This Traders’ Tip is for TC2000 version 12.3, based on Trent Gardner’s article in this issue, “Using VIX To Forecast The S&P 500.”
In TC2000.com, you can use the Custom % True Indicator to set up the buy and sell indicators from Gardner’s article and set alerts so you’re notified when to buy and sell.
A “Custom % True” indicator will display a value of 100 when the underlying condition is true. If you set the period on the indicator to a number, 11 for example, the value of the indicator will be 100 if the condition is true for each of the previous 11 bars. If it is only true six of the 11 bars, the indicator value would be 54.55 (or 54.55%).
In Figure 11, the buy and sell signal lines are plotted on the VIX-X chart between DDM and SPY.
FIGURE 11: TC2000. The workspace shows three charts: one of DDM at the top, VIX-X in the middle, and SPY on the bottom. The price pane of the VIX-X chart is pinned off to the side to save screen real estate, leaving only the buy and sell indicators visible. The buy and sell points are further defined on the charts by colored vertical lines drawn for illustrative purposes.
Buy signal: Custom % True Indicator on a daily chart of VIX-X using the formula:
C < AVGL50
Set the moving average period to 11. The value of this indicator will be 100 when the VIX has closed below its 50-period average low for 11 consecutive days.
Sell signal: Custom % True Indicator on a daily chart of VIX-X using the formula:
C > AVGL50
Set the moving average period to 11. The value of this indicator will be 100 when the VIX has closed above its 50-period average low for 11 consecutive days.
You can set alerts on both the buy and sell indicators to alert you when either indicator’s value is above 99. Once you set the alerts, you don’t really need to look at the charts again. You’ll get an email and/or text message whenever either alert fires.
For a free trial of TC2000, visit www.TC2000.com.