Saturday, September 15, 2012

Buying and Selling Pressure Indicator

My Buying and Selling Pressure Indicator has invoked lot of interest and have received many requested.  This is actually a very simple indicator using the daily excursion of the price.
Many times it is just a matter how we are looking at the data.  We can glean lot of information if we look at the data the right way. My Buying and selling pressure indicator is also the same case. Very simple Indicator, using the open, High, Low and Close and the volume. It obviously not a Holy Grail, but does give a very good picture of the buying and selling pressure.

I am sharing the afl for the same. There are two indicators. One is a Raw Buying and selling pressure Indicator.  The Raw buying and selling indication is provided in terms of a Histogram. Green bars above zero show the buying pressure and the red bars below the zero line show the selling pressure.  This presents a good visual representation of the dominating pressure.

The second is a smoothed version with version with a yellow line representing the selling pressure and a turquoise line which represents the Buying pressure. If the turquoise line is above the yellow line it would mean that the Buying pressure is more and vice versa. The difference between the two is plotted as a Histogram. This is a cumulative value of the buying and selling pressure and provides a easy visual presentation of the dominating pressure.
These two indicators can easily compliment your main strategies like Volume Spread Analysis..

You can also watch my video on this Indicator..

Monday, September 3, 2012

A Smoothed RSI

I came across a different way of plotting the RSI. The Difference between the RSI and the smoothed RSI value (A long term Simple Moving Average) is bias with a value of 50. This is further smoothed and plotted. The result is a smoothed value duplicating the original RSI curve. The resulting smoothed RSI value is a much better representation compared to the original RSI curve which is much jagged. Additionally we can plot a signal line like we do for the MACD. Check it out yourself.

Below is comparison of the original RSI and the smoothed RSI.


Friday, August 31, 2012

An ATR Band System

I am sharing a idea for a trading system based on ATR. We will create bands of a certain ATR values around the price. When the prices moves beyond these bands we can create buy and sell Alerts.

We will first create the centre line by plotting a EMA line of the price. The period of the EMA is selectable from the parameter window. Then we will plot upper and lower band lines of a particular ATR value above and below the centre line. The ATR value is again selectable from the parameter window. We will again create another band which we will call "space". This again will an ATR multiple selectable from the parameter window.

When the stock price moves up beyond the centre line we will have weak buy condition. When the price cross above the value of close when the weak buy condition occurs we will get the confirmation for the weak buy signals. similarly we will have medium buy signal when the price move beyond the first upper band line. We will have a strong buy signals when the price moves above the second upper band. The sell conditions occur in a similar manner when the price moves down below the lower bands

The AFL is made available for those who are interested to experiment and improve on this system.


Monday, August 13, 2012

AltrTrend Indicator

The First Indicator we are going to look at is the Altrtrend. This indicator is a simple channel breakout system which uses a part of the range subtracted from the Highs and added to the Lows to form the channel. Price above this channel is defined as an uptrend and price below the channel is defined as the downtrend.  The transition points are plotted as dots.  The funny thing is the plotting point is controlled by the ADX value.  Anyway the indicator itself is very prone to whipsaws and prone for lags. As a standalone indicator it is not very useful. This has to be used in conjunction other indicators.

Altrtred in Amibroker

Altrtrend in Metatrader

Channel Breakout Strategies

Channel breakout system is the heart of the most successful public and commercial trading systems. What is a channel breakout system? It is a simple strategy where we create a channel around the price.  Trading signals are generated whenever the price breaks out of the channel. There are number of ways we can create a channel.  It can be a simple High / Low channel.  It can be a percentage band channel like the Nick MA system or even an ATR channels.  Most of the popular commercial systems like the ASCtend or the Brain Trend are all channel breakout systems. Even the very popular Super trend is channel breakout system

In the Metatrader we find many channel breakout systems. In fact the channel systems are commonly used to define the Trend itself.  Indicators like Altrtrend, Bykov trend and Silver Trend  are a few examples. Even the StepMA which I described earlier in this blog uses a channel to decide when the MA has to remain constant or move up. I plan to present some of these metatrader channel based Trend Indicators here.

Friday, August 3, 2012

StepMA Stochastic

The next Metatrader Indicator I wish to discuss here is an offshoot of the StepMA  called the StepMA Stochastic  which is also quite popular among the forex traders. It also forms a part of the popular strategy  called CATFX50 in the forex forums.

A step channel is formed with the Maximum and minimum volatility and a stepSize.
Volatility is measured in terms of the spread.

Formula of Stochastic s used in this indicator is like below

Stochastic fast = (Min. Volatility- channel  lower  Border)/(channel  upper Border- channel  lower  Border)
Stochastic slow = (Mid. Volatility-  channel lower  Border)/( channel top Border - channel  lower  Border)

Sunday, July 22, 2012

Metatrader Indicator

Everybody is aware of the metatrader Platform for forex.  Its popularity and use is wide ranged and surpasses any software for trading,   It  has proved to be the incubator for a wide variety of indicators and systems.  The Russians have a very great contribution t development of many of these Indicators. I have always been intrigued by these Indicators and have attempted to translate many of these indicators in to Amibroker AFLS. Some of these are already available at my web site.  

Forex has its own peculiarities in terms of volatility, globalized and 24 hours trading. Many of the indicators which seem to work well in forex trading would not work for stocks and other instruments. So it is difficult to use these indicators as they are. We need to modify / fine tune these to suit for trading other instruments. 

The first Indicator we are going to look at is a very popular one called the "STEP MA". It was developed by the Igor of Trend laboratory yahoo group.  Then came variation of the same like Step MA stochastic and even Step RSI...

The Step Moving Average is an indicator which is only allowed to change in discrete steps calculated based on the Range calculation or constant step size. When price is within the constraints of the step size the moving average line remains flat. When price is trending, the moving average moves incrementally in the direction of the trend. 

Here is a Image of the MT4 Indicator

Now a Image of the same Indicator in Amibroker

Friday, July 20, 2012

The leaves that were green turned to brown ..

The first question that would arise in anybody’s mind would be “Why this Blog now?”

This is not my first Blog... My first Blog was “Stock Technician” when I released the now famous NMA. Then a Blog on Volume Spread Analysis followed. Slowly I progressed to my own Website

The process of starting a web site was a unique experience for me. Learning about CMS, playing around with Joomla was all very interesting and many times painful.  Unfortunately some Hackers had developed a particular liking for my website and were enjoying repeatedly destroying my web site. The latest is a gang of cyber goons from Pakistan.

A couple of months I was rather roughly reminded me the fragility of life. I was confidentially moving ahead taking the twists and turn of life with ease. All was fine till one fine day I ended up in the ICU after what the doctors loving called a MI, Myocardial Infarction. A rude reminder that there may not be much time to do what all I wanted to do in life.  Age was slowly catching up.  The words from the Simon and Garfunkel song keeps coming to my mind .. “The leaves that were green turned to brown ..”

I always wanted to leave something back. Something that would be used and talked about even long after I am gone. That way my work on VPA is already all over the internet. Whatever I put on my web site would be trashed by the service provider once the contract period gets over. However I am sure a blog would remain alive for much longer time. And also the headache of maintaining a web site would also not be there.

I would be sharing all my thoughts on Volume spread Analysis, Technical Analysis and some general musing on this blog… Also I am planning to close my web site slowly and concentrate on my experiments and Blog… Hope the little group which found my work interesting would continue to benefit from this Blog….