Indicator Interpretation - Snapshot 1

Commented Snapshot taken on RUT Aug 21st (60mins chart).
The technique is described as a discretionary trading method. However each and every piece of information feeds into the data segment of the custom DLL and can be used in C++ app using our API.

As an aside, please note that all indicators but the AdStoK have no parameters and adapt well to most if not all symbols and time frames. The AdStoK may also lose its last one or two parameters in a future release, which are in any case hardly ever modified in the current version of the indicator.

Edit: AdStoK has been renamed MTFS (Multi Time Frame Stochastic), and a significance level has now been added to better assess the pertinence of calculations at a given time frame.

Detecting market direction without the Swing indicator

The Swing indicator would certainly help, but let's first try and detect market directions by just interpreting at two of indicators: the HA modified PaintBar and the MM support/resistance levels.

These 2 indicators require no parameters, and do not back-adjust like our Swing indicator.

MM technique short description on RUT - Daily Chart

Upper Magenta Dotted Line - Ultimate Resistance

These lines are the hardest to penetrate on the way up, and provide the greatest resistance. (Prices sometimes never make it through these lines).·

Upper Grey Line - Weak, Stall and Reverse (not displayed – halfway line)

This line is weak. If prices however run up too far too fast, and if they stall at this line they will reverse down fast. If prices do not stall at this line they will move up to the Upper Magenta Dotted line.·

Upper White Dots - Pivot, Reverse (displayed when prices come close)

This line is second only to the Central Yellow dotted line in its ability to force prices to reverse. This is true whether prices are moving up or down.·

Upper Trading Range Level (not displayed – halfway line)

The prices of all entities will spend 40% of the time moving between the Upper Green line and Lower Green line. If prices move above the Upper Green line and stay above it for 10 to 12 bars, the entity is said to be selling at a premium to what one wants to pay for it and prices will tend to stay above this line in the "premium area". If, however, prices fall below the Upper Green line then they will tend to fall further looking for support at a lower level.·

Central Yellow Dots - Major Support/Resistance Pivot Point

This line provides the greatest amount of support and resistance. This line has the greatest support when prices are above it and the greatest resistance when prices are below it. This price level is the best level to sell and buy against.·

Lower Trading Range Level (not displayed – halfway line)

If prices are below this line and moving upwards, this line is difficult to penetrate. If prices penetrate above this line and stay above this line for 10 to 12 bars then prices will stay above this line and spend 40% of the time moving between this line and the Upper Green line.·

Lower White Dots - Pivot, Reverse (displayed when prices come close)

This line is second only to the Central Blue line in its ability to force prices to reverse. This is true whether prices are moving up or down.·

Lower Grey Line - Weak, Stall and Reverse (not displayed – halfway line)

This line is weak. If prices however run down too far too fast, and if they stall at this line they will reverse up fast. If prices do not stall at this line they will move down to the Lower Cyan Dotted line.·

Lower Cyan Dotted Line - Ultimate Support

These lines are the hardest to penetrate on the way down and provide the greatest support. (Prices sometimes never make it through these lines).

Indicator Interpretation - Entropy

For more details on the algorithm which inspired our Entropy indicator,
please visit : http://www.johncon.com/ntropix/ (ADVANCED)

Indicator Interpretation - Adaptive Stochastics (called MTFS)

The Swing Indicator - Part 2

The Swing Indicator

We here have 3 adaptive Swing indicators applied to QQQQ 5 mins, declined in 3 different lengths or Time Frame Multipliers.The shortest Swing is the white line, calculated over 128 bars. The second one is the yellow line, which with a TF multiplier of 2 calculates swings over 256 bars. The third one is the green line with a TF multiplier of 3.

The Swing indicator also has a Search Depth parameter. In most cases, the default setting (0) will suffice. However, in certain circumstances like a strong bull run, the indicator will obviously 'keep it simple' and bring about a straight line. The user may want to search longer for less obvious waves with a Search Depth parameter set to 1. The plot colour is then a little darker.

Since the indicator focuses on a fixed number of bars, the oldest leg is always incomplete. A future version may be implemented to draw all swings since bar 1, or give the user more flexibility in choosing the number of bars. It is not a technical difficulty, but rather a speed compromise which led to the current design. The Swing indicator indeed uses a proprietary Genetic Algorithm to detect pivot points, and can sometimes be computing intensive particularly on low time frames if a number of charts are open simultaneously.

An additional indicator can be added to the chart to retrieve pivot points and calculate Fib retracement and expansions automatically when swing legs show the right characteristics. Please note that communication between indicators, in this particular instance, the swing indicator writing pivot points in shared memory later retrieved by the Fib calculation. The same principle can be applied outside TradeStation, i.e. pivot information can be used in a VC++ program via the API.More details on the API will be posted soon on a separate site. Contact me for details.

Short description of the Swing indicator