My own indicator

Discussion in 'Technical Analysis' started by Laurens, Jan 12, 2013.

  1. Laurens


    Hi all,

    Two years ago I found out that I really liked trading.
    I read some books, did lots of research and started with some basic things.
    Gradually, I raised the stakes (and started 'day trading' with a small budget) and eventually I lost control over my strategy and blew it :). I figured it was best to stop, so I did. I do believe my strategy worked (as a lot of them can), but I failed to follow my own rules. (Mainly because with rules I missed the thrill haha :)). But that's another story.

    However, back then, I was trying to develop my own indicator. The theoretic part was finished, but when I was starting to learn how to 'code' this for the trading program I was using, the ending above happened.
    Now, two years later, I came accross this indicator on my computer and remembered how I believed in it. I never saw how it work though. So that is the reason for this post.

    Is there anyone here who can transform the idea and formula's into a working indicator? (for a working platform) I would really like to see it in action and test if it has any 'predicting'-value.

    It is a simple idea based on fluctuation, but from a different perspective. It was ment for very short term transactions, but term should be settable. The idea was to give a simple direct indication of if there is a trend that is going to last long enough to reach a given profit target. (I started thinking about this because the main issue I encountered is not detecting trends, but predicting how long they were going to last.)
    (Another description: Basicly it gave an indication of the chance you will reach your profit target, and not reach your stop loss.)

    To be honest, I just opened my file and I do not understand my own formules right now haha. But I'll try again on a clear mind.

    If there is interest, I will upload it.

    Kind regards,

  2. kut2k2


    Actually detecting trends is not as easy as it sounds. Most people think it's easy because they're easy to see in hindsight, but programming for trend detection is no trivial task.

    Predicting how long a trend will last sounds challenging. Mind giving some insight into your idea? Thanks.

  3. Please,do
  4. Laurens


    Yes, true. Actually my goal was to make an indicator that would simple give the trend at first. So that was my goal, but this was only a first step. My philosophy was: <u>There is always a bigger trend</u>. I always look at the trend at the level I was trading ànd the trend one level higher. But I never managed to develop any formula that could also combine those two (yet). So, this one is called "<B>Pressure Expectancy Indicator</B>" because it should indicate the pressure: upwards or downwards. (Not really the trend, simply just the pressure) Expectancy meaning: what to expect based on the past.

    Thank you for your interest. I'm not sure if the idea behind it is clear yet, so here is an example:
    If there was a 3% increase yesterday, but also during that day a 2% decrease at a given point (fluctuation), the indicator will say it is not smart to open a long position if your set Profit Target is 4% (>3%) and your Stop Loss is 1% (<2%). Because it is likely you will hit your Stop Loss and you won't hit your Profit Target. It also accounts for time and values time closer to the present more than farther away. (I had a simple strategy with a PT and a SL, so its very handy for those strategies.)
    The basic idea: The trend is strong enough to open a position when both the upwards pressure is higher than your PT and the downards pressure is lower than your SL.
    For a short position it is the opposite.

    The image in attachment is a quick example. The profit target is the double of the stop loss (f.e. 6% vs 3%).

    The more space between both variable lines: the higher the fluctuation in the last n candles. So it makes a difference between upwards fluctuation and downwards.
    In the image:
    1: The upwards pressure is higher than your PT so this is a green light, but the downards pressure is too high.
    2: Both variable lines are above the requirements for a long position. This indicates that there is sufficient upward pressure.
    3. Both variables are under the conditions for a short position: Downwards pressure.

    So this is it. I do not know how functional the formulas actually are. But they represent this idea :). Is the idea clear?

    PS: I can only upload one attachment, so here is the pdf: Click here
  5. Laurens


    So the very first part is the pressure (simply the % difference between the current high/low and the close of the last candle) and all the rest is to account for time.
    In stead of just taking the avarages it values more recent fluctuations higher by mutiplying with a weight.

    If you look at the last 3 candles for example:
    Last one: 9%; One before 9%; One before that also 9%;
    then it will assume that now 9% increase is also possible and likely. (same as for a simple avarage).

    However, if this was this:
    Last one: 9%; ... 6%; ... 3%;
    then it will say that 7% is possible (vs. 6% with a simple avarage)
    (Because the number of candles can be adjusted, this looks much more complicated than it is :))

    What do you think about it?
  6. ehlaban


    I'm interested and probably can code it in easylanguage for Multicharts and test it
  7. Laurens


    Go ahead, that would be awesome :).

    Let me know how it goes and as soon as it is finished.
    If you have any questions you can always ask me.
  8. Humpy


    If it works can we have a copy ?
  9. Laurens


    Sure, no problem. The only thing I want if it works is the credit :).
    And, the more people who use it, the better it will work of course ;).
  10. Mysteron


    The maths in the pdf is nonsense, the parameter t doesn't seem to depend on parameter i. In that case the summations will simplify to be simple functions of parameter n, and F(t) and f(t) have no meaning in the context of your descriptions.

    So I'm curious how you managed to generate the plots of your indicators. Could it be that you generated those plots manually to illustrate what you would like the indicators to look like, in the hope that someone would produce the correct formulae corresponding to your descriptions and show you how to implement them? I suspect that is the case.

    Just to be clear, you are wasting your time in this approach, both in terms of trying to get others to do your thinking for you and also in the very idea of using predictive indicators. Then again, perhaps I have just told you what you wanted to know.
    #10     Jan 14, 2013