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Hi Paolo
The oscillator you are describing is simply showing the deviation of the
close from an exponential moving average expressed on a percentage basis. It
is similar to a number of oscillators described in the literature - e.g.
DiNapoli's detrended oscillator, which is the close minus the MA. The only
difference here is expressing the change on a percentage basis and using an
EMA instead of a SMA. If you normalize the deviation by dividing by the
standard deviation you get a Bollinger Band variant (close to %b) if you
normalize by ATR you get what I call the Moving Average Deviation. It is
used in many cases (e.g. DiNapoli) as on overbought/oversold indicator. You
and every other user are, of course, free to use it in whatever way you
like.
With respect, the '-1' is not cosmetic. Mathematically, C/MA -1 is the same
as (C-MA)/MA, i.e. the deviation of the close from the MA expressed as a
percentage of the MA.
It's great fun playing with indicators in MetaStock. And varying the
formulae can be a good way to appreciate how they work. But you do often
find that someone had the same idea already.
Best
Andrew
-----Original Message-----
From: equismetastock@xxxxxxxxxxxxxxx [mailto:equismetastock@xxxxxxxxxxxxxxx]
On Behalf Of Paolo
Sent: Sunday, May 21, 2006 8:26 AM
To: equismetastock@xxxxxxxxxxxxxxx
Subject: Re[2]: [EquisMetaStock Group] A Metastock Price Oscilator
br> What parameters do you use with the Ultimate ROC?
Dear Bill,
the only parameter in this very-simple indicator is the 'number of
periods' (days) of the moving average.
By default it's 12.
So the formula can be more simple yet:
(CLOSE / (Mov(CLOSE,12,E) )) -1 ;
The "-1" is just cosmetic :)
"Andrew Tomlinson" <andrew_tomlinson@xxxxxxxxxxx> wrote:
> Like any other oscillator, though, it can show overbought or
> oversold conditions that are surprisingly persistent, so you should
> always wait for price confirmation.
Andrew: this indicator do not show overbough or persistent oversold
conditions. It's very diferent to RSI or Stochastic oscilators.
Thank U very much for your comments :)
Pablo
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