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Joined: 2/15/2008
Posts: 155
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If you could only have 3 indicators on a chart which would they be???? Would like to apply to back-testing for best results. Hope this question is OK for this forum. I use Blocks 3.
Thanks for response.
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Registered User
Joined: 12/31/2005
Posts: 266
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rsi, macd, moneystream.
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Registered User
Joined: 10/7/2004
Posts: 2,181
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BB 20,20; LR30; TSV
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Registered User
Joined: 6/6/2005
Posts: 1,157
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Price, Volume, Donchian channels
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Registered User
Joined: 10/26/2005
Posts: 238
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Price, volume, moving avg 10
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Registered User
Joined: 1/28/2005
Posts: 6,049
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That's tuff because I tend to think of indicators based on how they
aid what I'm looking for.
(davidjohnhalls Donchian channels become much more importent
if Im looking for breakouts)
To my view trends, pullbacks, breakouts,cycles, momentum
long-term, short-term require using a different magnifying glass.
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Probably: Moving Average, MACD, ATR or Bollinger bands.
That would at least cover Trend, Cycle, and Volatility.
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Registered User
Joined: 12/31/2005
Posts: 266
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QUOTE (Gaute) If you could only have 3 indicators on a chart which would they be???? Would like to apply to back-testing for best results. Hope this question is OK for this forum. I use Blocks 3.
Thanks for response.
i was assuming you meant oscillator type indicators. of course price and volume are the most important, then the moving averages, 10,40,200.
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Registered User
Joined: 1/28/2005
Posts: 6,049
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"i was assuming you meant oscillator type indicators."
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Yeah, price and volume should be a given.
I always consider indicators things that are applied to
or generated from price or volume.
(without price data we couldn't even construct most indicators)
Thanks
diceman
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Registered User
Joined: 8/6/2008
Posts: 45
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As earlier stated, Price and Volume are a given and in my opinion all one needs to judge entry and exit points, But if I were to pick three indicators to scan and sort with in wich to choose good candidates then I would want them all to be Volume based. Keep in mind, to eliminate redundancy the three that I choose measure different shades of volume action and I want all three working in harmony. Any price, trend, velocity or momentum indicators all lag and are unreliable. So here it is then.
MONEY STREAM
VOLUME PRICE CONFIRMATION INDICATOR
BALANCE OF POWER
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Registered User
Joined: 1/1/2005
Posts: 2,645
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QUOTE (Ptolemy) Any price, trend, velocity or momentum indicators all lag and are unreliable. So here it is then.
MONEY STREAM
VOLUME PRICE CONFIRMATION INDICATOR
BALANCE OF POWER
Ptolemy,
It seems odd that you would make the statement you did about indicators and then include VPCI and BOP in your choice of three indicators.
In the case of VPCI there is a shot term period P and the values CP, VP, and CP*VP dropping out of the back of the filters are just as significant as C0, V0, and V0*C0 comming into the front of the filters in determining the change in the indicator value.
The BOP behaves much like an oscillator form of OBV with period 16 in that SGN(C16-C17)*V16 dropping out of the back of the back of the filters is just as significant as SGN(C0-C1)*V0 comming into the front of the filters in determining the change in the indicator value.
Cumulative MS exhibits no such behavior.
Perhaps you were not aware of such behavior of VPCI and BOP.
Thanks,
Jim Murphy
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Joined: 8/6/2008
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Good morning Jim Murphy. I am glad that it was you that has chimed in on my three picks. You are the best indicator technician on this forum. Since you did not mention Money Stream then I will asume that it is a safe pick and that it also meets with your aproval. So we can discuss VPCI & BOP.
BOP, you say is a histogram version or oscillator of OBV and yet BOP has the abilities to contradict price. I have not ever seen this feature in OBV. Any indicator that can contradict price could also have the ability to lead price. I think that research of fruitfull environments and successfull reactions to said indicator are worth documention for future endevors. Lastely Balance of Power can be used in other more long term tactics. I have noticed that it is a great tool for exposing mechanical or automated accumulation. After many long hours of chart study (bottom formations in particular) I have noticed whith successfull charts that have led to strong momentum rallies that when you look at the actions of BOP in the bottoms of these charts that you can almost time the cycles of active BOP. Below I have just one example, you will see the pink inclusions that show an almost guided plan of timely accumulation that yeilded great results.
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Joined: 8/6/2008
Posts: 45
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PART II
So you can see why I would want BOP in my toolbox of three. It is a versatile tool and has many applications on more than just one level or even time frame.
VPCI: Yes another good indicator and I understand that there is also lag constraints on this tool based on the very fact that you must choose a period of time which is to be measured. If it were not for the volume aspects of the formula then I would have no use for it. You see I have during my studies found other characteristics of price movement. (Not in all cases), but I find that in most cases price will mak a move one way or another within an 8 day period (short term only). And volume plays a big role in these minor advance or declines. Also the critical price levels are also in play - S/R, Fibonacci levels, trend lines and so on.
Unlike momentum runs where resistance levels are breached as easily as a sharp knife through warm butter, these shorter term plays must be handled with care critical levels respected. Volume measured.Yes it is a different game but also profitable. So I use an 8 day VPCI to help me to see if volume is leading or laging price. This indicator can help do this. Take a look at my chart bellow HLF you will see how I played this on the short term time frame with the use of the VPCI where it showed that as price was declining towards a strong support level that volume was not confirming the decline in price and that in my opinion there was not enough volume to breach the support, thus a bounce in price was probable. (after all short term trading is all about probabilities). In this case I was correct and the VPCI once again was a usefull tool for this tactic.
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Registered User
Joined: 4/18/2005
Posts: 4,090
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well any indicator that candiverge could be seen as leading price. Question becomes when will price follow up and how signifficant will it be.
OBV can form divergences.
I'm almost to the point of saying that I prefer to not trade divergences.. I wan't indicators confirming price so that I can clearly hear their warning when they begin to fail.... insted of trying to stare through them into the haze and discover if they are leading, diverging, or something even more benigne.
That isn't to say that I don't think divergences are important.
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Registered User
Joined: 1/1/2005
Posts: 2,645
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QUOTE (Ptolemy) Since you did not mention Money Stream then I will asume that it is a safe pick and that it also meets with your aproval.
_________________
BOP, you say is a histogram version or oscillator of OBV and yet BOP has the abilities to contradict price. I have not ever seen this feature in OBV.
Ptolemy,
Thanks for your detailed response.
First of all, I do not approve or disapprove of any indicator, and, even if I did, it should be of no interest to anyone. There is no delayed reaction to the raw data input for Cumulative MS.
I did not say that BOP is a histogram version or oscillator of OBV. I only said that BOP behaves much like an oscillator form of OBV with period 16.
The chart you chose nicely illustrates the effect of the period 16 in BOP. The effect of a large volume bar, green or red, entering the BOP filters is obvious. If we move 16 bars later, we observe the effect of the large volume essentially dropping out of the BOP filters.
Bruce constructed a Price Volume Oscillator (PVO) that behaves very similar to OBV. Consider the most recent 16 volume bars. Calculate the average of the up (Green) bars and subtract the average of the down (Red) bars.
The similarity of PVO16 and BOP is observed by placing the following Custom Indicators in the same Window:
PVO16:
Check Center Zero Line
Indicator Formula:
((C0>C1)*V0+(C1>C2)*V1+(C2>C3)*V2+(C3>C4)*V3+(C4>C5)*V4
+(C5>C6)*V5+(C6>C7)*V6+(C7>C8)*V7+(C8>C9)*V8+(C9>C10)*V9
+(C10>C11)*V10+(C11>C12)*V11+(C12>C13)*V12+(C13>C14)*V13+(C14>C15)*V14
+(C15>C16)*V15)
/
((C0>C1)+(C1>C2)+(C2>C3)+(C3>C4)+(C4>C5)4
+(C5>C6)+(C6>C7)+(C7>C8)+(C8>C9)+(C9>C10)
+(C10>C11)+(C11>C12)+(C12>C13)+(C13>C14)+(C14>C15)
+(C15>C16)-0.000001)
-
((C0<C1)*V0+(C1<C2)*V1+(C2<C3)*V2+(C3<C4)*V3+(C4<C5)*V4
+(C5<C6)*V5+(C6<C7)*V6+(C7<C8)*V7+(C8<C9)*V8+(C9<C10)*V9
+(C10<C11)*V10+(C11<C12)*V11+(C12<C13)*V12+(C13<C14)*V13+(C14<C15)*V14
+(C15<C16)*V15)
/
((C0<C1)+(C1<C2)+(C2<C3)+(C3<C4)+(C4<C5)4
+(C5<C6)+(C6<C7)+(C7<C8)+(C8<C9)+(C9<C10)
+(C10<C11)+(C11<C12)+(C12<C13)+(C13<C14)+(C14<C15)
+(C15<C16)-0.000001)
BOP:
Check Center Zero Line
Indicator Formula:
BOP
It is seen that the two Custom Indicators are very similar in behavior except when:
1) BOP is truncated to +-100.
2) There are less than 5 up volume bars or less than 5 down volume bars in the most recent 16 volume bars.
Essentially, whatever can be said of either Indicator, can be said of the other. The properties of PVO16 are easily determined including the 16 bar delayed reaction to its input.
Thanks,
Jim Murphy
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Registered User
Joined: 8/6/2008
Posts: 45
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Thank you Jim, you always amaze me with your technical abilities. How would you make a 6 day version of the PVO indicator?
Thanks for your help.
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Registered User
Joined: 8/6/2008
Posts: 45
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Diceman has made reference to Hohandy a few times recently. I remember and liked him well. He was focused on MACD-H and designed many different approaches and applications for its use. I like to think that I am as focused on Volume and the more indicators based on volume then the more approaches I can design.
I have been a student of the Markets for many years and have come to the conclusion after many thousands of hours studying charts that it is all about Volume. Just my opinion, nothing more.
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Registered User
Joined: 1/1/2005
Posts: 2,645
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QUOTE (Ptolemy) How would you make a 6 day version of the PVO indicator?
Ptolemy,
I am going against the statement in my previous post and say that if my comparison of PVO16 and BOP caused you to develop an interest in PVO, I have done you a disservice. It should have had the opposite effect since it helps one understand what BOP is actually doing. Sorry.
For a PVO6, just eliminate the terms involving (C6>C7) and (C6<C7) and higher. Thus, a PCF for PVO6 is:
((C0>C1)*V0+(C1>C2)*V1+(C2>C3)*V2+(C3>C4)*V3+(C4>C5)*V4+(C5>C6)*V5)
/
((C0>C1)+(C1>C2)+(C2>C3)+(C3>C4)+(C4>C5)4+(C5>C6) -0.000001)
-
((C0<C1)*V0+(C1<C2)*V1+(C2<C3)*V2+(C3<C4)*V3+(C4<C5)*V4+(C5<C6)*V5)
/
((C0<C1)+(C1<C2)+(C2<C3)+(C3<C4)+(C4<C5)4+(C5<C6) -0.000001)
The PVO is not to be considered a reflection on Bruce, he was just trying to answer a user's question when he created it.
Thanks,
Jim Murphy
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Registered User
Joined: 8/6/2008
Posts: 45
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Jim, thanks for the formula. I have built a template around it and like it a lot. I will find some good candidates and post them soon.
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Joined: 11/1/2005
Posts: 240
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Judgement(1) from experience(2) with one of the obv indicators(3) to use at a glance to shorten the judgement time.
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