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You have created a monster. If you look closely at the indicators and the
time frames you are using, they are contradictory. They also violate the
uses for which many where intended by their creators. There are much
simpler ways to trade. Have a good week end. Ira.
"Rajat K. Bose" wrote:
> Realtraders,
>
> Here is an analytical methodology that I use to determine the nature
> of the securities that I analyze and trade. At the outset, I admit
> that the methodology is bit eclectic and it does not have the
> required intellectual appeal. However, I have found it to be quite
> helpful and profitable.
>
> I request you to comment on this and please suggest further
> refinement.
>
> Thanks in advance for your patience to read the stuff.
>
> Rajat K Bose
>
> Reproduced below is the write-up:
>
> Analytical Methodology
> The analytical methodology involved in technical studies has
> essentially been divided into two models—trending and non-trending or
> range bound.The process followed in determining trendiness is as
> follows:
> 1. ADX indicator—9 and 14 period one—is used. If the ADX values are
> seen to be rising, the scrip is said to be in a trend. In conjunction
> with this or exclusively one can use Tushar Chande's Range Action
> Verifying Index.
> 2. A smoothed version of the statistical indicator called r-squared—of
> differing time-periods—is also used. Here again, if they are found to
> be rising, the scrip is said to be in a trend for the time periods
> used
> in those indicators.
> 3. Variable moving averages (VMA) of differing time periods are also
> used for confirmation. I use 8 and 21 days VMA. In a trending market,
> the VMA has a direction—up or down—otherwise it remains flat in a non-
> trending market.
> 4. A band of another statistical indicator called Standard Error Band
> (SEB) is also used to observe the strength of any trend in a scrip.
> The stronger the trend the tighter the band. In a range bound market
> the band becomes wider. Both the SEB and the r-squared indicator are
> derived from linear regression analysis of time series data—here
> stock prices through time.
> 5. Additional confirmation of bull and bear markets come from
> indicators like the 14-RSI—in a bull market, this indicator does not
> normally go below 40 and while in a bear market it does not normally
> goabove 60.
> 6. Also used are Fibonacci retracement studies—38.2 per cent
> retracement is normal in a correction beyond that the probability of a
> trend petering out becomes greater.
>
> Once the trend is determined and the scrip is found to be in a trend,
> trend following methodology is used. Trend-following methodology
>
> 1. Tools used in trend-following methodology are primarily moving
> averages and trendlines. These two tools are either used as support
> and resistance levels or re-entry points depending on the case.
> 2. Other trend-following indicators like MACD and MACD Histogram are
> also used.
> 3. Moving Average hi-lo channels are also used extensively.
> 4. Certain indicators which are otherwise used for range bound markets
> are also used to predict higher or lower prices. Williams’ %R and
> Stochastics are two such examples. Stochastic Pops in either the
> overbought or the oversold zones are used as confirmation that a trend
> is in progress and prices are likely to continue to move in the same
> direction. Similarly a rising Willams’ %R in an uptrend would indicate
> higher prices.
> 5. Stop-loss levels are determined by the break of moving averages or
> trendlines or hi-lo channels.Trading or range-bound market methodology
> 1. If the scrip displays trading market (range bound )characteristics,
> what is attempted first is to be able to determine the range in which
> the security in question would move about. This is done in two ways
> either by using the oscillators’ overbought and oversold readings or
> by using Fibonacci retracement levels or major support and
> resistancelevels.
> 2. In this type of market, buy weakness and sell strength strategy is
> followed.
> 3. Stop-losses are placed beyond the levels perceived to be the
> boundaries of the range.
> 4. Pyramiding is not advocated in this type of market.
> 5. Volatility study is added as a crucial factor in range-
> boundmarkets.
>
> Above all, the Weight of the Evidence approach is followed in
> allcases.
>
> ______________________________________________________
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