[RT] Re: Gen:OEX Entropy

[Clyde Lee <clydelee@xxxxxxx>]

Ron gave us an interesting look at Entropy.

Here is an indicator that I wrote using his ideas.
Note that I did a bit of flipping for display purposes.
I'm not bothering with  .ela   since this is so simple.

SIMPLE don't mean that it ain't valuable.  I think if
you look at this closely you will get some idea of why
Ron is so convinced ! ! !

Clyde


Input:  Length(21);

Vars:  ENTROPY(0),Avg(0),RMS(0);

{
     E(entropy) =     (Average / Root Mean Square) + 1
                     ---------------------------------
                                      2
}

Avg = Average(c,Length);

RMS = 0;
for value1=0 to length-1 begin
  rms=rms+c*c;
end;
rms=SQUAREROOT(rms/length);

Entropy=(Avg/iff(rms<>0,rms,.001)+1)*.5;

Value1=-(Entropy-1);

if Value1>0 then
 Plot1(Value1,"-ent")
else
  Plot2(Value1,"+ent");

 Plot3(0,"0");

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Clyde Lee   Chairman/CEO       (Home of SwingMachine)
SYTECH Corporation             email:   <clydelee@xxxxxxx>
7910 Westglen, Suite 105       Work:    (713) 783-9540
Houston,  TX  77063            Fax:     (713) 783-1092
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----- Original Message -----
From: "Ronald McEwan" <rmac@xxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Friday, June 02, 2000 15:17
Subject: [RT] Gen:OEX Entropy


> For all those who enquired about the Entropy Indicator. This is a copy
of
> a reply I sent to another member. My original  post was just meant to
> give my short term outlook on the OEX and my reason for this using an
> indicator I developed. And not to push a new indicator on anyone.
> ----------------------------------------------------------------------
---
> ---------------------------------------------
>
> All the information on this is in "The Mathematical Theory of
> Communication" by Claude E. Shannon. It took me almost a year to
> understand this enough to figure out how to use it. If you want to get
> this book I suggest you get a very large bottle of aspirin to go with
it.
> I can give you the basic formula for this if you would like to see it.
I
> don't sell anything or charge for anything I do, I just don't give it
all
> away either. I believe that if you do not try to do some of the work
> yourself you will not get a good understanding of how it works.
>
> thanks
> Ron
>
>
> formula for Entropy Calculation
>
>      E(entropy) =     (Average / Root Mean Square) + 1
>                                 --------------------------------------
--------
>                                                             2
>
> Ron McEwan
>
>
> ps Shannon's book has completely changed my way of looking at market
> information.
>
>
>
>


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