Experiments in Technical Analysis
- Thread starter karthikmarar
- Start date
Thanks Oxy & Ashish for all your help.
WARNING : May disturb you guys & Karthik, Anant & others with my queries in future too!
Warm Regards,
Kalyan.
WARNING : May disturb you guys & Karthik, Anant & others with my queries in future too!
Warm Regards,
Kalyan.
Please do put up your queries freely. You are not at all disturbing. On the other hand helping to understand better and learn.
Regards
-Anant
Re: Experiments in Technical Analysis-Trading the MACD
Hi Friends,
Time to move on..with Trading the MACD..
Next we will see combining the MACD with Stochastic
Combining Stochastic with MACD
Stochastic unlike the ADX does not provide Definite clues to aid trading with the MACD. However it does give some indications regarding the strength of a move. I will just briefly describe them here and leave it you to experiment further.
We will use a stochastic K (15,5)
The stochastic rising from the oversold region quickly reaching the over bought region in few trading session (5 or 6) and this is accompanied by a power Buy signal indicates a bullish move is ahead. In the same manner a swift move from the over bought region to the oversold region and accompanied by a power Sell signal will indicate a strong bearish move. Example 4 shows a bullish move. Example-5 shows a Bearish move.
To be continued
Regards
karthik
Hi Friends,
Time to move on..with Trading the MACD..
Next we will see combining the MACD with Stochastic
Combining Stochastic with MACD
Stochastic unlike the ADX does not provide Definite clues to aid trading with the MACD. However it does give some indications regarding the strength of a move. I will just briefly describe them here and leave it you to experiment further.
We will use a stochastic K (15,5)
The stochastic rising from the oversold region quickly reaching the over bought region in few trading session (5 or 6) and this is accompanied by a power Buy signal indicates a bullish move is ahead. In the same manner a swift move from the over bought region to the oversold region and accompanied by a power Sell signal will indicate a strong bearish move. Example 4 shows a bullish move. Example-5 shows a Bearish move.
To be continued
Regards
karthik
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Hi friends,
Just wanted to know if there's any indicator that depicts i) the absolute strength of demand ii) the absolute strenth of supply iii) the absolute resultant strength (of demand vs supply) much in the same way as the ADX ( with +DI & -DI) depicts the trend.
I may stress here that it should depict the absolute (& not relative) strengths for each of its components.
I was thinking along these lines - whether one can be created - but there's no point in trying to reinvent the wheel if one already exists.
Ideally, i'd want to incorporate both price & volume into it. So if one exists based on prices alone it'd still be useful (as it would be job half done!).
Alternatively, one can think of a single-line oscillator that shows the Absolute Strength of a move (can call it the ASI!) and takes 2 parameters - i) An Array of values & ii) period. The most obvious (default) candidate for the array would be the closing price; but it could also be a MA or a MA differential (MA1 - MA2, in which case both +ve & -ve values will need to be handled) and ideally it should also incorporate the corresponding volumes for the period. Again, is such a thing already in existence??
Regards,
Kalyan.
Just wanted to know if there's any indicator that depicts i) the absolute strength of demand ii) the absolute strenth of supply iii) the absolute resultant strength (of demand vs supply) much in the same way as the ADX ( with +DI & -DI) depicts the trend.
I may stress here that it should depict the absolute (& not relative) strengths for each of its components.
I was thinking along these lines - whether one can be created - but there's no point in trying to reinvent the wheel if one already exists.
Ideally, i'd want to incorporate both price & volume into it. So if one exists based on prices alone it'd still be useful (as it would be job half done!).
Alternatively, one can think of a single-line oscillator that shows the Absolute Strength of a move (can call it the ASI!) and takes 2 parameters - i) An Array of values & ii) period. The most obvious (default) candidate for the array would be the closing price; but it could also be a MA or a MA differential (MA1 - MA2, in which case both +ve & -ve values will need to be handled) and ideally it should also incorporate the corresponding volumes for the period. Again, is such a thing already in existence??
Regards,
Kalyan.
Last edited:
Dear Kalyan
Sharing some thoughts on your post on Absolute strength with strength of demand and supply.
First, I feel it is logical to equate demand and supply to the Buying and selling pressure.
One of the most widely used indicators for checking the buying and selling pressure is the Chaikin Money flow Indicator. This combines the price and volume. A tock closing above the median price is considered to be under buying pressure and closing below the median price considered selling pressure. I will not go into the details of the formula and indicator as everything is available on the net. But I have noticed that this indicator often gives clear indication of waning buying or selling pressure by means of divergence with the price. It is an indicator worth studying.
Another Indicator, which belongs to this category, would be the Williams A/D (Accumulation/Distribution). Frankly I have not been quite successful in using it and hence would not comment on it. If somebody can throw more light on it it would be wonderful.
Another one would be Elder Ray Bull power and Sell Pressure. It is a simple difference of the nDay EMA from the High and Low of the day. Divergences are the best method to use this indicator though I did not find it very interesting it is quite popular with many.
Interesting variation of the Elder ray indicator are available. The ones by Livshin and Gimalfarb are worth looking at.
Regards
karthik
Sharing some thoughts on your post on Absolute strength with strength of demand and supply.
First, I feel it is logical to equate demand and supply to the Buying and selling pressure.
One of the most widely used indicators for checking the buying and selling pressure is the Chaikin Money flow Indicator. This combines the price and volume. A tock closing above the median price is considered to be under buying pressure and closing below the median price considered selling pressure. I will not go into the details of the formula and indicator as everything is available on the net. But I have noticed that this indicator often gives clear indication of waning buying or selling pressure by means of divergence with the price. It is an indicator worth studying.
Another Indicator, which belongs to this category, would be the Williams A/D (Accumulation/Distribution). Frankly I have not been quite successful in using it and hence would not comment on it. If somebody can throw more light on it it would be wonderful.
Another one would be Elder Ray Bull power and Sell Pressure. It is a simple difference of the nDay EMA from the High and Low of the day. Divergences are the best method to use this indicator though I did not find it very interesting it is quite popular with many.
Interesting variation of the Elder ray indicator are available. The ones by Livshin and Gimalfarb are worth looking at.
Regards
karthik
Thanks Karthik, for the info.
I know a bit about the Chaikin MFI & Williams A/D. The latter builds upon the OBV (On Balance Volume) but i haven't found it any more useful than than the OBV which has a simpler construction.
As for the Elder Ray indicator i have no idea & will have to look up.
Actually, the failure of some MA crossovers is what makes me feel the need of an indicator which could indicate the strenth, the power of the move. The higher the strength the less the chances of failure. By applying the same to a MA differential we can gauge the strength of the crossover (even an impending crossover).
I want it to be as direct, as forthright as possible (hence the stress on the absolute). Not subtle clues like divergences etc. but a direct answer to whether the strength is there or not.
Off course, indicators of such 'direct' category tend to have sharp edges & zigzags. But even if the power is there for a short period after our entry and we mange to reap a small profit up & above our transaction costs, the move cannot said to have been failed.
But lemme first see what's already available.
Thanks Again.
Regards,
Kalyan.
I know a bit about the Chaikin MFI & Williams A/D. The latter builds upon the OBV (On Balance Volume) but i haven't found it any more useful than than the OBV which has a simpler construction.
As for the Elder Ray indicator i have no idea & will have to look up.
Actually, the failure of some MA crossovers is what makes me feel the need of an indicator which could indicate the strenth, the power of the move. The higher the strength the less the chances of failure. By applying the same to a MA differential we can gauge the strength of the crossover (even an impending crossover).
I want it to be as direct, as forthright as possible (hence the stress on the absolute). Not subtle clues like divergences etc. but a direct answer to whether the strength is there or not.
Off course, indicators of such 'direct' category tend to have sharp edges & zigzags. But even if the power is there for a short period after our entry and we mange to reap a small profit up & above our transaction costs, the move cannot said to have been failed.
But lemme first see what's already available.
Thanks Again.
Regards,
Kalyan.
Kalyan
Sharing some more thoughts
First decide the trading time frame.
If you looking at short-term trades, then you can go for moving averages which have less lag and overshoot. Adaptive moving averages like KAMA, VIDYA, are quite good.
You may also consider HULL or Tlsons T3. Ananths BB method on the histograms is a very good way to exploit the difference between two moving averages. But one draw back is the whipsaws and he is diligently working on it. Hope he will come out with some method to stay off the whipsaws soon.
If you were a position Trader, simple trend following methods would be fine. But trying to catch the bottom and the Top would be a waste of time. If one is able to catch a decent part of the trend ..say from 60 to 70 % he would make decent money. Try to make it simple at least in the beginning. You can look at complicated stuff later when you are in the habit of making decent returns.
Just remember the magic of compounding, a 3% percent return every fortnight would double your money in a year. Just four percent return in a month would give up about 1.5 time your money. You are not planning to become rich over night, are you?
Regards
Karthik
Sharing some more thoughts
First decide the trading time frame.
If you looking at short-term trades, then you can go for moving averages which have less lag and overshoot. Adaptive moving averages like KAMA, VIDYA, are quite good.
You may also consider HULL or Tlsons T3. Ananths BB method on the histograms is a very good way to exploit the difference between two moving averages. But one draw back is the whipsaws and he is diligently working on it. Hope he will come out with some method to stay off the whipsaws soon.
If you were a position Trader, simple trend following methods would be fine. But trying to catch the bottom and the Top would be a waste of time. If one is able to catch a decent part of the trend ..say from 60 to 70 % he would make decent money. Try to make it simple at least in the beginning. You can look at complicated stuff later when you are in the habit of making decent returns.
Just remember the magic of compounding, a 3% percent return every fortnight would double your money in a year. Just four percent return in a month would give up about 1.5 time your money. You are not planning to become rich over night, are you?
Regards
Karthik
Thanks karthik for your thoughts and (some more) info.
It's not about getting rich quick but about improving the weapons system. It's about going for the Sukhois with the MIGs still in place. I don't like the chinks in my armoury. I don't like markets fooling me. (A war can be short, long or intermediate, but does it matter? Whatever the duration one would always want to have the best weapon system).
Yes, Ananth has done some great (& unique)work. I was particularly impressed by the way he improved things through an ingenious (& scientific) use of the BBs. No wonder he's a scientist. He has been an inspiration in showing that even ordinary folks like myself do stand a chance of coming up with something unique (& useful, value adding) - it's not 'all done'.
And you Karthik are the true leader. All the ideas that's on this thread today originated from you. And you've kept it going with your knowledge, your patience, your congeniality (I may eventually manage to imbibe some of Ananth's qualities, but never yours - it's not in my grain).
Hats off to you guys and to the spirits of new India!
Regards,
Kalyan.
It's not about getting rich quick but about improving the weapons system. It's about going for the Sukhois with the MIGs still in place. I don't like the chinks in my armoury. I don't like markets fooling me. (A war can be short, long or intermediate, but does it matter? Whatever the duration one would always want to have the best weapon system).
Yes, Ananth has done some great (& unique)work. I was particularly impressed by the way he improved things through an ingenious (& scientific) use of the BBs. No wonder he's a scientist. He has been an inspiration in showing that even ordinary folks like myself do stand a chance of coming up with something unique (& useful, value adding) - it's not 'all done'.
And you Karthik are the true leader. All the ideas that's on this thread today originated from you. And you've kept it going with your knowledge, your patience, your congeniality (I may eventually manage to imbibe some of Ananth's qualities, but never yours - it's not in my grain).
Hats off to you guys and to the spirits of new India!
Regards,
Kalyan.
Last edited:
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