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In a message dated 98-03-11 15:09:42 EST, 75231.2457@xxxxxxxxxxxxxx writes:
<< Anybody got any ideas for seeing tops, ESPECIALLY shorting
opportunities? >>
I don't know if this will solve the problem of shorting with RoC but
it might be an interesting idea to explore (I don't have the software to test
it so I can only pass it to you).
Fred G. Schutzman took Martin Ping's work one step further and
developed a Smoothed Rate of Change (S-RoC) indicator. To do this (as
described in "trading for a Living" by Alexander Elder) you calculate the
exponential moving average (EMA) of the closing price then apply the RoC
formula to the EMA. According to Elder this produces fewer but more accurate
results.
This would require some exparimation with the length of the EMA, but a
good starting point might be a 30 bar closing EMA applied to your 7, 14 & 20
RoC. I suspect an EMA greater than the longest RoC would work best but all
reasonable values should be tested. You might even try different EMA's with
different RoC's, say 7 bar EMA with 7 RoC, 14 bar EMA with 14 RoC and 20 bar
EMA with 20 RoC (thinking about this is starting to give me a headake, what is
that, 3 to power infinity possible combinations?).
I hope this raises some interesting lines of exploration and not just
complexity, sorry I can't test it for you.
Good luck and good trading,
Ray Raffurty
P.S. If this proves to be of value please include my name as a footnote in
your first book on trading.
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