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WEALTH-LAB: SWAMICHARTS

Wealth-Lab 6’s C# translation of the EasyLanguage code from John Ehlers & Ric Way’s article in this issue, “Introducing SwamiCharts,” is shown here and is also available to Wealth-Lab customers through the Strategy Download feature.

Discretionary traders using technical analysis could find some value using the SwamiCharts stochastics heatmap to determine entry points in ongoing trends. While “no Swami expert am I” (think of the Yoda character from the Star Wars movie series when reading that), it’s my perception that the main trend may be better identified using higher scales, such as weekly. Then look to the SwamiCharts heatmap at a lower scale, such as daily, to enter a trade when a countertrend move begins to dissipate — that is, when the green starts appearing at the bottom of the SwamiCharts pane and correlates to a break in an identifiable resistance area, as demonstrated in Figure 3.

FIGURE 3: WEALTH-LAB, STOCH IFT STRATEGY. Shown here is the SwamiCharts stochastics indicator (inset) on a chart of Apple Inc. daily and weekly showing trade opportunities after consolidative pullbacks.

Wealth-Lab 6 strategy code (C#):

using System;
using System.Collections.Generic;
using System.Text;
using System.Drawing;
using WealthLab;

namespace WealthLab.Strategies
{
   public class SwamiStochastics : WealthScript
   {   
      StrategyParameter _plotWidth;
      
      public SwamiStochastics()
      {
         _plotWidth = CreateParameter("Plot Width", 6, 2, 10, 1);
      }
      
      public class ArrayHolder
      {
         internal double Stoc, Num, Denom;
      }
      
      public void SwamiStochHeatMap(DataSeries ds, int plotThickness)
      {
         int r = 0; int g = 0; int b = 0;
         string s = ds.Description + ")";   
         DataSeries swStoch = new DataSeries(ds, "SwamiStoch(" + s);
         DataSeries[] swamistoch = new DataSeries[49];
         
         // Initialize array
         ArrayHolder[] ah = new ArrayHolder[49];   
         for( int n = 4; n < 49; n++ )
            ah[n] = new ArrayHolder();
         
         // Create and plot the heatmap series (change bar colors later)
         HideVolume();  HidePaneLines();
         ChartPane swPane = CreatePane(50, false, false );
         for( int n = 4; n < 49; n++ ) 
         {
            swamistoch[n] = swStoch + n;
            swamistoch[n].Description = "SwamiSto." + n.ToString();   
            PlotSeries(swPane, swamistoch[n], Color.LightGray, LineStyle.Solid, plotThickness);
         }
         
         for(int bar = 48; bar < Bars.Count; bar++)
         {         
            double num2, denom2, stoch2;

            for (int n = 4; n < 49; n++) 
            {
               num2 = ah[n].Num;
               denom2 = ah[n].Denom;
               stoch2 = ah[n].Stoc;
               
               double hh = 0;
               double ll = 1e10;
               for (int j = 0; j < n; j++)   
               {
                  if (ds[bar - j] > hh) hh = ds[bar - j];
                  if (ds[bar - j] < ll) ll = ds[bar - j];
               }
               ah[n].Num = 0.5 * (ds[bar] - ll) + 0.5 * num2;
               ah[n].Denom = 0.5 * (hh - ll) + 0.5 * denom2;
               if (ah[n].Denom != 0)
               {
                  ah[n].Stoc = 0.2 * (ah[n].Num / ah[n].Denom) + 0.8 * stoch2;
               }
               
               if (ah[n].Stoc >= 0.5) {                  
                  r = Convert.ToInt32(255 * (2 - 2 * ah[n].Stoc)); 
                  g = 255;
               }
               else {
                  r = 255;
                  g = Convert.ToInt32(255 * 2 * ah[n].Stoc);
               }
               SetSeriesBarColor(bar, swamistoch[n], Color.FromArgb(r, g, b));   
            }
         }         
      }      
      
      protected override void Execute()
      {
         SwamiStochHeatMap(Close, _plotWidth.ValueInt);      
      }
   }
}

—Robert Sucher
www.wealth-lab.com