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Registered User
Joined: 1/4/2005
Posts: 15
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I am trying to create a Volume MACD Indicator, differentiated from a recent Volume Weighted Average Price Indicator recently demonstrated on a Worden video. I'm trying to create this Indicator in TeleChart. I have reviewed your MACD videos and it's accompanying referenced formulas. I'm getting a simple line using the formula (AVGV9 - AVGV21) for a 9,21,9 setup. I seem to be missing a comparative, or crossover line in my chart study. Could you help refine this for me?
Thanks
Chuck
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Worden Trainer
Joined: 10/7/2004
Posts: 65,138
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Assuming it is just a MACD based on Volume instead of Price (as opposed to a Volume Weighted MACD), you would add the second line to the Chart by adding a 9-Period Moving Average Child Indicator to your AVGV9 - AVGV21 Custom Indicator.
Plotting Custom Indicators with Examples
Adding, removing and saving indicators to a chart template
Understanding MACD
-Bruce
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Registered User
Joined: 1/4/2005
Posts: 15
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The references you mentioned doesn't describe how to add a Child Indicator (9-period moving average or otherwise). I tried adding a moving average to the VolMACD (yes it's just volume instead of price). But it just seems to shift a new line to the right with the same amplitude, not a typical MACD divergence line. Still need some help.
Thanks
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Worden Trainer
Joined: 10/7/2004
Posts: 65,138
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A Child Indicator is just an Indicator added to another Indicator instead of to the Pane. Moving Averages in TeleChart are always Child Indicators. Adding a 9-Period Moving Average to the AVGV9 - AVGV21 Custom Indicator seems to create a different line for my (not one that is just shifted).
Select Chart Template | Add Indicator | Indicator.
- Visible: Checked
- Center Zero Line: Checked
- Plot using price scale: Unchecked
- Smoothing Average: 1
- Average Type: Doesn't matter (because the Smoothing Average is 1)
- Indicator Formula: AVGV9 - AVGV21
Select Chart Template | Add Indicator | Moving Average | FormulaAVGV9 - AVGV21 1 Period.
- Period: 9
- Average Type: Up to you, but Simple would match the Custom Indicator.
- Shift Left: Unchecked
-Bruce
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Registered User
Joined: 1/4/2005
Posts: 15
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Registered User
Joined: 1/4/2005
Posts: 15
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Bruce
Thanks for some clarification. I believe I added the 9 day moving average correctly, but the similar amplitude and shift appearance seems to be the result of my original custom formula setup that was with a smoothing average of 9 instead of 1 as you indicated below (please confirm if this was the reason).
I observed this Volume MACD Indicator on another chart application. The significance of applying it to a stock or index chart is a measure of conviction of a move (not too dissimilar to divergences in TSV). If this indicator rises above 0, it confirms conviction of that move (up or down). If it falls below 0, it demonstrates lack of conviction in that move (up or down). My back testing suggests that it works pretty well to that end.
I believe that I read in another discussion that we could not setup a histogram with these custom indicators, is that true? If that is the case, I believe I have accomplished my objective with your help on this indicator. I'll look forward to your response to my three follow-up queries, and thank you for your valued help.
Select Chart Template | Add Indicator | Indicator.
- Visible: Checked
- Center Zero Line: Checked
- Plot using price scale: Unchecked
- Smoothing Average: 1 I entered 9 on my original formula
- Average Type: Doesn't matter (because the Smoothing Average is 1)
- Indicator Formula: AVGV9 - AVGV21
Select Chart Template | Add Indicator | Moving Average | FormulaAVGV9 - AVGV21 1 Period. I'm confused by this notation (italics), since the Moving Average box doesn't provide for a formula entry. Is there some significance to this representation other than a reference to the moving average?
- Period: 9 When I entered this number, the 2 lines I was looking for seemed correct.
- Average Type: Up to you, but Simple would match the Custom Indicator.
- Shift Left: Unchecked
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Worden Trainer
Joined: 10/7/2004
Posts: 65,138
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Having a Smoothing Average of 9 would have probably made the lines more similar, but the Moving Average still should have had a slightly smaller amplitude.
You could create the outline of the Histogram by using AVGV9 - AVGV21 - AVG(AVGV9,9) + AVG(AVGV21,9) instead of AVGV9 - AVGV21. There isn't a way to actually display the result as a Histogram however.
-Bruce
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Registered User
Joined: 1/4/2005
Posts: 15
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I'll play with Histogram outline formula to see what it looks like. As a final follow-up, I would like to ask again about the notation you made:
Select Chart Template | Add Indicator | Moving Average | FormulaAVGV9 - AVGV21 1 Period. I'm confused by this notation (italics), since the Moving Average box doesn't provide for a formula entry. Is there some significance to this representation other than a reference to the moving average?
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Worden Trainer
Joined: 10/7/2004
Posts: 65,138
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When you add a Moving Average, you apply it to a parent Indicator and must select it. The actual text shown when selecting the parent using my instructions is FormulaAVGV9 - AVGV21 1 Period.
-Bruce
Personal Criteria Formulas
TC2000 Support Articles
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