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GV,
You are correct, I would like to see an easier version of the
indicator even though I know that a SMA(6) is very close. While 1%
at this quick/short of a lookback is not much I can't help but think
that the further out you go the bigger the difference would be.
I also mentioned that not all programmers lay all their cards on the
table. I was talking about myself, not Wabbit. To see all of the
Equis forum discussion go to:
http://forum.equis.com/forums/thread/23170.aspx
As far as the RMO versus the Rainbow, I would have to say that
little was ever published about the Rainbow. What we have then is an
enhanced version of the Rainbow which happens to be called the RMO
and that's quite okay. Maybe the name should be changed to "RMO...an
enhanced Rainbow Oscillator System".
I'm really glad that you have been able to learn something from the
discussion. If we've stimulated some other minds as well then its
been a really good day.
Preston
--- In equismetastock@xxxxxxxxxxxxxxx, "Vasanth Mohan G Buddaan"
<vgbudawn@xxx> wrote:
>
> I take Preston saying "...and would love to see a shorter / easier
version of it" to be an invitation to take the discussion further.
>
> Actually wabbit himself in his post has nicely dissected the
recursive averaging to its well approximated simpler version as
below;
>
> "...it might be interesting to note that the
AverageOfMovingAverages (the mathematical average of the ten 2 bar
SMAs) is ALMOST the same as a much more simple expression, Mov
(C,6,S). If you compare the PRECISE VALUES of the
AverageOfMovingAverages and the Mov(C,6,S) there is always a small
difference, but, if you compare the instances when the CLOSE crosses
the AverageOfMovingAverages and the instances when the CLOSE crosses
the Mov(C,6,S) they are the same, with about 3-4% error. If you
apply one bar latitude in either direction, the two expressions are
the same within 1%. Thefore, for testing when the CLOSE crosses the
AverageOfMovingAverages the trader could easily substitute Mov
(C,6,S) for the more complicated expression."
>
>
> But what I was more interested in RMO was not the formula in
itself which when the indicator itself is available has no more
additional use but how it, so well, tackled the 'gaps' or the
wildness of a couple of ticks in the direction opposite to the
trend / position. Most usual MACO system would have created a lag
and if a signal had been generated in that skew it would have
carried on for quite a while but was not so in RMO. When the whole
Rainbow Indicator formula itself is taken for studying, the process
does not become obvious but when the simplified version of wabbit is
considered it makes eminent sense.
>
> What better way than to average the skewedness of a couple of
ticks with more saner ones prior or past to them to reduce the
impact of this skew. Simple averaging of essentially a short period
makes sure equal weightage is given to the saner ones regardles of
their positioning - whether before or after the 'gaps' / the sudden
spurts thereby reducing the impact of this few stray behaviour of
the market while still in a larger trend. Then the resultant output
can always be used for long period averaging to make sure one sits
through the trend inspite of these few stray & adverse ticks. In
hindsight, it all looks so very simple & logical. I seriously wonder
whether the the designer of RMO himself realised it, for if he had,
he could very well have gone for the long period exponential
averaging of the simple moving averaging like Mov( Mov(C,6,S) , 81 ,
E ) instead of choosing to average the Rainbow Indicator thereby
losing some amount of original thinking.
>
> While wild moves of very short term in nature is ignored, the
adverse effect of this would be a much more severe lag because of
the initial simple averaging. In other words, this sytem while
avoiding smaller and sharper strayness would either get into the
trend later but by which time the probability of trend having set in
would have become high. By same logic, it would also get out of the
trend later. Or take bigger loses / bigger whipsaws when prices
trade in larger ranges due to its lack of sensitivity. That is,
while avoiding smaller whipsaws it will take larger ones (though
they may be fewer) but also lose good amount of profits at the time
of exits even when in trend which explains the words of Big
Papa "..For all the testing of the RMO I have done, it is good at
getting in, but terrible at getting out.."
>
> The limitation of any Moving Average System has probably been best
described by Preston...
> "If the lag is removed then there are more whipsaws. If the
whipsaws
> are dampened, then the moving average is later to the party. There
is
> only so much information that can be extracted from price and
volume
> data no matter how many ways it is tortured, twisted and
manipulated."
>
> Must thank everybody who contributed for a good learning period
for me.
> gv
>
>
>
> ----- Original Message -----
> From: "pumrysh" <no_reply@xxxxxxxxxxxxxxx>
> To: <equismetastock@xxxxxxxxxxxxxxx>
> Sent: Friday, February 20, 2009 4:01 AM
> Subject: [EquisMetaStock Group] Re: adjusted moving averages
&zerolagoscillators
>
>
> > GV,
> >
> > Today you have learned the formula to the RMO/Rainbow and that
> > programmers never lay all there cards on the table.
> >
> > I'd say you've learned quite a bit.
> >
> > I actually like the recursive moving average and would love to
see a
> > shorter / easier version of it.
> >
> > Preston
>
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