Using Market Indicators to deduct Market Bottoms

VPA Version 4

Finally here is the next version of the VPA, V.4.0.  The earlier version was a step in refining the signal generation codes. However the signals were generated were too many creating a confusing picture. Also there was a error in coding which prevented the use Random walk  Index for the evaluation of the trend. In version 4.0 I have attempted to refine the signal generation coding  so we have lesser more accurate signals.

Another major change is the effort to indicate the high probability of change in the Trend. These are Sentiment Change Indicators. .  A green up Arrow indicates that there is a change of sentiment. The current down Trend may possibly end soon and we may see an Uptrend soon. A Red Down Arrow indicates that there is a change of sentiment. The current Up Trend may possibly end soon and we may see Down trend soon.  Like any signal in Technical Analysis there signal are never 100% accurate these seem to catch the majority of the trend changes. The users are advised not to use these as buy and sell signals. However these signals would be indeed good guiding sophomores.

I am also including a PDF file which provides some details of the various Flags generated by the AFL on the chart. This would help the beginner very much to understand the implication of the various Flags. This is very brief and we I will try to elaborate on each as and when time permits.

The AL can be downloaded from here :
VPA  Version 4
VPA Flags

Custom Volume Histogram

Back to my Blog after a long time. Unfortunately my work does not give me the luxury of pursuing a active hobby.

On thing I found amusing is that my custom Volume Histogram has been generating a lot of interest. There were many request to share the same. It is a simple histogram based on the strength and weakness of the bar base on close volume and also the overall Trend. There is nothing special about it. However it seems to catch the trends , the turning points and listless days clearly. It also plots the average volumes, a selectable short term and a six months average

Anyway I am sharing the same for whatever its's worth.

The AFL can be downloaded from my shared folder 

Volume Histogram AFL

VPA - 3 with Exploration

There has been a lot of demand for including the Exploration with the Latest VPA afl.  I never imagined that so many people used the exploration. It is only a sign of the growing popularity of  the Wyckoff way to Analysis the Markets.

Today is special day to Indians. The 15th of August is the Independence Day. And there cannot be better Day to share the AFL with Exploration. So from a Proud Indian, a gift to all VPA lovers around the globe.

Since many were having problem downloading from 4shared site, I am sharing it from my One Drive Please provide feedback so that we can improve it further.

VPA - V.3.1.0 - VPA with Exploration

Finally...... Here is VPA Version 3

Finally, I am ready with the working version of the upgraded VPA, version 3.0. Of course the usual prolonged testing has not been done yet. For the version 1.0 I had my friend CAS who did the through testing before we released for the public. He was the one who introduced me to VSA. It is the right time to acknowledge his contribution to the VPA. Anyways I am releasing the version 3.0 directly now and we can collect all the feedback and make the debugging if any.

Obviously the first question that would arise in everyone’s mind is what is new in version 3.0. Let us look at the various changes as below

Code: The code itself had undergone a big change. Now it is more organized and easily understandable. Also the formula for each condition have been studied and updated.

Background color choice: There is option to select the background color.  There is option to have two different colors for the upper and lower parts of the pane providing a gradient colors.

Trend Analysis: One of the major changes is the way the trend evaluation is done. In the earlier version trend evaluation was done using Linear Regression Slope. In the new version we are using the “Random Walk Index” to evaluate the Trend. This method is much more accurate compared to the earlier one. It uses the Inbuilt RWI functions of the Amibroker. The AFL has some parameter variables and if one is not sure about the Random Walk Index it is better to leave the parameters at default values. The RWI index and trend analysis deserves a separate dedicated post which I will do later.

Bar coloring: Two choices for bar coloring are provided, VSA based and Trend Based. The method is selectable from the parameter window.

Support and Resistance lines:  The support and resistance lines can be plotted on the chart. Maximum of 20 lines can be plotted. One can also adjust the sensitivity for the selecting the support and resistance lines. All the selection can be performed from the parameter window.

 Also commentary is provided about the support and resistance lines. Messages are displayed as the price approaches a support or resistance lines. Also messages are displayed when the price cross a support or resistance line.

 High Volume Lines:  In Volume price analysis high Volume bars deserve a lot of attention. The high volume Bars of the past  also play significant role in current Bar analysis as well. So I have provided the facility to plot the high volume lines just  like the support and resistance lines.  One can plot up to 20 lines. Also one can adjust the volume factor that determines the high volume areas.  All the adjustments and selection are done from the Parameter window.

The Parameter setting window

The AFL can be downloaded from the below link

Volume Price Analysis VPA 3.0

The K-Trend System - I

Before we proceed with further exploration of the K-Trend Indicator let me share with you my Trading system based on the K-Trend Indicator. It was one of my early Indicators developed during my early days of TA journey.

The system is a simple Reversible one. The rules are follows

BUY Setup

When the momentum turns positive from negative, In other words when the K-Trend Indicator is negative and changes from negative to positive.

Buy setup = KT < 0 and KT (today) > KT (Yesterday)

The setup condition remains active for 6 Bars

Entry

Enter when the value is above the High of the Buy setup Bar+0.5 times a 5 bar Average True range.

Buy = High(Buy setup bar) + (0.5 x ATR(5) ) .  In fact the value 0.5 is adjustable.

Exit  setup

When the momentum turns negative from Positives, In other words when the K-Trend Indicator is positive and changes from positive to negative.

Exit setup = KT >0 and KT (today)<KT (Yesterday)

Exit

Exit when the value is below the Low of the Exit setup Bar-0.5 times a 5 bar the Average True range.

Exit = Low(Exit setup Bar) – (0.5 x ATR(5))

After experimenting I found that many trades were missed because the Ktrend quickly crossed above or below the zero line in less than 6 bars and the value was still less/more than the entry/exit threshold values and the stock went on to make big moves. So I added further conditions to take care of these opportunities as well. The revised Entry and Exit condition are as follows

Entry

Buy = High(Buy setup bar) + (0.5 x ATR(5) )  OR  KT cross above +40

Exit

Exit = Low(Exit setup Bar) – (0.5 x ATR(5))  OR  KT cross below -40

I found that the system was able to catch the big Trends and losses were quite limited  in the sideways moves. The system was useful for stocks which had the tendency to have some trends and useless for stocks which moved sideways most of the times.

The system has the facility to set the ATR multiplication factor which has a default value of 0.5.  Also one can set the traded quantity so the current Profit/Loss situation  is indicated exactly. 

A quick backtest on the Nifty (The Indian stock Index) is provided below.

The System can be downloaded and tested if one likes from the below link.  Looking forward to feed backs..

K-Trend System - I V.1.0

The K-Trend Indicator

Those who knew me in my early days with Technical Analysis in the forum “Traderji” would remember one of my Indicators which I preferred to call as K-Trend. Those days a commercial Indicator called “Taio” was getting a lot of attention in the Amateur Trading circles.  I was also drawn to this indicator and I was eager to clone it and my experiments were in that direction. Soon it was very clear that it was nothing but the True Strength Indicator (TSI) with some additional Gaussian filters.  I also built a TSI indicator and further experimented to make it  adaptive by using Adaptive Moving Averages instead of conventional Exponential Moving Averages. I christened this Indicator as “K-Trend”.   I am sharing this indicator as it is. I will later present a trading system based on this and further experiments in building a Volume weighted Momentum Indicator.

For the K-Trend, I used the “Ravi” indicator and the “Linear Regression Slope” to determine various conditions like entry and exit.  Also these were used to identify the intermediate Tops and Bottoms and the possibility of reversal. Frankly  the Identifications of intermediate Tops and Bottoms were quite good while other signals were not very good.  There is also an option to select the smoothing filter AMA or EMA.  Also some signals like Zero line cross, Zero line bounce and zero line loop were added.

I am presenting this Indicator here as it is and also because this will form the basis of further work.  Appreciate feedback on this. The Indicator can be downloaded for the link below.

K-Trend Indicator Version 1.0