Experiments in Technical Analysis

asnavale · #**231** 28th September 2006, 09:02 PM

Quote:

Originally Posted by karthikmarar

Hi Friends

Here are the Metastock expert and Amibroker AFl for the Trading system we looked at before.

Please note that the afl file extension had been change to TXT to enable uploading. Please change it to AFL.

The Metastock expert extension also changed to txt. Please change it to DTA.

Also enclosed a pdf file with the details of the codes.

Warm regards

Karthik

The explorations can be found at
http://www.traderji.com/52463-post43.html

Hi Karthik (and other members),

I came across this thread rather late and have gone through almost all the messages. I have downloaded the trading and exploration codes for AmiBroker and using them on different stocks for different time spans. As you have rightly pointed out that whipsaws are unavoidable I do get them everywhere. I would like to experiment with the technique with some modifications to see whether better results can be obtained. As I am a newbe, I need some guidance from you and other senior, experienced and knowledgeable members here. I am listing out my views/queries below:

1) When I apply the trading system quite often I get consecutive buy or sell signals without getting a signal in the opposite direction. In my opinion an ideal trading system should generate alternate buy and sell signals (I am saying an ideal system, not necessarily every system). Am I correct?

2) When we test our system, if we get such consecutive signals in the same direction should we take only the first one and ignore all others till an opposite signal occurs? After all, if we really use the system for actual trading, we would not know that one more signal of same kind may come later. So, we would be taking the first signal and act accordingly. If another signal of same kind comes later what would we do in real situations? May be for a buy signal we my buy more. But if a second sell signal comes we may not have anything left to sell even if the second signal is more profitable. So in simulation also should we follow the same principle?

3) If a system gives buy and sell (or sell and buy) signals on consecutive days should we accept it and trade accordingly? Even if such trade leads to loss? Because on a longer time span this loss may be wiped out with a handsome gain.

For the present I stop here. After getting some guidance from the forum members I would query further.

Thanks in advance to all those who respond.

-Anant

gobatman2001 · #**232** 30th September 2006, 12:58 PM

Quote:

Originally Posted by karthikmarar

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.

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.

Warm regards

karthik

Hi! Karthik,

Firstly, thanks for this brilliant thread. This is really an eye opener.

I have tried to get some detailed information on the RAVI indicator, but have not managed to do so. Hence, I am requesting you if you could please help me out on what I am missing. Could you please help me with the following queries ....

Attached is a chart. I have marked 2 arrows, 1 on the price & 1 on the RAVI. The date is the same for both (Sep 19).

1) Why is the RAVI indicator showing an upmove, when the price is still falling.

2) What do the numbers on the right hand side of the chart mean (1.704, 3.9809 etc)

Thanks & regards,
Amit

kp1234123 · #**233** 30th September 2006, 01:25 PM

Hi All
I'm Koshy , I am an NRI from Saudi Arabia. I'm a novice in this field. I would like to get a better insight as I find it pretty interesting.

Could anyone please tell me what to look out for while choosing a broker and a DP?
I like interday and daily trading

rajesh.sadhanala · #**234** 1st October 2006, 03:03 PM

Hi KArthik,

As usual nicely put up, great to see the thread reaching higher highs as day by day. I missed out some action for the last 3mnths, slowly joining into it again. May not be as active as before but will definately follow the action.

Bye.. Take care.. Catch u sometime on Chat.

Raj

Quote:

Originally Posted by karthikmarar

Hi Rahul
Brief explanation of ATR, HHV and LLV
ATR or the Average True Range was first defined by Welles wilder as a measure of volatility over a stock’s volatility over a given period.

More specifically, the average true range is the (moving) average of the true range for a given period. The true range is the greatest of the following:
· The difference between the current high and the current low
· The difference between the current high and the previous close
· The difference between the current low and the previous close

The value returned by the average true range is simply an indication as to how much a stock has moved either up or down on average over the defined period. High values indicate that prices are changing a large amount during the day. Low values indicate that prices are staying relatively constant.

ATR is also popularly used for trail stopping. Basically it is a volatility stop. When the volatility toward the opposite direction occurs you get stopped. Normally stops are designed in multiples of ATR. So in a trail stop like the popular chandelier exits the stop is always from the highest high over a specified period.

Highest high or HHV is the value the highest value of the stock over the specified period. (Note not the highest close but the highest high).

In the same way LLV is the lowest “Low” value for the stock in the specified period.

The HHV and LLV are quite useful functions to find the range of a price range over a period. The stochastic formula uses the HHV and LLV

Stochastic K (n period)= close – LLV(n)/ HHV(n)-LLV(n)

Hope this would clarify some of doubts.

Regards

Karthik

karthikmarar · #**235** 1st October 2006, 09:05 PM

Quote:

Originally Posted by rajesh.sadhanala

Hi KArthik,

As usual nicely put up, great to see the thread reaching higher highs as day by day. I missed out some action for the last 3mnths, slowly joining into it again. May not be as active as before but will definately follow the action.

Bye.. Take care.. Catch u sometime on Chat.

Raj

Hi Raj,

Nice to hear from you. Hope you are doing very well in your new career and new place. Looking forward to you in the chat room.

warm regards

Karthik

karthikmarar · #**236** 1st October 2006, 09:13 PM

Quote:

Originally Posted by gobatman2001

Hi! Karthik,

Firstly, thanks for this brilliant thread. This is really an eye opener.

I have tried to get some detailed information on the RAVI indicator, but have not managed to do so. Hence, I am requesting you if you could please help me out on what I am missing. Could you please help me with the following queries ....

Attached is a chart. I have marked 2 arrows, 1 on the price & 1 on the RAVI. The date is the same for both (Sep 19).

1) Why is the RAVI indicator showing an upmove, when the price is still falling.

2) What do the numbers on the right hand side of the chart mean (1.704, 3.9809 etc)

Thanks & regards,
Amit

Hi Amit

Is it a inbuilt formula or a custom built one for RAVI indicator in Fibotrader.
It looks as if it is behaving exactly the opposite way. Please check the formula again.

regards

Karthik

gobatman2001 · #**237** 1st October 2006, 10:00 PM

Quote:

Originally Posted by karthikmarar

Hi Amit

Is it a inbuilt formula or a custom built one for RAVI indicator in Fibotrader.
It looks as if it is behaving exactly the opposite way. Please check the formula again.

regards

Karthik

Hi! Karthik,

It's an inbuilt formula. To save my life, I can't create scripts (as of now)

Will check with Fibotrader.

Thanks,
Amit

mrktMC · #**238** 1st October 2006, 10:04 PM

Hi Karthik,

First of all let me Congratulate you for a wonderful effort and showing courage and conviction in bringing forward your trading system on an open forum. I really appreciate people like you who put up there best parts and hardwork in a best and selfless way. Great job dude...!! I read only the 30% of couple of thread's of traderji and found three gems of this forum for there outlook one is Saint,vvonteru and Karthik as I told you I only read only 30% of this forum as I started reading since last week. I am not aware of any technical analysis as I am not that literate to understand the fine points of technical indicators so never used it in my 10 years of trading. But I understand how a proper technical study can give you proper outlook of market and stock direction. My Long term outlook where all based at what the producthas in store for the future and what market it will be targeting and what revenue its going to generate and what is the current borrowed money its playing with and what is the outlook of the company and my daytrading was mostly on market sentiments and volumes and bad news and good news for the company but i never trusted rumours so every time used to pick only6-7 stocks to trade from each sector and used to play accordingly. Well that was my view point as I told you am bad at one thing that is calculations.....

But Dear Karthik after reading your Thread am pleased and proud of your efforts and wish you all the best for your wonderfull Journey towards new horizion of the world of stocks.....Keep it up man!!..............thats d spirit of the winner............

promienent regards,
MrktMc

karthikmarar · #**239** 2nd October 2006, 01:32 AM

Hi Ananth

Nice to know you are trying out the Afls. If you are able to achieve better results please do post them for the benefit of members.

Quote:

When I apply the trading system quite often I get consecutive buy or sell signals without getting a signal in the opposite direction. In my opinion an ideal trading system should generate alternate buy and sell signals (I am saying an ideal system, not necessarily every system). Am I correct?

Yes, Many people have the same opinion, that the trading system should not give consecutive buy or sell signals. But in my personal opinion any systems should give consequetive buy signals whenever there is one. For example in a up trend the pull backs also provide opportunity to enter for those who missed the first one and to add for those who are already in. So in my systems I do not try to prevent the multiple buy or sell signals. Maybe a matter of choice.

Quote:

When we test our system, if we get such consecutive signals in the same direction should we take only the first one and ignore all others till an opposite signal occurs? After all, if we really use the system for actual trading, we would not know that one more signal of same kind may come later. So, we would be taking the first signal and act accordingly. If another signal of same kind comes later what would we do in real situations? May be for a buy signal we my buy more. But if a second sell signal comes we may not have anything left to sell even if the second signal is more profitable. So in simulation also should we follow the same principle?

I think it depends on ones style of trading, capital and risk profile. Some prefer to enter on the first buy and ride the trend till the sell signal comes. Some keep adding on every consecutive buy signals. Here capital may be a constraint.

Quote:

If a system gives buy and sell (or sell and buy) signals on consecutive days should we accept it and trade accordingly? Even if such trade leads to loss? Because on a longer time span this loss may be wiped out with a handsome gain.

Again it would depend on the trading style. If you decide to strictly follow the buy and sell signal then you should you should sell if the signal comes the next day of the Buy signal. But if you decide a stoploss from the buy price you can still hold even if the sell occurs but the stoploss is not hit. This keeps you getting out of the trade for temporary dips. But if your system gives repeated buy and sell signals on consecutive days then it is time you had seriously look at the system.

It will be interesting to hear more opinions on these. Looking forward to some

Warm regards

Karthik

karthikmarar · #**240** 2nd October 2006, 01:43 AM

Quote:

Originally Posted by mrktMC

Hi Karthik,

First of all let me Congratulate you for a wonderful effort and showing courage and conviction in bringing forward your trading system on an open forum. I really appreciate people like you who put up there best parts and hardwork in a best and selfless way. Great job dude...!! I read only the 30% of couple of thread's of traderji and found three gems of this forum for there outlook one is Saint,vvonteru and Karthik as I told you I only read only 30% of this forum as I started reading since last week. I am not aware of any technical analysis as I am not that literate to understand the fine points of technical indicators so never used it in my 10 years of trading. But I understand how a proper technical study can give you proper outlook of market and stock direction. My Long term outlook where all based at what the producthas in store for the future and what market it will be targeting and what revenue its going to generate and what is the current borrowed money its playing with and what is the outlook of the company and my daytrading was mostly on market sentiments and volumes and bad news and good news for the company but i never trusted rumours so every time used to pick only6-7 stocks to trade from each sector and used to play accordingly. Well that was my view point as I told you am bad at one thing that is calculations.....

But Dear Karthik after reading your Thread am pleased and proud of your efforts and wish you all the best for your wonderfull Journey towards new horizion of the world of stocks.....Keep it up man!!..............thats d spirit of the winner............

promienent regards,
MrktMc

Hi Mohan

Thanks for those wonderful words, encouragment and wishes. Such kind words make all the efforts worthwhile

You seems to have a good system based on fundamentals. It will be nice if you share your experience and knowledge with us. The members will be immensely benefitted by it.

Wishing you also the very best in life.

warm regards

karthik

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