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Thanks for the info Ed, it is always interesting to here from real traders,
and finding out what works for them.
Thanks
Dave
-----Original Message-----
From: equismetastock@xxxxxxxxxxxxxxx [mailto:equismetastock@xxxxxxxxxxxxxxx]
On Behalf Of Ed Hoopes
Sent: Wednesday, 23 November 2005 5:43 AM
To: equismetastock@xxxxxxxxxxxxxxx
Subject: [EquisMetaStock Group] Re: Parabolic trend "line"
The goal of many indicators is to determine the true trend of the
security in the presence of noise.
MS has pre-programmed 3 indicators that fit price to a straight line:
Lin Reg Ind
Lin Reg Slope
Lin Reg Trendline
My observation was that prices rarely move in a straight line, much
more common is that the price action is curved - like a section of a
parabola. (A straight line is a special case of a parabola with the
x^2 term equal to zero)
After programming the fit to a quadratic, I found that it more
accurately determined the markets trend, with significantly less lag
than a fit to a straight line.
After normalizing prices to $100 and calculating the first derivative
of the quadratic at the most recent bar, I found that I had a
accurate, fast responding ranking system that worked well with ETF's.
My portfolio of the top 4 ranked ETF's (out of a universe of 20 ) is
up 22% YTD with a max drawdown of 6%.
I trade the above system in 5 accounts for my family. I am a private
investor - nothing for sale - no website.
Ed Hoopes
--- In equismetastock@xxxxxxxxxxxxxxx, "david" <dwei9361@xxxx> wrote:
>
> If anyone uses parabolic trend lines as part of a systematic approach I
> would be very interested, as I can not see the logic behind them ... it
> seems to me 'curve fitting' literally.
>
> Regards
>
> Dave
>
> -----Original Message-----
> From: equismetastock@xxxxxxxxxxxxxxx
[mailto:equismetastock@xxxxxxxxxxxxxxx]
> On Behalf Of Jose Silva
> Sent: Tuesday, 22 November 2005 5:17 PM
> To: equismetastock@xxxxxxxxxxxxxxx
> Subject: [EquisMetaStock Group] Re: Parabolic trend "line"
>
> Ron, Ed, plotting a parabolic fit is not impossible using MSFL - it
> just requires a little imagination and a lot of free time.
>
> However, since abstract mathematical plots are generally considered an
> absolute waste of *valuable time* and effort, and since it has little
> or nothing to do with actual trading, you won't find much of that
> around here.
>
> For complex parabolical(!) plots, try dedicated maths software such as
> Statistica 7. http://www.statsoft.com/v7.htm
>
>
> jose '-)
> http://www.metastocktools.com
>
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