Saturday, October 5, 2013

K-Bars Variations in charting Bars...

Also under consideration is a dream is a project to help and educate retail investors so that they do not easily lose their hard earned money in the market. The idea is to equip the small trader with the technical tools and education to save them from the sharks of the stock market and the snake oil vendors. The project has been given a pet name “Marar Foundation”.  Well, the seeds have been sown and we will wait for project to sprout and grow in to healthy and successful organization. I will be sharing more information on the same as the time goes.

Today I will be sharing some of the charting tricks I use. As a VSA enthusiast I more interested in how much easily the Smart Money would move the stocks or in other words what is the effort and the corresponding result. So I am more interested in the where the current stock price ended compared to the last bar close. In a EOD perspective how is today’s close compared to yesterday’s close. So I have special bars which have the current open adjusted to previous bars close. As a result we have a smoother chart without the Gap ups and Gap downs. I call it the K-Bars charts

The other chart I use is more interesting and the one with bars that reflect the buying and selling pressure. This chart helps us the easily understand the underlying market sentiment 
in terms of supply and demand. Let us look at it with an example.

In the Above chart the bars are coloured red and green. The green part represents the buying pressure / demand and the red part represent the selling pressure / supply. In the up move and down move the demand and supply is clearly indicated by the corresponding colour  However the utility of these bars are can be appreciated during the turning points. Look at the green box. After the down trend the demand /buying coming is very visible by dominating green colour  So the impending up move was very evident. In the same way in the red box the selling/supply was dominant and was clearly visible and the down is easily forecast.
I am sharing the code piece for Amibroker for those interested to experiment. You can upend the same to any other strategy code. The same can be down loaded here. Download the AFL code.