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The ela file attached contains 4 indicators. Two from Walt Downs and two from
me.
Walt's provide the full moon dates and counts the number of turns within a
lunar year. If you have any questions regarding these two indicators Please
contact Walt.
The indicator marked as X-bar is my first indicator.
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The first is a moving average channel based on the work of Dr. Edward Deming
who never traded a stock/index or Future in his life, but was recognized as a
foremost statistician in his lifetime. (as a side note I am not surprised
Japan is in an economic mess since his death.)
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This indicator gives three plots.
Daily price average of open/hi/low/close. (xbar)
A twenty-five day period average of the daily price average. (x doublebar)
Moving average envelopes for the Xbar based upon the average daily price range
of the last 25 bars. (mutiplied by a specific factor that is statistically
derived based on sampling theory. As the sample size changes so does the
multiplying factor.).
These envelopes provide the most efficient +/- 3standard deviations for the
Daily price action as represented by the daily xbar.(Sorry John Bollinger, you
almost got it right.)
It is specifically designed to answer The Most Important Question needed to
design a sucessful trading system. What is the trend? Up, Down or sideways?
Here is a rule. If three X-bar's are outside the limits in a particular
direction. a trend is in the making.
Test it and I think most of you will find it to be a most superior moving
average trading system.
There are also rules to tell one when a trend is over. Those will be in my
book if i ever write one.
Since it takes three plots to identify the trend, It is a Lagging indicator.
The other indicator is called linslope2. The basic principle behind this
indicator is based upon a simple concept in physics. When is a system in a
steady state and when is it changing?
Up, down or sideways if a system is moving at a constant rate of speed then
the rate of change to the system is zero. Think of a car. It can be standing
still or moving at a steady rate of 60 miles per hour. the rate of change
would be the same. "zero" But if we accellerate or decellerate the car then
the "Rate of change for speed" would oscillate.
That is what this indicator measures.
The two lowest plots on the chart are for the same indicator. Only the Number
of days have been changed. Note how the 10 day(red) turns faster than the
yellow (13 days).
The 10 day also turns before price, giving it an opportunity to be a leading
indicator.
I have found that this indicator works well as a divergence indicator. (Higher
high in price and lower high in the indicator) and as a screening mechanism
for other oscillator entrance rules.
As an example if a stochastic turns up and this indicator is turning up from
an "oversold" location then I give the Stochastic signal more weight.
On the otherhand if there is a stochastic buy signal and the LINSLOPE2 has
already passed it's zero line, I will most likely pass on the trade.
Hint:You folks doing cycle work may want to try !/2 the average cycle length
for this indicator an then look at your buy signals in relation to this
indicator.
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