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)