March 2008 Letters To The Editor
or return to March 2008 Contents The editors of S&C invite readers to submit their opinions and information on subjects relating to technical analysis and this magazine. This column is our means of communication with our readers. Is there something you would like to know more (or less) about? Tell us about it. Without a source of new ideas and subjects coming from our readers, this magazine would not exist.
Address your correspondence to: Editor, STOCKS & COMMODITIES, 4757 California Ave. SW, Seattle, WA 98116-4499, or E-mail to editor@traders.com. All letters become the property of Technical Analysis, Inc. Letter-writers must include their full name and address for verification. Letters may be edited for length or clarity. The opinions expressed in this column do not necessarily represent those of the magazine. -Editor
METASTOCK CODE FOR THE FRACTAL DIMENSION INDEX?Editor,
I found Radha Panini's articles, "From Nile To Nyse" (February 2007 S&C) and "Trading Systems And Fractals" (March 2007 S&C), very interesting. At your website, I see that it's possible to get the code for some software, but I could not find code for MetaStock. Do you have any suggestions on where I can find MetaStock code for the fractal dimension index (FDI)?
Matthias Frey
GermanyMetaStock has not sent us code for the fractal dimension index. However, there is a MetaStock user forum that you can access through the Equis website at www.MetaStock.com. I would recommend that you ask at the forum if anyone has developed MetaStock code for the FDI indicator.--Editor
HISTORICAL AND IMPLIED VOLATILITY DATAEditor,
I was interested in the December 2007 STOCKS & COMMODITIES article "Forecasting Futures Movements" by In Gyu Koh and Sung Soon Lee and the strategy they use for historical and implied volatility. Can you tell me where I can find a free website to get these charts?
Glenn Leininger
Unfortunately, there is no free website to get these charts. The authors used Microsoft Excel to generate the charts. Please contact the authors directly for a copy of their spreadsheet.--Editor
SHORT-TERM VOLUME AND PRICE OSCILLATOR FOR BLOOMBERG?Editor,
I enjoyed the article on SVAPO ("Short-Term Trading With SVAPO" by Sylvain Vervoort, December 2007) and was wondering how I could recreate such a graph on Bloomberg. Could someone send me the template?
Andrew Switajewski
Unfortunately, Bloomberg is not a contributor to our Traders' Tips feature. You would need to speak with Bloomberg technical support to see if they can help you recreate this type of graph.--Editor
BEAR RANGE TRAILING STOP EQUATION BY LEON WILSONEditor,
In your January 2008 article by Leon Wilson, "Bear Range Trailing Stop Equation," I tried to use the MetaStock formula given in the sidebar but it doesn't work:
X - ( (Sum(Abs(LOW-Ref(LOW,-1)),N))/N + (Sum(CLOSE-LOW,N))/N )
Am I missing something?
Bill
The equation was shown separately at the end of that sidebar to highlight that information. This line was separate from the MetaStock code. The equation is already incorporated into the MetaStock code that precedes the equation in that sidebar, so if that code works for you, you shouldn't need to worry about the equation itself. Think of the equation as a resource.
Hope this helps.--Editor
TICK, TIKI, TRINEditor,
Could you tell me where I can find the tiki indicator presented in the article, "How To Use Tick, Tiki, Trin For Daytrading" by Terry O'Brian, published in the April 2000 S&C? Alternatively, do you have an email address for O'Brian?
David Murphy
The tiki is an indicator that measures the net buying/net selling of the Dow 30 stocks. Most charting software will plot the tiki for you. It essentially measures the buying or selling pressure.--Editor
THE ALLIGATOR INDICATOREditor,
After reading the January 2008 article "The Alligator Indicator" by Alexander Sabodin in the Forex Focus column, I was inspired to try the strategy. However, I have some questions for the author.
1) It seems to me that the EMA settings and alligator work the same. Could you explain the difference?
2) With EMA settings, some recommend 200-50-20 and another recommends 60-30-15. With your alligator parameters, it is 13-8-5. What effect does each parameter offer? What determines the expected results of different parameter settings, as I have explained?
3) Would you use a fourth parameter for MOM with the alligator parameters? The different time periods have a much different effect on the graph; what is the best way to interpret their expected results?
As you can see, I am anxious to learn more about this way of trading. I look forward to hearing from you.
Calvin R. Parry
Alexander Sabodin replies:
The exponential moving average (EMA) is a more active indicator than the alligator. Thus, it reacts more quickly to changes and provides more signals -- including both profitable and false ones.
Whenever you widen the window for any indicator (including moving averages), it becomes more fluid and lagging. The downside is that you will skip over a considerable part of motion before you get the signal. The upside is that the indicator will show the signal in hard motion and will eliminate insignificant fluctuations in price using a wider period.
How does the trader choose what period to use for an indicator? Each trader must choose for himself. Use recent history to sort out the period that works best, and apply it. My advice is to apply numbers from the Fibonacci sequence at the change of the indicator's period: 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, and so on.
If you want to make the indicator more active, move leftward to a smaller number; if you want the indicator to be more fluent, move rightward to a larger number.
As for the alligator indicator, I wouldn't advise you to change anything in it. Thanks for writing, and good luck!
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Originally published in the March 2008 issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright 2008, Technical Analysis, Inc.