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Preston,
On seeing your mail and reading the
links, for a moment was sad somebody from my country had played an Indian Rope
trick on the world but on investigation believe it not to be so - assuming that
my understanding of the writing in one of the links to be that RMO & Rainbow
has the same formula.
The following chart has both RMO,
Rainbow Indicator (with parameters adjusted so that both RMO at the top in dark
blue color & Rainbow at the bottom in green) and my earlier
simple MACO of long & short periods is in maroon. Have taken the parameters
of Rainbow (8 & 100) in such a way that they give crossovers more or
less at the same point in time.
Formula I have used for Rainbow
(modified) is as below;
n:=Input("Averaging
Periods",1,40,8);
period:=Input("Period for
Oscillator",50,200,100);
100 *
(CLOSE - ((Mov(C,n,S)
+
Mov(Mov(C,n,S),n,S) +
Mov(Mov(Mov(C,n,S),n,S),n,S)
+
Mov(Mov(Mov(Mov(C,n,S),n,S),n,S),n,S)
+
Mov(Mov(Mov(Mov(Mov(C,n,S),n,S),n,S),n,S),n,S)
+
Mov(Mov(Mov(Mov(Mov(Mov(C,n,S),n,S),n,S),n,S),n,S),n,S)
+
Mov(Mov(Mov(Mov(Mov(Mov(Mov(C,n,S),n,S),n,S),n,S),n,S),n,S),n,S)
+
Mov(Mov(Mov(Mov(Mov(Mov(Mov(Mov(C,n,S),n,S),n,S),n,S),n,S),n,S),n,S),n,S)
+
Mov(Mov(Mov(Mov(Mov(Mov(Mov(Mov(Mov(C,n,S),n,S),n,S),n,S),n,S),n,S),n,S),n,S),n,S)
+
Mov(Mov(Mov(Mov(Mov(Mov(Mov(Mov(Mov(Mov(C,n,S),n,S),n,S),n,S),n,S),n,S),n,S),n,S),n,S),n,S))
/ 10)) /
(HHV(C,period) - LLV(C,period))
For the same trending range (more
or less), the RMO has behaved without any tick on the negative while the Rainbow
has crossed below '0' a few times though for a single tick each time. But would
have saved a trader from closing his position when filter is applied. The edges
are ragged compared to the RMO - it has no relevance except for
aesthetics.
But on both 'gap down' openings on
15th & 20th for NIFTY (Indian Index) the Rainbow carried on with the lag
induced by that single tick while the RMO recovered pretty fast - especially on
the 20th. The reason is that the 'incremental' fall suffered in that tick in the
indicator for the 'gap down' in price was only minimal in RMO while it was
considerable in Rainbow and also in the simpler MACO - exactly as one would
expect with an oscillator that is purely based on 'price averaging &
difference of 2 averaged points'. This behaviour of RMO is pretty
advantageous to somebody when he/she is trading on smaller time frame systems
like 5min / 15 min and intends to carry forward postions till either 'exit' or
on 'stop & reverse' basis. This obviously avoids loss of profit and possibly
a subsequent whipsaw.
I am no expert on software writing
and can not crack his or anybodyelse's passwords. But I am still
inclined to believe that in all probability he has based his system on MACO (it
might even be the Rainbow - if so it has to be a further smoothened Rainbow at
the final level since Rainbow has so much of raggedness at the
edges) but there could probably be an element of a
conventional oscillator built into it.
On the negative side his system does not seem to be swift enough at the
extremes and fails to give sufficient divergence on the face of weakness which
normally is the hallmark of a good oscillator (and the drawback of a MACO) but
on the positive side it ignores the impact of a single large tick as
in 'gaps'.
Unless somebody comes up with a set of parameters for Rainbow that exactly
replicates RMO, guess it deserves the name Rahul Mohinder Oscillator and not
Rainbow Modified Oscillator. :-)
As a matter of disclosure, I am as far away from Rahul Mohinder as West
Coast is to East Coast in US.
gv
----- Original Message -----
Sent: Wednesday, February 18, 2009 11:16 PM
Subject: Re: [EquisMetaStock Group] Re: adjusted
movingaverages&zerolagoscillators
> Preston,
>
> thanks for the
info on Rainbow Indicator.
>
> must say I am pretty appreciative of
the work you are doing.
>
> have been learning a good amount of my
programming from this group and great
> amount of info on so many other
things.
>
> thanks again
>
>
> gv
>
> ----- Original
Message -----
> From: "pumrysh" <no_reply@xxxxxxxxxxxxxxx>
> To: <equismetastock@xxxxxxxxxxxxxxx>
> Sent: Wednesday, February 18, 2009 9:39 PM
> Subject:
[EquisMetaStock Group] Re: adjusted moving averages &
>
zerolagoscillators
>
>
>> GV,
>>
>> 1.Charts will be broadcast to those
choosing to receive emails but
>> not saved in the message
archive.
>>
>> 2.The RMO uses recursive
smoothing.
>>
>> 3.While the indicator may not come with the
flexibility of choosing
>> your own parameter, it can be
modified.
>>
>> 4. The RMO is the Rainbow Indicator created by
Mel Widner, Ph.D. and
>> originally introduced in the July 1997 issue
of Technical Analysis of
>> Stocks and Commodities
magazine.
>>
>> The Rainbow Charts indicator is
trend-following indicator. The basis
>> of the Rainbow Charts indicator
is a 2-period simple moving average.
>> Recursive smoothing is then
applied to the original moving average
>> thereby creating 9 additional
moving averages; each new moving
>> average is based on the previous
moving average. Through this use of
>> recursive smoothing a full
spectrum of trends is created that, when
>> plotted using continuous
colors, have the appearance of a rainbow.
>>
>> The Rainbow
Oscillator is also a trend-following indicator that is
>> based on the
same calculations used to create the Rainbow Charts. The
>> Rainbow
Oscillator is derived from a consensus of the Rainbow Charts
>> trends.
It defines the highest high and lowest low of those moving
>> averages
to create an oscillator and bandwidth lines based on those
>>
calculations.
>>
>>
>> Click on the link for
the Meatastock formula:
>>
>> http://www.traders.com/Documentation/FEEDbk_docs/Archive/0797/tradetips.html
>>
>> or go
to:
>>
>> http://www.paritech.com/education/technical/custom/indicators/97jul.asp
>>
>>
>> The article link
is:
>>
>> http://www.traders.com/Documentation/FEEDbk_docs/Archive/0797/0797Widner.html
>>
>> Discussion at the Equis
Forum:
>>
>> http://forum.equis.com/forums/post/23170.aspx
>>
>>
>>
>> Hope
this helps,
>>
>>
>>
Preston
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