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Bill, just simply go here:
http://users.bigpond.com/prominex/pegasus.htm#roy
Roy has gone through a lot of trouble to create accurate weekly
indicators for daily charts. Forget the complexity, and just copy and
paste the formulae into MetaStock.
jose '-)
--- In equismetastock@xxxxxxxxxxxxxxx, "Bill Saxon" <vondell@xxxx>
wrote:
> I have need to plot a weekly MACD on a daily chart. Can this
histogram formula be modified to do this or does anyone know where I
could get that formula? I have tried to figure out something that
would do it but it appears to be a lot more complicated than one would
think.
>
> TIA
>
> Bill
> ----- Original Message -----
> From: pumrysh
> To: equismetastock@xxxxxxxxxxxxxxx
> Sent: Tuesday, March 30, 2004 7:12 PM
> Subject: Re: [EquisMetaStock Group] Weekly MACD histogram
>
>
> Roy,
>
> As always words of wisdom. Appears to be a good chapter for the
book.
>
> Preston
>
> --- In equismetastock@xxxxxxxxxxxxxxx, "Roy Larsen" <rlarsen@xxxx>
> wrote:
> > Hi Alan
> >
> > > Thanks for your excellent advice. As a newbie, it's difficult
for
> me
> > > to know what to believe and what not to believe on the
internet.
> > > That's why I wish I could analyse any formula that I find -
such
> as
> > > the weekly MACD in my post.
> >
> > > I found the weekly MACD histogram formula at:
> > >
> http://www.paritech.
com/education/technical/custom/indicators/macd.asp
> > >
> > > I have already posted your reply on their Metastock forum, so
> > > hopefully they will remove their formula from their site, or
at
> least
> > > try to justify it.
> >
> > That will be interesting. I don't really want to get into an
> argument with Paritech but when I
> > plotted the formulas you posted the weekly one was so far off it
> was a joke
> >
> > > There's a fiendishly complicated formula for weekly MACD at:
> > > www.users.bigpond.com/prominex/MetaStock/Roy-63.txt
> >
> > This is my formula :-) , hence the name "Roy"
> > Yes it does look feindishly complicated but quite a bit of the
> formula has to do with making
> > allowances for things that can be wrong with the data so that it
> will exactly emulate the MetaStock
> > MACD values as plotted on a weekly chart. Try plotting my
formula
> on a weekly chart and then plot
> > the MS drop-down indicator over the top of it. There will
possibly
> be some differences at the left
> > side of the chart but values should agree to 4 decimal places
at
> the right unless you only have a
> > small amount of history.
> >
> > My weekly formulas attempt to create exact weekly data from the
> daily chart and are very accurate in
> > doing so. Most attempts at weekly data emulation are done on
> a "near enough is good enough" basis
> > but in my view that's not good enough. When you have thinly
traded
> issues, suspensions,
> > reconstructions, Easter or Christmas breaks, and various other
> situations that cause gaps in the
> > data, great care has to be taken to ensure that the right days
are
> included in the right weeks.
> >
> > I could create simpler weekly indicators but for some issues
they
> would be less accurate. Unless
> > they are accurate 100% of the time how do you know when they
will
> be off? The thing with a weekly
> > formula (for daily charts) is that it must plot the same values
> that you would see for the standard
> > MS formula on a weekly periodicy chart. That's the only standard
it
> can be judged by as far as I'm
> > concerned.
> >
> > I can take you through a complete weekly formula and explain
every
> detail if you wish. It would take
> > you a while to absorb but you would learn quite a lot.
> >
> > > I suspect that the Paritech formula is trying to calculate
MACD
> for
> > > Friday's closing prices only. I verified this by plotting all
the
> > > individual bits and pieces as separate indicators, because I'm
too
> > > inexperienced to understand the formula. (If you know anyone
who
> > > understands the bit between the {start} and {end}, could you
ask
> them
> > > to explain it. It doesn't matter whether they agree with it
or
> not.
> > > At least I'll learn something.)
> >
> > I could do this but my thinking is your time and mine would be
> better spent on studying something
> > that has underlying principles that give accurate results. I
didn't
> attempt to study the Paritech
> > code (I may have if I'd known where it came from) but I plotted
it
> alongside code I knew to be
> > accurate. It was so far off I didn't see any reason to
investigate
> further.
> >
> > > I suppose it makes some sense: the
> > > daily MACD formula is based on daily closing prices, so the
weekly
> > > MACD formula is based on Friday's closing prices. Presumably,
if
> > > there were a monthly MACD histogram, it would be based on
monthly
> > > closing prices.
> >
> > Exactly right. I could knock up a monthly MACD and it would only
> use the CLOSE for each month, just
> > as MetaStock would on a monthly periodicy chart. The plot that
> doesn't change for several bars may
> > look a little odd but when you think about it, it can't be any
> other way if it is a true
> > representation. A weekly MACD doesn't change value on Wenesday
then
> again on Friday.
> >
> > > I agree with your comment that the Paritech daily MACD
> is "slightly
> > > off". I found this description of the daily MACD histogram in
a
> book
> > > by someone called Dr. Alexander Elder (why do all conmen and
> shysters
> > > call themselves "Dr"):
> >
> > I don't know that I'd call Dr Elder a conman. He is widely
> respected in the trading industry and is
> > the author of a couple of "must have" books.
> >
> > The reason why the Paritech MACD is slightly off is because they
> are using the convventional 12/26
> > "periods" to create the two exponential moving averages. This is
> widely accepted as normal so in one
> > sense these are "more" accurate than the MS version. You need to
> understand how an EMA is
> > constructed to understand why these differences show up.
> >
> > An EMA adds a proportion of new data for evey bar, and it also
> retains a portion of old data
> > (previous value). If the proportion of new data added is 20%
then
> the proportion of old data
> > retained is 80%. Can you see that? A standard EMA calculates the
> amount of new data to add like
> > this - 2/(1+periods). The actual construction of an EMA follows
so
> that you can check the code for
> > yourself.
> >
> > {Exponential Moving Average}
> > n:=Input("Periods",1,999,10);
> > R:=2/(n+1); {ratio of new data added each bar}
> > M:=If(Cum(1)=1,C,PREV*(1-R)+C*R);
> > M;
> >
> > So the factor determining how much new data to add and how much
old
> data to retain for a 12 period
> > and 26 period EMA is 2/13 and 2/27 respectively. In decimal
terms
> this is 0.153846 and 0.074074.
> > Metastock actually uses values of 0.15 and 0.075 rather than
basing
> on 12 and 26 periods, and that's
> > why the MetaStock MACD is slightly of the Paritech code.
> >
> > > Page 129:
> > > 1. Calculate the 12-day and 26-day exponential moving
averages of
> > > closing prices.
> > > 2. Subtract the 26-day EMA from the 12-day EMA to obtain the
fast
> > > MACD line.
> > > 3. Calculate a 9-day EMA of the fast MACD line to obtain the
slow
> > > Signal line. Plot both lines to obtain the classic MACD
indicator.
> > > 4. Subtract the Signal line from the MACD line to obtain an
MACD-
> > > Histogram.
> >
> > This is the accepted norm but I think may be only only a close
> approximation of what the creator
> > intended. I honestly don't know which is the "authentic"
version.
> At the end of the day they're only
> > numbers that we interpret how we want. Anyway I have no argument
> with the there being two different
> > versions because I understand the slightly different values that
> each version is based on.
> >
> > > The "MetaStock canned version", as you call it, is bound to be
> > > superior, because at least I've heard of Equis :-), but I've
never
> > > heard of Dr. Alexander Elder.
> >
> > You have now :-) Don't write him off. There are many "experts"
out
> there but just take what you can
> > use and leave the rest. My comment in my earlier reply "If this
> works for you then great, but a
> > weekly MACD it is not." applies across the board. If anything is
> suspect as to name or accuracy but
> > still works for you then don't throw it away, just make sure you
> understand the differences. At the
> > end of the day you have to use what works for you, not what some
> guru tells you works for everyone
> > else.
> >
> > > Thanks for your help.
> >
> > No problem. Remember that a fair bit of the above comments are
my
> opinions only, and may not be
> > shared by others.
> >
> > I meant what I said about being willing to walk you through any
of
> my code if you want to learn.
> >
> > Good luck.
> >
> > Regards
> >
> > Roy
>
>
>
>
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