AIQ: TREND, MOMENTUM, VOLATILITY, AND VOLUME (TMV)

Uncategorized

A Series Of Indicators Used As One

Making good trading decisions involves finding indicators that cut through the market noise. But how do you do it without collapsing under the weight of information?
Chart analysis is a multidimensional affair; no single indicator can tell the entire story. After spending years cluttering my screen with multiple indicators, I discovered that more is not necessarily better because they sometimes present conflicting information. Often, it takes longer to analyze the information needed to make decisions.
The goal is to integrate the knowledge that indicators provide in order to evaluate the situation that leads to making good trading decisions. That means each trader needs to find those indicators that cut through the market news (and noise) in a way that makes most sense to him or her without collapsing from information overload. Here’s a method I have found useful.
The first step is to determine the categories from which to draw the indicators. For me, that includes trend, momentum, volatility, and volume (TMV). These present a multi-dimensional view of price behavior to supply a more complete picture…..excerpt of Barbara Star’s article in Stocks & Commodities, “Trade Breakouts And Retracements With TMV,”

Image 1
AIQ SYSTEMS, KELTNER CHANNELS, CCI, AND COLOR-CODED PRICE BARS. Here’s a sample chart of Noble Energy with the TMV indicators.

The AIQ code and EDS file based on is provided at www.TradersEdgeSystems.com/traderstips.htm. The code is also shown below

!TRADE BREAKOUTS AND RETRACEMENTS WITH TMV
!Author: Barbara Star,PhD, TASC February 2012
!Coded by: Richard Denning 12/9/2011
!www.TradersEdgeSystems.com

!CODING ABREVIATIONS:
   C is [close].
   C1 is valresult(C,1).
   O is [open].
   H is [high].
   L is [low].
   H1 is valresult(H,1).
   L1 is valresult(L,1).
   V is [volume].

!KELTNER CHANNEL
   !INPUT:
      keltLen is 20.
   !KELTNER CHANNEL UDFs:
   typ is (H+L+C)/3.
   rangeAvg is simpleavg(H-L,keltLen).
   !Plot the following three functions on price chart
   !as three separte indicators:
      midKelt is simpleavg(typ,keltLen).
      upperKelt is midKelt + rangeAvg.
      lowerKelt is midKelt – rangeAvg.

!ADX
   !INPUT:
      WilderLen is 10.
      !NOTE: Wilder to expontential averaging the formula is:
        !Wilder length * 2 -1 = exponential averaging length
     
!USED FOR DMI, ATR, ADX, ADX RATE
     avgLen is WilderLen * 2 – 1.

   !AVERAGE TRUE RANGE:
TR  is Max(H-L,max(abs(C1-L),abs(C1-H))).
ATR  is expAvg(TR,avgLen).
ATRpct is expavg(TR / C,avgLen) * 100.

   !+DM -DM CODE:
rhigh is (H-H1).
rlow is (L1-L).
        DMplus is iff(rhigh > 0 and rhigh > rlow, rhigh, 0).
        DMminus is iff(rlow > 0 and rlow >= rhigh, rlow, 0).
AvgPlusDM is expAvg(DMplus,avgLen).
        AvgMinusDM is expavg(DMminus,avgLen).
            
   !DMI CODE:
PlusDMI is (AvgPlusDM/ATR)*100. !PLOT  (2 lines)
MinusDMI is AvgMinusDM/ATR*100. !PLOT  (2 lines).
DirMov is PlusDMI – MinusDMI.
DirMovAIQ is [dirMov].

   !ADX INDICATOR as defined by Wells Wilder
     !PLOT DIdiff as historigram is same as DirMov (AIQ built in indicator): 
DIdiff is PlusDMI-MinusDMI.
        ZERO if PlusDMI = 0 and MinusDMI =0.
DIsum is PlusDMI+MinusDMI.
DX is iff(ZERO,100,abs(DIdiff)/DIsum*100).
     !PLOT ADX as single line indicator with support at 24:
ADX is expavg(DX,avgLen).

!VOLUME OSCILLATOR:
   !INPUTS:
volLen1 is 1.
volLen2 is 20.
pctChgLvl is 50.
   !VOLUME OSCILLATOR UDFs:
volAvg1 is simpleavg(V,volLen1).
volAvg2 is simpleavg(V,volLen2).
    pctChgV is (volAvg1 / volAvg2 -1) * 100. 
volOsc  is iff(abs(pctChgV)>pctChgLvl,1,0). !PLOT

!CCI INDICATOR:
   !INPUTS:
cciLen is 13.
   !CCI UDFs:
   typAvg is simpleavg(typ,cciLen).
   absdiff is abs(typ-typAvg).
   sumD is sum(absdiff,cciLen)/ cciLen.
   CCI is (typ – typAvg) / (0.015 * sumD). !PLOT WITH +100 -100 LINES

!COLOR BAR RULES:
   !INPUT:
trndLen is 8.
   Green if ADX > valresult(ADX,1) and C > simpleavg(C,trndLen).
   Red if ADX > valresult(ADX,1) and C < simpleavg(C,trndLen).

—Richard Denning

info@TradersEdgeSystems.com

This e-mail address is being protected from spambots. You need JavaScript enabled to view it.

for AIQ Systems

Leave a Reply