An Indicator

Ok. SP500 CFD

 

Are you Alex Frost?
Because he wrote this code. He also mentions www.understandmarket.com

 

I don't use Omega, but I'll have a look at it and see if I can translate it into something else.

- Spydertrader

Edit: I see I have to HAVE Omega to open the file. Maybe you could post the logic behind the indicator, so I could write it using another program?

 

here is the code:

{***************************************



Written by: Alex Frost

Company: UnderstandMarket.com

Description: Smooth Zero-Based.



****************************************}

Input:Length(NumericSimple),Price(NumericSeries);
Var:j(0),hh(0),b(0),f(0);
Array:R2[100](0),PR[100](0);

if Length<100 AND BarNumber>Length then begin
for j=0 to Length begin
PR[Length-j]=Price[j];
R2[j]=j;
end;
for hh=0 to Length begin
for j=0 to Length-2 begin
if Price[Length-R2[j]]>Price[Length-R2[j+1]] then begin
b=R2[j];
R2[j]=R2[j+1];
R2[j+1]=b;
end;
end;
end;
Value33 = 0;
for j=0 to Length begin
Value33=Value33+Power((R2[j]-j),2);
end;
UMindicator = 1-(6*Value33)/(Power(Length,3)-Length);
end;

 

Thanks Spike500; much appreciated.

- Spydertrader

 

My name is Alex Frost

 

Meaningless without a set of backtested rules.

I suspect the results would show this system has little added value.

Why? Because it's susceptible to the "hard right edge" that's dominant in all "sentiment" indicators. When charted they look deceiving good. However it's not an "oversold" indicator that's pulling up prices, it's in reality bouncing prices that bring the indicator out of oversold territory.

I used to be addicted to these indicators like a junkie to crack and in turn they were as good for my financial health as crack is to physical well being.

Look closely at 2002. For months the market appeared oversold, yet the rallies were shallow, meaning the buy signals failed to generate enough profits to compensate for the losses of buying into such substantial declines.

Not to mention the psychological pitfalls. If one loses for example , 20pts, 20pts, 13pts, will you then "accept" a mere 10pt profit? I'd venture that a true look into your soul will be an answer of probably not. You'll think "I'm finally right, I nailed the bottom and I'm milking this one." but low and behold the market breaks yet again. At some point YOU WILL catch THE bottom. However either a.) you'll be running low on money by that time and/or b.) you'll get out too early because THIS TIME you're not going to squander away the small profit you could have previously banked had you exited on the earlier temporary lows.

There's better ways......

 

Oh. This is an immemorial mistake to interpret oscilators as overbought or oversold. This indicator shows strength of a trend

 

MACD and Stochastic example

 

Don't care what is "shows" for you.
Does it make money? That's what Pabst wanted to know. From what you shew, it don't look like it could be of much help.