Yoohoo, I am interested in any additional resources you have to offer as well.I will appreciate anything you can send my way. thank you. cgar
Here is another person's signal system. I annotated on it to show the signals it generates in three colors. the signal is the slow line and the white flags re where the unshown fast line crosses to generate the trade signal. Obviously he has this automated and it turns out the segements long and short for an excess of 3 times the H-L per day. This was last Friday. Do you want me to post 20 of these kinds of systems that are in use on ET? Maybe I should post an instruction book for creating any kind of new indicator. would you like an instruction books for creating a new kind of indicator???
As anyone can see there are three parts to any Stochastic. I labelled this person's X, Y, and Z since he has not presented the three values. X is the raw value Y is the %K and Z is the %D You have announced here my three values for the dual stochasitcs I started using long ago. You also repeated my MACD which has been adopted by most top traders who use MACD around the world. The equations first posted for these three equations were incorrect so it is not a good idea for anyone to use them. Lane ties the market periodicity to the X equation. You may remember the SPM thread that was using an indicator that bridged the cycles (periodicity) of the market. why this person used the old out of dat period is beyond me. I suggested that he adopt the modern on so he could make money during the trending part of application of SPM. He didn't. On the other hand, long ago, people started to adopt what the SPM guy couldn't. He has become a person like you are today. Why? Everyone has choices and they make them and they become the consequences of their choices. I choose to enlighten and I choose to, occasionally, allow a person to be a foil for me so I can introduce idea and factual knowledge from others that will help those others. Once the period is set in X, tyen the Stochastic is going to work for Y and Z when Y and Z are adjusted for making money. I gave you an example of such an adjustment that is used by another person and sure enough the Stochastic is signalling most of the trades on an intermediate level of trading. The Stochasitc does have one draw back as we all see; it does not depict the overbought and the undersold very frequently. This is where Lane suggested a solution for that problem. Lane recommended using two Shochastics. This gives four lines that provide many signals and it is then possible to make more money using such precision. As it turns out the subsets of combinations of signals from the dual calibrated Shochastic pair form one master finite set of all possibilities. These subsets also have an order associated with them on several levels of finenss. That is there is a main formal large reliable sequence and there are also many subroutines that present themselves at various places in the Main formal large reliable sequence. If you have the master finite set analyzed, then you have an analysis result for all the statistically significant singal subsets and groups of subsets within a sections of the sequential representation of market change over time (known as the non stationary market overall set). Lane was a very early scientific student of markets. He determined a classic application of mathematics to price change in markets based on the periodicity of the market. To build a raw evaluator and then use it to relate to the opportunity to make money was a terrific and lasting contribution. He and Appel who did a similar thing have demonstrated that some aspects of markets are unchanging over time and they work during times such as Black Swans. What is it exactly that allows an indicator to function so it is capable of signalling just at the right moment to maximize the making of the money on the table at that moment? This is not a rhetorical question for scientists and those who use critical thinking. In the example given the singal generator does not work at all times as you may be able to see. Why not? This is not a rhetorical question either. Lane desinged his indicator to work on a particular job originally and other joined with him to further wring more information out of the original work. we all know about this history; it serves as a model today for increasing the effectiveness and efficiency of any model. Developing models also increases their yield. We have seen an era of Quants. Now an era of Quals is coming into being. Non stationary data is suggesting that stationary approaches aren't too swift. Moving non stationary analysis towards having more than just a time variant context is coming to light. Most still flip coins and cogitate on adjacent flips. They are like kids with pennies in a candy store. They just buy candy. To come up with a rwa measurement and express it as an oscillator is something no one, roughly speaking, ever does. It takes a numerator AND a denominator. This is way past moving averages. Way past. Getting denominators is fairly easy. I really fixed your ASS and a lot of ASSES with mine. Wait until you find out who else is using such a denominator? But what about numerators? I added the indicator's signal trade segments together for longs and for shorts to get the numerator you are so familiar with and also use. Next I measured this sum in terms of a denominator. and got an answer that you so often quote for me to keep everyone aware of the ratio. The example using someone else's indicator works to a tee for intermediate level trading. Lane used the same denominator in a different way didn't he? He chose the H and the L over a period of time that he related specifically to the period of the price movement. So X designates the width of the selection period that is used to find the most extreme H and the most extreme L. Nowadays it is the same for Shoch and MACD as we all know. If you are using the original MACD, the original no longer works because the calculations "bridge" the money making trading cycle. Look at what platforms use which defaults. That is a QA assessment. People who cannot invent lasting indicators do not know enough about mrkets to do that. today people do not know enough about indicators to even use the indicators. Look at this thread and how long it takes to get a person to ask his first question. Even then he has to be programmed by an externality to get him to speak the question.
The numerator. the numerator relates the close (the last value) to the range as a %. Logic prevailed;either the high or the low could have been used. The low was chosen to keep things right side up. And the low that was chosen was the low in the denominator.
Raw values accumulate every bar and they are placed in storage. How many are stored is determined by the segment of time used to get the H and L. After that the set is determined and can be fed to the %K calculator. The raw values that are more recent are used. How many? This is a money making question. By determining this it can be determined how long to hold a position to make money effectively and efficiently. As long as an instrument is making money, it may be a good idea to keep it. %K answers that Q by giving a chart line that expresses when an instrument is making money. Since there are two ways to make money in holding a position, there are two measures that say when it is a good idea to hold an instrument. By getting the raw value set right by using periodicity, you can get the exit value right by adjusting the %K. So do it. You now have Y of the example I put up.
Lets see how the extremes of the %K are noticed. %K is used for expressing holding a position by dealing with keeping an instrument as long as it is overbought or undersold during the trends of overbought and undrsold. The safety of overbought and undersold cannot be over emphasized. When you think about the H-L of an instrument it is telling ou what is possible in price range. Ranking stocks by range is nice and it is even better if you include the time involved. Lane did that by using periodicity and price to get a raw value that tells the instruments story and it is comaprable to all other instruments. Appel didn't as we see. He designated absolute values, instead. We add safety by limiting the past and we throw in critical values for protection that just keeps us in the position as long as it is trending. "Trending" is a synonym for the words: 'MAKING MONEY'. Think about a person who is involved and thinking and thinking critically. He says: WOW if I have an indicator that tells me how long to HOLD when something is making money, why can't I make it better by repeating what makes it so great? He did. Lane did just that. %D relates to %K the same way %K relates to the RAW equation storage data. By doing this he got a line (%D) that is "carried" (as on a carrier, like radio and TV are) by %K's line. You can see it wiggle and amaze you or you can see it and not understand it at all. This created many signals for the user. And those who thought critically along side Lane got a lot more information from the Stochastic. Two Stochastics are recommended as well. The three great signals I will note are: Convegence, divergence and x overs. There are about 15. I noted the X over with a white flag on the example. It gave the timing of about 18 intermediate level trades and made 60 points per contract on Friday. This is 30 days of beginner trading as done by allen hobbes. And for Tdog, et al, it is unbelievable and astonishing. Lane did this over 20 years before MACD came into being in 1979. Lane was following Graham and Dodd (1930's) who followed the MA that Dow invented. All of this excells quant type betting. Why? the answer is because it has come from critical thinking about knowing what is going on in markets. Markets operate in price ranges. There is a trail of prices. By relating the most recent price (the close) to the range you know where price is in the range. By doing nonstationary averages that relate to the periodicity of the price cycle in it's range, you know where you are as time passes. By dealing with the cycle of price, you get to use good timing for the ends of profit making. you can, thus move capital from one place to another to take advantage of your knowledge. They now have trading for Dummies from liberal arts people. People look at indicators and BELIEVE that they are lagging. They are for these dummy type people. These indicators are the basis of Price status in terms of market strength. Two other variables determine market strength: volume and open interest. In any three variable system there are 8 combos. Two of these give STRONG; 6 give WEAK. The question is how does a person get from dummy and type B person to EXPERT. Knowing markets down cold is the answer. Dow, Graham and Dodd, and Lane, and Appel. worked through what was available to them to build on one another's work. The Tharp test takes a person to an advanced beginner, maybe, intermediate level of thinking. As in most areas of the financial industry the test is simply a sales tool that focuses on people who want to go farther from beginner or advanced beginner. Don recognizes it as "silly", for example. Using Stochastics as a "ribbon" is throwing mud at a wall as we know. The example I put up is one that sacrificed the value of tuning vs. information. It gets to 3X the daily range. To get to 11 points in 2 1/2 hours with a 3 point range takes a better auto signal. Here, at this level many degrees of freedom are needed and being able to rove around use the approapriate subsets at the right time is required. This is Qual instead of Quant. If a person is going to be expert, they are going to have to work. Bitching is easy; ET has proven that. What is required is that a person think critically and do what the market tells him to do when he learns what the market is telling hime to study. If you get "Trading from A to Z", then you have to go through it an change all the original defaults to the contemporary defaults that make money. then you have to redefault your platform from the incorrect ones (the originals) to the correct ones. You also have to use several platforms to get the feeds for monitoring. Then you have to build a display to take your first, ever, look at the markets. Then you have to add script to your display component to be able to get them to provide infomation to you that has high utility. You will have to go all over the place to get these cripts or you will have to learn to code. At some point you will have all the leading indicators of price showing and available. I do. Here is what this place is like. It is up to 2 or 3 minutes ahead of the what the T&S is tattoo'ing out to you. It is several sequence events ahead of the NOW segment that is seen by you presently. What is going on for such a person and set up is that trades are determined well before price presents itself at that very time and value. Last Friday the market had a H-L of about 20 points on the ES. The market showed many profit taking moments. Those were seen by intermediate traders who took 60 points plus per contract out. Trading with 25 contracts in the ES is a compfortable place to be while taking those 60 points per contract. The example presented is just one of many ways to use a Stochastic to make those 60 points using the number of contracts desired. If you want to use 400 as Greenspoon does (he profits less than a tick per trade and does 24,000 contract turns per day), divide the 400 into smaller groups and carve the turns, all of them with partial fills. Coatail trading some accounts can be fun I am told.'