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There a couple of indicators that are built in to MS that can help
determine if prices are trending or in a trading range. I've had some
luck with the Vertical Horizontal Filter (VHF). I use a 10-period
Exponential Moving Average of a 5-period VHF. For many of my stocks
this indicator indicates strong trending tendencies if the reading is
above 0.6. However, I recommend experimenting with different values
to see what works best for you.
For short-term trading (typically commodities) the Commodity Selection
Index (CSI) is supposed to indicate trading/trending periods. It is
often combined with the Directional Indicators. I have not yet
experiemented with these guys personally.
Hope this helps,
Chip
Wireless in Seattle via Ricochet
---Harvey Pearce wrote:
>
> Steven/
>
> You bring up a point that I've been toying with. I was hoping that
one
> of the more experienced members would reply, but since they haven't
I'll
> make my own low grade input. I'm a beginner with a greater investment
> in books than securities, so evaluate this accordingly.
>
> The received wisdom is that oscillators work with trading ranges but
not
> with trends. If this is true then it is more a case of switching
> between oscillators and trend-following indicators than of combining
> them.
>
> There is a commercial system called Catscan. The developer, Randy
> Stuckey, claims that it is two systems in one: one for choppy markets
> and one for trends, with a choppiness indicator to switch between
them.
>
> Perhaps Stochastics, which tells us where we are now relative to where
> we've been, could be used in this way. Once it pegs at one end you're
> in a trend. Elder points out that it is easier to distinguish between
> trends and trading ranges when you're looking back at a completed
chart
> than at the "hard right edge" as you try to get a glimpse of the
future.
>
> I've tried to make an indicator of my own to show what percentage of
the
> lookback period has had highs greater than the current high, but ran
> into limitations of the MS Indicator Builder. (We need a Visual Basic
> add-on). I'll post an accompanying message to see if anyone can help.
>
> For references I'd recommend the following.
>
> Trading for a Living, by Alexander Elder.
> Technical Analysis of the Futures Markets, by John Murphy.
> Schwager on Futures: Technical Analysis, by Jack Schwager.
>
> Harvey Pearce, Victoria, B.C., Canada
>
> =====================================
>
> Steven Buss wrote:
> >
> > My frustration the last few days led me to try to get a handle on
the
> > Oscillator (e.g., Stochastic) vs. Trend Following (e.g., moving
average)
> > indicator issue.
> >
> > Maybe I've seen someone lay out a general strategy for
understanding how
> > these two indicator types can be used together and just don't
remember...I'm
> > sure there are multiple approaches.
> >
> > But I did come across Alexander Elder's "Double-checking beats
optimizing"
> > article in a little booklet he sells ("Trader's Guide to
Day-Trading") at
> > his site for $10. If I had read (and understood <g>) this article
just a
> > few weeks ago I would have saved myself some tension as well as a
few
> > dollars...His site is www.elder.com.
> >
> > Anyone know of anyone else who has specified a clear view of HOW
Oscillator
> > vs. Trend Following Indicators can be used together?
> >
> > Steven Buss
> > Walnut Creek, CA
> > sbuss@xxxxxxxxxxx
>
>
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