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For those of you who are looking for a way to define trend and also
strength of trend. Try using the 5,13,34 MA indicator used by Bill
Willams. The way I use this indicator is to simply look at the
relationship between the 3 ma's. If the price is above the 34 ma , look
to buy, if under look to sell. If prices is above 34, and 5 & 13 ma
lines are crossing, the trend is not that strong. If the 5 & 13 ma
lines are NOT crossing, the trend is very strong. You can even look at
the relationship's between 5 & 13 ex: how close or how far the two are
from each other or how the two lines are interacting with each other,
can tell you how the trend is going. Using this indicator, Pivots and a
simple oscillator(Stochastics or RSI) to determine divergence as a means
to end of the trend.
I have found this to work very well for me. It's not perfect but it
does quite a good job for being simple. But then again, we all know
that the more simple , the better right!
Happy Trading
Troy Pasion
wallst@xxxxxxxx
Bob Hunt wrote:
> As a follow-up to previous discussions concerning trading basics, I
> have a suggestion for those who have been frustrated in using moving
> averages as a way to define trend.
>
> The April TASC has an excellent article on using Linear Regression
> tools to define trend and trend strength ("Identifying Market Trends"
> by Jack Karczewski). I've only been working with these concepts for a
> week, but they appear to show great promise. I especially like the
> ability to define trend strength, something that's generally missing
> when using moving averages.
>
> I've attached an .ela of the indicators discussed in the article. I
> downloaded this file from the Omega site.
>
> One indicator that is discussed in the article, but is not included in
>
> the .ela is Linear Regression Errors. From my limited experience in
> working with it, it seems to be an excellent indicator of short term
> turning points, in all time frames. I've included my interpretation of
>
> the indicator from the article below. If others, better versed in
> statistical analysis, interpret it a different way, please post your
> suggestion.
>
> Bob Hunt
>
> {-----------------------------------------------
> Study : Linear Regression Errors
> Last Edit : 3/12/98
> Provided By : Bob Hunt (c) 1998
> RHunt.066@xxxxxxxxxxxxxxxx
>
> Notes: Indicator constructed from the April '98 TASC article
> "Identifying Market Trends"
> -----------------------------------------------}
>
> Input: Length(30);
>
> Value1=LinearRegValue(C,Length,0);
> If Value1<>0 then Value2=((C-Value1)/Value1)*100;
>
> Plot1(Value2,"LinRegEr");
> Plot2(0,"0");
>
> -----------------------------------------------
>
>
> -------------------------------------------------------------------------------------------------------------
>
>
>
>
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