Have you noticed that most of the technical indicators are very old, most being developed more than 20 years ago, and many 50 years ago, well before the age of computers.
There are two issues here: 1. computers provide a fundamental shift in the way indicators can be developed. 2. Computers have fundamentally changed the way the entire market functions and behaves because computers provide instant information.
If you look at the details of the derivation of the indicators that all of us use you will see that most are very primitive and simplistic, despite their widespread use.
I have been looking for new modern indicators that provide better predictive power. My idea is to focus on parameters that change just before a stock starts a new surge. Sure there are many sudden announcements etc. that are unpredictable. But often there will be signals in the few days prior to a rise that are partially due to the way that the market behaves and the effect of some new activity or interest in the stock. I have been focusing on the following parameters used to provide a buy signal:
Increase/decrease in Volume
Close in the top half of the daily range
The size of the daily range
Gaps i.e. sudden increase in mean daily price compared with yesterday’s mean.
I have been developing an index that uses a combination of these parameters. So far the results look promising and the index gives a signal one to four days before the price surges.
I would be interested on your comments about these and other signal parameters and new indicator methods that attempt to do the same thing.
There are two issues here: 1. computers provide a fundamental shift in the way indicators can be developed. 2. Computers have fundamentally changed the way the entire market functions and behaves because computers provide instant information.
If you look at the details of the derivation of the indicators that all of us use you will see that most are very primitive and simplistic, despite their widespread use.
I have been looking for new modern indicators that provide better predictive power. My idea is to focus on parameters that change just before a stock starts a new surge. Sure there are many sudden announcements etc. that are unpredictable. But often there will be signals in the few days prior to a rise that are partially due to the way that the market behaves and the effect of some new activity or interest in the stock. I have been focusing on the following parameters used to provide a buy signal:
Increase/decrease in Volume
Close in the top half of the daily range
The size of the daily range
Gaps i.e. sudden increase in mean daily price compared with yesterday’s mean.
I have been developing an index that uses a combination of these parameters. So far the results look promising and the index gives a signal one to four days before the price surges.
I would be interested on your comments about these and other signal parameters and new indicator methods that attempt to do the same thing.
