Experiments in Technical Analysis

no system is ultimate neither any system is redundant. its basically how one uses one according to one's personality.

this is what the original master Richard Dennis has to say:
yeah seconded.


traderji is a happening place. a lot of wisdom does flows behind those names. afterall nobody knows the face behind the name marcus. i keep my finger crossed.

cheers,
jdm.

If something seems to good to be true it generally is.

Hi Karthik,
Please don't invest your valuable time over the meaningless discussions. Already in the meantime we lost a good amount of inputs from you. Please start posting the experiments front. Eagerly waiting to see more from you.

AJAY

Thanks Ajay, I was rather tied up with my official work and hence could not post much. We can continue on a slower pace.

I my first post I had said that we would also look into some interesting Indicators. The idea is not to promote these indicators or replace the existing ones you are using. Some of these could augment you already sharp arsenal of indicators, another arrow in your quiver.

I am going to introduce a simple indicator called RAVI introduced by Tushar chande. The indicator Range Action Verification Index (RAVI) is useful to check trending and ranging markets like the ADX. RAVI is a momentum based indicator whereas the ADX looks at current price action to the previous.

Building the indicator

Take a long moving average and a short moving average whose period is bout 10% of the long moving average. RAVI is defined as the absolute value of the percentage difference between the long and short moving averages. Tushar chande considered a 65-day moving average, which would represent quarter of a year. Then the short moving average (10% of 65) would represent a 7-day moving average. Then the calculation will be as follows

RAVI=Absolute Value (100*(7-SMA - 65-SMA)/65-SMA)

Interpretation

The interpretation is very simple. When the value of the RAVI is more than 3- 4 % then the stock is trending. Lesser than this value the stock is ranging. Of course there is no hard and fast rule about the percentage level. One can fine-tune it depending on the market or stock. It may vary from stock to stock. You can experiment with these values and also the moving average values.

Comparison with ADX

The problem with ADX is that it gets very much affected by freak prices. The DI+ and DI- go haywire when these freak price values and kangaroo tails occur. Many times you will find the ADX charts moving sideways when the stock is actually trending up. At those times you will find the RAVI more reliable. I am attaching a classical example of Satyam computer’s chart. I will leave the rest to your experimentation. This could be good add on tool for confirmation.

Warm regards

karthik

excellent......applied TA.......whif of fresh air....we need it badly......let the flow continue......KABHI ALVIDA NA KAHENA......Ignore criticism of persons who are not having sharing spirit, or have nothing to share

hi all,
for any trend to stabilise, 'a counter trend' is unavoidable.
i feel we are entering in a correction even outside the market.
let truth prevail.
MurthyMSR

Hi ccitrade

There seems to be something amiss in the formula. I tried it on Matrix lab charts. The result is not very encouraging. I am enclosing the chart for your reference. Please check.

Also if you tell us your logic we may be anle to check it properly and troubleshoot. Also attaching your own charts will be helpful.

regards

Karthik

Hi

Sorry , Forgot to attach the codes for the Indicator RAVI. Find enclosed the Metastock and Amibroker codes. Just cut and paste the the codes.
Thanks, Casoni for reminding me.

regards

Karthik

THANK YOU SIR

Karthik,

Could you tell me where i can get the AFL code for VIX, Chaikin money flow oscillators?

Also do you know how I may plot volume on the price axis as in PBV charts?