Experiments in Technical Analysis

Discussion in 'Advanced Trading Strategies' started by karthikmarar, Jul 22, 2006.

  1. karthikmarar

    karthikmarar Well-Known Member

    Joined:
    Jul 3, 2005
    Messages:
    1,527
    Likes Received:
    1,140
    Trophy Points:
    113
    Location:
    kuwait
    Muchikana

    Unfortunately I have never used FC charts or Apistock. Iam sure there will be knowledgable members who can translate the codes into FC chat and Apistock codes.

    Thanks for the interest shown

    warm regards

    Karthik
     
    karizmax likes this.
  2. karthikmarar

    karthikmarar Well-Known Member

    Joined:
    Jul 3, 2005
    Messages:
    1,527
    Likes Received:
    1,140
    Trophy Points:
    113
    Location:
    kuwait
    Amit, Murthy, Saint

    Thanks for the encouragement. I am just trying to emulate your great contribution to the forum and the members. Hope this thread will meet your expectations.

    warm regards

    Karthik
     
    karizmax likes this.
  3. karthikmarar

    karthikmarar Well-Known Member

    Joined:
    Jul 3, 2005
    Messages:
    1,527
    Likes Received:
    1,140
    Trophy Points:
    113
    Location:
    kuwait
    Thanks Jaykiru for kick starting this thread. I will study and revert back to you again.

    Now let us take look at my very first workable trading system. Of course I have come a long way from there. This system though very simple did provide many profitable trades and I hope will help the beginners to get some insight and help them in their path towards their own profitable trading system. Step by step we will cover more advanced systems, Indicator etc. This system, which I fondly called MABIUTS (Moving Average Based Intermediate Uptrend System. Forgive my penchant for funny names) will be a good starting point for the thread. I will talk about the setup and entry only. I will not cover the position sizing and money management part here because each individual has his flavor of MM.

    It was a time when I was trying the grasp the intricacies of Technical Analysis. I was looking at various Indicators without really getting the grasp of their working and drawbacks. The indicators gave conflicting signals leaving thoroughly exasperated.

    Finally I decided to make a system, which will be a very simple one yet gives me reasonable profits. I started experimenting with simple moving average cross over systems, but was quite unhappy with the frequent whipsaws. Then I decided to approach the problem in an unconventional way different from the normal use of Moving averages. I listed the objective as follows

    1. The system should be simple
    2. Based on simple moving averages
    3. It should be able to identify an Intermediate Up trend ( Ahh… I am a big Fan of Saint, you know) and latch on to the trend.
    4. The Time frame should be medium.
    5. Visual pointer like Bullish, bearish and neural (sideways) on the charts to make an easier understanding.

    With these set of objective I set out to make my system. First step was to identify an Uptrend using Moving averages. That time I was very familiar with the 3-13-39 system from the great thread by Traderji. After some experimentation I decided to use just the 13 day EMA with a signal line of a 9 day EMA of the 13 day EMA.

    So my setup was EMA(13) greater than 9 day EMA of EMA(13).

    Now what about the entry? I wanted to enter on confirmation of starting of Intermediate Up trend. Now my Pivot Analysis studies (Some of you may be familiar with my thread on pivots) came to my aid. So the entry would be when the price crosses the previous High Pivot. (The previous peak)

    I kept the exit also very simple. When the he EMA (13) cross below the signal line, I will exit the trade. (Trailing stops etc were a far cry for me those days)

    It was a simple and elementary Trading system. But worked well during the bull market. It caught on most of the intermediate up trends and kept one on the right side most of the times. It also gave signals for entry or adding on pullbacks in an uptrend. It identified most sideways movements. It was good for safe, stress free positional trades.

    Of course It had its share of drawbacks. Some entries were signaled at the top which proved to be loss making. The system also was unable to handle big drops.

    Overall it was very satisfactory system in a bull market and of course in a bear market the system will fully keep one aside. The system with its simplicity may be a good one for beginners.

    Let me reiterate the rules again.

    Setup: EMA(13) of close > Signal Line
    Entry: Close crossing the previous peak
    Exit : EMA(13) crossing below the Signal Line

    Signal Line : EMA(9) of EMA(13)


    I had implemented the same in Metastock and has now recreated the same in Amibroker. It has the following features.

    Buy and Sell indications – Arrow and “B/S” Texts. Amibroker is more flexible hence has the price also.
    Chart Bars color coded with green for Bullish, Red for Bearish and blue during pullbacks and sideways movements. The blue indication puts one on alert.

    Color-coded ribbons in Metastock for Bullish, Bearish and neutral zones.

    I am enclosing the two charts for your reference (one from Metastock and the other from Amibroker).

    Comments welcome. Also effort to improve could be thought of.

    The Metastock Expert and Amibroker AFL will be posted in their respective sections (Just to avoid clutter here)

    Warm regards

    Karthik

    The Metastock code and Amibroker AFL can be found at

    http://www.traderji.com/52339-post21.html

    For the related explorations please go to
    http://www.traderji.com/52463-post43.html
     
    Last edited: May 20, 2008
  4. AJAY

    AJAY Active Member

    Joined:
    Jul 14, 2004
    Messages:
    195
    Likes Received:
    198
    Trophy Points:
    43
    Sorry to catch you up karthik very late because of my health conditions.
    Unable to sleep and as usual logged into the forum and found this wonderful thread.
    Very nice to see a great stuff being delivered by a selfless pesonality.
    Eagerly waiting to hear more from you and also all the lot at once, though gulping is not possible. :)

    And congrats in advance for the success that this thread is going to achieve.

    And thanks for educating every one of us.

    AJAY
     
    karizmax likes this.
  5. pkjha30

    pkjha30 Well-Known Member

    Joined:
    Mar 24, 2005
    Messages:
    1,928
    Likes Received:
    214
    Trophy Points:
    63
    Location:
    India
    Hi Karthik

    At last you have provided relief to expel our doubts and that too in a very sound technical writeup.This will prove equally educative to us the perpetual novices as that of Saint's thread.Popularity also is going to surpass your earlier threads.

    Pankaj
     
    karizmax likes this.
  6. gvnarendra

    gvnarendra Member

    Joined:
    Jul 20, 2004
    Messages:
    348
    Likes Received:
    13
    Trophy Points:
    18
    hi karthik,

    this is a wonderful intiative:) .keep them coming.

    regards,
    gvnarendra
     
    karizmax likes this.

  7. cooltetra

    cooltetra Active Member

    Joined:
    Mar 17, 2006
    Messages:
    193
    Likes Received:
    25
    Trophy Points:
    28
    Location:
    Pune
    Hi Karthik
    Ye dil mange more ;-).

    With Best Regards
    Coool.
     
    karizmax likes this.
  8. karthikmarar

    karthikmarar Well-Known Member

    Joined:
    Jul 3, 2005
    Messages:
    1,527
    Likes Received:
    1,140
    Trophy Points:
    113
    Location:
    kuwait
    Dear Ajay

    Thanks for the kinds words. I have also learnt a lot from you. Dont worry , you health is just undergoning a pull back not a bearish trend. God will always be with you.

    Warm regards

    Karthilk
     
    karizmax likes this.
  9. karthikmarar

    karthikmarar Well-Known Member

    Joined:
    Jul 3, 2005
    Messages:
    1,527
    Likes Received:
    1,140
    Trophy Points:
    113
    Location:
    kuwait
    PK,

    You are a kind man. You have been always encouraging me and I am thankful to you for that. "perpetual Novice" I disagree my friend. You have been showing a different perpective of the markets and the FII influences. Great work. By the way , I somehow failed to notice the cross(post,1000)... sorry for the TA language :) . Congratulations, though belated.

    warm regards

    Karthik
     
    karizmax likes this.
  10. karthikmarar

    karthikmarar Well-Known Member

    Joined:
    Jul 3, 2005
    Messages:
    1,527
    Likes Received:
    1,140
    Trophy Points:
    113
    Location:
    kuwait
    Narendra, cool

    Thanks for the encouragement. Hope this thread will be helpful to you.

    Warm regards

    Karthik
     
    karizmax likes this.
Loading...

Share This Page