticom.com but it's not working anymore. He's written articles
for S&C and Futures magazine. That's how I had to figure out his
formula's.
Have fun!
Super
--- In equismetastock@xxxxxxxxxxxxxxx, "eciarng" <eciarng@xxx> wrote:
>
> HI,
>
> I am reading this book Rocket Science for Traders by John Ehlers and I
> find the indicators described in this book very interesting. However
> the codes given for the filters and indicators are not for Metastock.
>
> If someone has used these indicators, can you please advise me your
> experience with them. Also can you share the code for the Optimum
> predictive filter described in this book.
>
> Thanks
>
> Arun
>
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