Name of an indicator

Discussion in 'Technical Analysis' started by Marcell, May 13, 2011.

  1. Marcell


    Hi there,

    I am wondering if a simple indicator exists that would show you the distant from a given Exponential Moving Average to the current price in the form of an oscillator? Or is there a way to configure a similar indicator so that it can serve this purpose?

    What I want the indicator to present is the distance from current price to the 200 EMA. If it is above it is above some 50% territory it is bullish. If it is below, it's bearish. MACD does not quite do it.

    Thank so much
  2. kut2k2


    What you're describing is just the moving average crossover (MAX) where the faster MA is price (= MA1). I guess you could call it EMAX(P,1,200) if you wanted to be fancy.

    EMAX(P,1,200) = EMA(P,1) - EMA(P,200) = P - EMA(P,200)
  3. Distance from price to an MA? That's pretty close to what CCI is.

    So the indicator will read 0 (or very close to 0) as the price crosses over the MA.

    What are you looking to do with this indicator? Mean reversion?
  4. Marcell


    Yes that looks like what I'm looking for. I don't quite see a way to set it to use an EMA instead of SMA? Mean reversion would be the keyword here, or would you suggest a more appropriate indicator for that?
  5. Marcell


    Is this to be programmed as a custom indicator? So far it does not tell me much :/
  6. How are your programming skills? It's easy to do in SierraChart, but that's the only charting platform I have experience with.

    Just do price - MA value and plot that. If price is below the indicator then it will be a negative value on your oscillator which is what you want.

    You can use whatever type of MA you want.

    Just because price gets a certain distance from an MA doesn't mean it's any more or less likely to go in another direction.

    Also, be aware that many of the times when the price and MA meet up again after being far apart, it's because price chops around while the MA catches up. In this case, you won't make any money.

    Here look, I MSPainted it for you.


    In a worst case scenario, price will slowly climb after you get your signal to short, the MA will rise up to meet it (and your indicator gives a reading of 0) yet you're already in the red, and then price takes off again.

    You're thinking outside the box, though, which is good.
  7. Hi Marcell. You can do this in TraderPro. Let me know if you want me to show you and I'd be happy to :)
  8. lindq


    LAST/EMA as a custom indicator. Chart it and you will see your deviation.
  9. Yep this 100% true. The problem is the oscillator cannot differentiate the difference between the reversion of price back to the EMA or the EMA moving to meet the price. If the first occurs, you win, if the second occurs you lose.
  10. ================
    Mar/ma/ema, yes ;
    Reguardless, keep it simple or keep it ema. Like both myself.
    Probably much better to use a shorter like 20, 50dma,200dma .Keep it simple or keep it ema . Like both myself

    Also ma/ema are easy to see /check for accuracy;
    not true for lots of other tek garbage/baggage.LOL

    Good trend question;wisdom is profitablle to direct
    #10     May 25, 2011