The following
are Add-On Trading tools for: TechniFilter
Plus:
DARVAS BOXES:
Based on the the Trading methodology of Nicolas Darvas author of the
book "How I made $2,000,000 in the Stock market". Scan the market
for Darvas Boxes at the click of a button ... totally customizable.
Click here to view an
educational slideshow
STAGE ANALYSIS:
A unique tool based on the Best selling Book by Stan Weinstein "The
Secrets of Profiting in Bull and Bear Markets".
Click here to view an
educational slideshow
PATTERN FINDER:
Locates many of the most popular and widely used chart patterns:
Triangles, Head & Shoulders, Double Tops and bottoms etc.
Click here to view an
educational slideshow
THE POTENTIAL:
Bollinger Band Analysis Tool. Locate stocks in a "Squeeze",
automatically monitor them for breakouts and more.. Based on the
Best Selling Book by John Bollinger: "Bollinger on Bollinger Bands".
CATALOGUE
Our Complete range of Traders Tools
3rd PARTY PRODUCTS
Various interesting Trading and Investment products supplied by
other Vendors
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Glossary of Technical Analysis Terms
(Technifilter Plus)
Absolute Breadth Index
The absolute difference between the number of NYSE advances and
declines. Generally, high ABI values suggest market bottoms, and low ABI
values suggest market highs.
absolute value
The value of a number regardless of its sign (also known as the
magnitude of the number). For example, the absolute value of negative 10
is 10; the absolute value of 10 is 10.
Accumulation/Distribution Indicator
A weighted volume indicator based on the one-day change in price
divided by the current day’s range. Generally, the ADI moves in the
direction of price. For example, if the price drops on a given day, the
volume is deemed negative.
Advance-Decline Ratio
The ratio of NYSE advances to declines and one of the standard market
indicators that can be used to analyze general market trends. Generally,
ADR values above 1.25 indicate oversold conditions; values below .75
indicate overbought conditions.
algebraic notation
The most commonly understood method of writing a mathematical formula.
A very simple example is 1 + 1 = 2 . TechniFilter Plus lets you enter
formulas using this familiar method, but performs the calculation using
the faster, more efficient post-fixed notation method.
arithmetic combiners
Formula-writing tools that perform arithmetic operations (like
multiplication and addition) on two time series to obtain a result series.
A simple formula using an arithmetic combiner is C + L, which produces a
result series in which each entry is the sum (+) of the close (C) and low
(L) for a particular day in the two original time series. Arithmetic
combiners include: + (addition), - (subtraction), / (division) and *
(multiplication). There are nine arithmetic combiners and nine logical
combiners.
average bands
Bands placed a user-specified percentage above and below a moving
average on a bar or line chart.
Average Directional Movement
The 14-day exponential average of the Directional Movement Indicator
(DX).
Average Directional Movement Rating
The average of Average Directional Movement (ADX) today and ADX 14 days
ago.
Average True Range
The true range of an issue’s price determined by taking an exponential
average of the difference between the higher of today’s high and
yesterday’s close, and the lower of today’s low and yesterday’s close.
Average True Range bands
Support/resistance lines that mark off an issue’s average true price
range, which is determined by taking an exponential average of the
difference between the higher of today’s high and yesterday’s close, and
the lower of today’s low and yesterday’s close.
backtesting
Testing a strategy on a large historical database to evaluate its
profitability before risking any money.
bar chart
One of chart types produced by TechniFilter Plus. A bar chart is a
graphic representation of an issue’s high, low, close and open prices.
Prices appear on the vertical axis. Time is on the horizontal axis. For
each day, a line is drawn to connect the high and the low. Closes are
represented by ticks to the right of the high-low bar; opens are
represented by ticks to the left of the bar. When just one time series is
charted, a line chart is produced.
basket test
An open account test that has two main uses: (1) it lets you buy the
top "n" issues from your chosen collection of issues based on some ranked
statistic; and (2) it lets you test a strategy on a collection of issues.
TechniFilter Plus tracks the basis required to trade the system and uses
this number to compute return. Entry and exit fees are tracked (either
fixed or percentage). On the General tab (Strategy dialog) enter the
basket issues in the Issues to Test box.
bearish
A negative interpretation of the behavior of an equity or the market as
a whole based on a prolonged period of falling prices.
Bearish Pattern
A standard point & figure pattern. This Double Bottom variation has an
added relationship between the previous two X columns. Namely, the most
recent X column must top at a lower price than the previous X column. The
Bearish Pattern, which occurs less frequently than the Double Bottom, is
considered a stronger bearish signal.
Bollinger Bands
Curves plotted above and below a moving average of prices using a
standard deviation offset. You specify where the bands should be placed in
relation to the average.
boxsize
The dollar amount used to decide where to plot a new X or O on a point
& figure chart. One of the two parameters required to draw a point &
figure chart. The other is reversal.
building blocks
These formula-writing tools are letters that represent a particular
time series in formulas. There are 12 building blocks. Six represent price
time series (e.g., H represents the high time series in formulas). The
rest of the building blocks represent popular volume indicators (e.g., K
represents On-Balance Volume in formulas.
bullish
A positive interpretation of the behavior of an equity or the market as
a whole based on an extended rise in prices.
Bullish Pattern
A standard point & figure pattern. This Double Top variation has an
added relationship between the previous two O columns. Namely, the most
recent O column must bottom at a higher price than the previous O column.
The Bull Pattern, which occurs less frequently than the Double Top, is
considered a stronger bullish signal.
buying power
One of two preliminary indicators used to compute the Demand Index.
Buying power tries to measure that part of the trading volume that comes
from buying the issue. This indicator uses price-movement measurements to
weight the volume as either up-volume or down-volume. Its companion
indicator is selling pressure.
candlestick chart
One of the chart types produced by TechniFilter Plus. A candlestick (or
candle) chart clearly displays the relationship between an issue’s
current-day opening and closing prices. A line is drawn to connect each
day’s high price with each day’s low price and a rectangle (called the
candle body) is drawn over the bar. The height and location of the candle
body is determined by the opening and closing prices. The top of the body
is always at the higher of the open and the close. The bottom of the body
is always at the lower of the open and the close. A solid black body
indicates that the close is lower than the open. A solid white body
indicates that the close is higher than the open. This simple construction
makes it very easy to see up-days (solid white bodies) and down-days
(solid black bodies).
Chartcraft method
A method of point & figure charting that dates back to 1947. It has a
default boxsize of 0 and a reversal of 3. The boxsize of 0 sets a box
value range from $.25 to $2, depending on the price of the issue. The
reversal of 3 means that an X column will change to an O column when the
price drops at least three boxes below the highest X in the current
column. To reverse from Os to Xs, the price must rise three boxes above
the lowest O in the current column.
close
An issue’s last price of the trading day. When recorded over a length
of time, the closing prices form a time series, represented in formulas by
the building block C.
combiners
These formula-writing tools perform mathematical operations on two time
series to compute a third time series (also called the result series).
There are two types of combiners: arithmetic and logical.
Commodity Channel Index
An indicator that measures how much the current typical price varies
from an average typical price. Typical price is just the sum of the high,
low and close divided by 3. CCI, which oscillates around zero, can be as
large as 250 or as small as -250. Most of the time it ranges between 100
and -100. When the indicator is outside of this range, an overbought or
oversold condition exists and you can expect a price correction.
constants
In addition to the 12 building blocks, you can use constants within
formulas. Basically, constants perform the same function as building
blocks, representing a time series in which each entry is a fixed number.
A simple formula using a constant is C > 50, or "Is the close (C) greater
than (>) 50?"
Cumulative Advance-Decline
The running sum of the difference between NYSE advances and declines.
As with any indicator computed as a running sum, the actual values depend
on when the sum begins. CADL signals are triggered by curve direction and
relationships between points on the curve. Look for divergence between
CADL and a market average (like the Dow Jones Industrials). For example,
if CADL is making new highs but the average is not, the situation is
considered bullish. The opposite divergence is bearish.
Cumulative Volume
A daily sum of the difference between NYSE up-volume and down-volume.
This indicator is usually compared to a market index, such as the S&P 500,
for divergence.
Daily Volume Indicator
One of the weighted volume indicators. To calculate DVI, TechniFilter
Plus picks an arbitrary value and, on each successive day, adjusts the
indicator up or down depending on where that day’s close is located
relative to the day’s trading range. For example, if the price closes
nearer to the high price of the day than to the low price of the day, the
volume is deemed positive. Look for breakouts and divergence between DVI
and price.
Demand Index
A leading indicator to changes in price trends (designed by James
Sibbet). The DI calculation uses volume and price movement to quantify two
ideas: buying power and selling pressure. When the DI crosses zero, buying
power and selling pressure cross. An up-cross is a buy signal; a
down-cross is a sell signal.
Directional Movement Indicator
Directional movement is family of indicators developed by J. Welles
Wilder to study and quantify the strength of trends and trending issues.
Specifically, the Directional Movement Indicator (DX) combines the values
from a Percentage of Uptrend (+DI) formula and a Percentage of Downtrend
(-DI) formula to measure the strength of a trend. Regardless of direction,
the higher the number, the stronger the trend. Welles Wilder’s suggested
time period is 14 days.
divergence
Two curves are said to diverge when one curve makes a significant new
peak (or valley) but the other curve does not. Divergence is an important
part of many technical indicators. The following three classic examples
all look for divergence between the price of an issue and an indicator
based on the issue. In each case, divergence usually signals a change in
price trend. They are: price and OBV, price and RSI, price and a
stochastic. Divergence also helps you study market indexes, like the S&P
500, and market indicators, like the Advance/Decline Line. You can
identify divergence simply by looking at a chart because your eyes
automatically can pick out significant peaks, often ignoring many smaller
peaks in the process. However, it is difficult to create a computer
algorithm that ignores insignificant peaks. TechniFilter Plus’s solution
is the divergence combiner formula-writing tools.
divergence combiner
Formula-writing tool used to mathematically join two time series. The
divergence combiner looks for four types of divergence between the two
original series, entering either 1, -1, 2, -2 or 0 in the result series,
depending on the type of divergence found (i.e., positive divergence on
the high side, positive divergence on the low side, negative divergence on
the high side and negative divergence on the low side). 0 indicates no
divergence.
Double Bottom
A standard point & figure pattern. The last column is an O column that
goes below the previous O column. It is the first indication of a bearish
situation. On the day this pattern is formed, strategies include exiting
long positions and entering short positions. However, you may want to wait
for a stronger bearish pattern before entering short positions.
Double Top
A standard point & figure pattern. The last column is an X column that
exceeds the previous X column. It is the first indication of a bullish
situation. On the day this pattern is formed, strategies include taking
long positions and exiting short positions. However, you may want to wait
for a stronger bullish pattern before entering long positions.
equal test
A type of "fixed" test that lets you invest an equal dollar amount at
each position, which makes it easier to compare test results among issues
that trade in different ranges. The equal test is similar to the
percentage test with the following difference: In a percentage test, the
amount invested in each position is the initial amount plus or minus prior
gains or losses. In an equal test, the amount invested in each position is
the same.
exponential moving average
A moving average that gives more weight to recent price values and less
weight to earlier price values within its time span. Unlike the other
moving averages, exponential averages use all available closing price
data. The other two moving averages are simple and weighted.
filter report
A spreadsheet-like technical report that will search through your
database and pick out issues that meet conditions you specify. Each column
in the report can define a condition for which you want to filter.
flag combiner
One of the formula-writing tools used to join two time series to form a
result series. The flag combiner locates distinct, nonoverlapping signals,
entering 0s (no flag), -1 (flag) or 1 (flag).
floating point values
Numbers that may contain a decimal point.
formula charts
A graphic representation of the results of a selected formula.
formula set
A collection of formulas grouped together for a strategy or a filter
report.
formulas
Mathematical constructions that identify specific trading patterns.
TechniFilter Plus comes with a library of more than 200 formulas. Some of
these formulas are integral parts of trading systems; others are not tied
to any particular system and interpretation depends on what is being
analyzed. You also can build your own formulas using the three basic
formula-writing tools: combiners, building blocks and modifiers.
futures test
A type of test that mimics how you would normally trade futures
contracts, buying and selling on margin. It considers leverage, initial
margin requirements and maintenance margin requirements. You enter margin
requirements and TechniFilter Plus tracks the basis required to trade the
system and uses this number to compute return. When a position is opened,
the rule specifies the number of contracts involved. You can make partial
liquidations (specifying a percentage or a specific number of contracts)
or close the entire position. Entry and exit fees are tracked (either
fixed or percentage).
geometric volume indicator
A type of volume indicator derived from an iterative multiplicative
calculation. Geometric volume indicators attempt to track "smart money" in
the market. The Negative Volume Indicator and the Positive Volume
Indicator are geometric volume indicators.
hierarchy of operations
Rules that govern the order in which mathematical calculations are
done. In TechniFilter Plus formulas, integer division and
modulus operations are performed first; followed by multiplication
and division, then addition and subtraction;
greater and lesser; equal and not equal; less
than or equal to and greater than or equal to; greater than
and less than; and and or; flag and
divergence.
high
An issue’s highest price of the day. When recorded over a length of
time, the high prices form a time series, represented in formulas by the
building block H.
horizontal lines
A support/resistance line that you can plot at your specified price
level. For example, draw support lines at a recent low price and
resistance lines at a recent high.
individualized report
In the standard filter report, all the issues use the same column
formulas. In an individualized report, each issue could use a different
number as the parameter. To create an individualized report, you first go
through the steps to create a standard report, then you individualize the
formulas by changing parameters.
integer division
One of the formula-writing tools used to mathematically join two time
series to form a result series. For each day in the two original time
series, the integer division combiner enters a nonfractional value in the
result series.
Julian dates
Day counts. For example, if today has Julian date 25001, then tomorrow
has Julian date 25002.
least-squares-fit lines
Unique straight lines that best approximate the values (highs, lows,
etc.) under study. Lines with an upward slope bullish, while lines with a
downward slope are bearish. LSF lines are also called linear regression
lines. (Technically, LSF are not support/resistance lines, although they
are often grouped with those analytic tools.)
linear price scale
On a chart, this scale type shows distances between moves based on
actual dollar changes.
logical combiners
Formula-writing tools that answer some true or false question (such as
"Did the price rise?") for a time series. The result is another time
series made up of 0s and 1s, which are called truth values (1 for true and
0 for false). Often, we’ll use logical results in an arithmetic manner,
such as adding up the 1s and 0s to find out how many times an event is
true or false. There are nine logical combiners, including: > (greater
than), < (less than), = (equal to) and < > (not equal to). A simple
formula that uses a logical combiner is C > Y1, or "Did the price (C) rise
(>) from yesterday (Y1)?" There are also nine arithmetic combiners.
low
An issue’s lowest price of the day. When recorded over a length of
time, the low prices form a time series, represented in formulas by the
building block L.
maximum location
A formula-writing tool that produces a time series in which each
typical entry is the number of days since the largest value of the
original series over the most recent n days. In other words, the number of
days since the maximum occurred.
maximum modifier
A formula-writing tool that picks the largest value over the given
number of days. It produces a time series in which each typical entry is
the largest value of the original series over the entire range of loaded
data or over the most recent n days (including the current day).
McClellan Oscillator
An overbought or oversold technical indicator. MO values below 20 are
oversold, and values above 70 are overbought. When the oscillator breaks
up across zero, it is bullish for stocks; the opposite break is bearish.
McClellan Summation Index
A running sum of the McClellan Oscillator. MSI breaking above zero is
bullish. MSI breaking below zero is bearish.
minimum location
A formula-writing tool that produces a time series in which each
typical entry is the number of days since the smallest value of the
original series over the most recent n days. In other words, the number of
days since the minimum occurred.
minimum modifier
A formula-writing tool that picks the smallest value over the given
number of days. It produces a time series in which each entry is the
smallest value of the original series over the entire range of loaded data
or over the most recent n days (including the current day).
modified series
A type of time series resulting from the action of one of the modifier
tools. The modified series gets its values from the original series
through some calculation or algorithm as defined by the modifier used.
There are more than 40 modifiers, including time offset, relative
strength, standard deviation, extreme values and summation.
modifiers
Formula-writing tools that use a calculation or algorithm to change the
values in an original time series to create a new, modified time series.
There are more than 40 modifiers, including time offset, relative
strength, standard deviation, extreme values and summation. For example,
CY2 produces a modified series in which each entry is the value of the
close series two days ago. That is, today’s value of CY2 is the value of C
two days ago. Y is the time-offset modifier. C is the building block that
represents the close time series.
modulus operator
This integer division companion combiner yields the integer amount that
remains following an integer division operation. It is often called the
remainder operator.
Money Flow Index
A volume indicator that combines the ideas of positive and negative
volume with the RSI calculation. Money flow is defined as the typical
daily price times today’s volume. This quantity is tracked from day to
day, and averages of up-money flow days and down-money flow days over some
specified period of time are computed. MFI is defined as the percentage of
the total money flow that is up.
moving average
A succession of individual averages for an issue’s price over a given
time period. Averaging techniques take into account several entries in the
original time series; which means that the influence of a single entry
from the original series on a single entry in the modified series is
reduced. The modified series, therefore, produces a smoother graph than
the original series. For this reason, averaging is sometimes referred to
as smoothing. TechniFilter Plus charts five basic moving averages: simple,
weighted, exponential, centered and geometric.
multiline formulas
A series of referenced formulas treated as one formula, with the last
formula in the series defining the value of the multiline formula. Prior
formula reference usually plays a part in the final computation. In
effect, multiline formulas let you break complex calculations into a
series of more simple calculations, which can help you translate your more
intricate analytic ideas into a form that TechniFilter Plus can use. You
also can create recursive multiline formulas.
named formula reference
You can refer to a standard formula by name within a formula body using
the format: name(param). For example, in the Formula box on the Custom
Formula dialog, you would enter a reference to the One-Day Acceleration
formula as: Accel(CA30). When referenced in this way, the named formula
serves the same function as a building block, and you can use other
formula-writing tools to compute, for example, moving averages of named
formulas. You must include the parameter parentheses even for formulas
that do not have parameters. Simply use a pair of parentheses with nothing
inside. You cannot use point & figure, recursive or multiline formulas in
this way.
negative divergence
When Curve 1 is making new lows or new highs but Curve 2 is not.
negative volume
Negative volume implies that current market activity will make the
price of the issue decrease, which is a bearish sign. Negative volume
exists when money is moving out of the stock. Technicians also use the
term distribution for negative movement.
Negative Volume Indicator
A geometric volume indicator that measures price movement on days that
the volume has declined, beginning at an arbitrary value of 100. The value
of NVI only changes if the volume declines. If the volume declines, the
new value of the indicator is 1 times the old value of the indicator plus
the percentage change in price. It is bullish for NVI to be above its
long-term average because that situation indicates that, in the long run,
smart money is entering the issue.
On-Balance Volume Indicator
A weighted sum of volume where the weights are 1 (bullish volume) or -1
(bearish volume). The simplest method of determining bullish volume and
bearish volume is to check the price. If today’s close is higher than
yesterday’s close, consider today’s volume positive. If today’s close is
lower than yesterday’s close, consider today’s volume negative. If you
keep a running tally of positive volume minus negative volume, you get the
volume indicator known as On-Balance Volume, or OBV. In formulas, you can
use the building block K to represent OBV.
open
The price at which an issue begins trading. When recorded over a length
of time, the open prices form a time series, represented in formulas by
the building block O.
Open 10 Trading Index
A modification of the Short-term Trading Index (TRIN). 10TRIN uses
10-day sums of the components, instead of just the components (which are
used in the TRIN calculation). Values above 1 are bearish; values below 1
are bullish.
open interest
The number of outstanding futures contracts. When recorded over a
length of time, the open interest values form a time series, represented
in formulas by the building block I.
optimizing
Varying parameters in a test to see which variation would have been the
most profitable. You are, in effect, asking "What if...?" "What if I
changed the time period of this average?" "What if I used a simple average
instead of a weighted average?" "What if I calculated over a different
length of time?" The goal is to see if one variation might be more
profitable than another-which variation is optimal. You can optimize
signals and formulas that use parameters.
overbought
An unstable pricing situation for a security or a market. There has
been an unexpectedly sharp price rise and a price drop (or correction) is
expected.
oversold
An unstable pricing situation for a security or a market. There has
been an unexpectedly sharp price decline and a price rise is expected.
parallel lines
Support/resistance lines that define an area of trading activity, known
as a linear trading band. The lines can be drawn parallel to trendlines,
horizontal lines and least-squares-fit lines.
parameters
The most commonly used parameters are parts of formulas or signals that
you may need to change, like time periods, time series or some other fixed
values. When used in this way, they simplify formula and signal variation,
letting you quickly and easily change elements without editing the formula
or signal body. (For example, parameters are required for optimizing
strategies and for individualized reports.) You can have up to nine
parameters in formulas. Parameter locations are marked with placeholders
(&1, &2, &3,…, &9). There also are two special instances where parameters
do not follow the rules described above. One type is used in point &
figure formulas; the other in basket tests. Point & figure formulas
require two parameters: a boxsize and reversal, which do not use
corresponding placeholders in the formula body. For basket tests, a
special stop item (RankScore) requires that you specify a formula number
as a parameter. This formula parameter does not require a matching
placeholder in the signal body.
peak
A peak is defined as a point on the curve that is higher than the point
to its immediate right, and at least as high as the point to its immediate
left. Making a succession of higher price peaks is a bullish signal. One
way to identify higher peaks is to look at the slope of the trendline
determined by the peaks. If the slope is up, the peaks are rising. If it
is down, then they are falling.
percentage test
A type of test that mimics how mutual funds are traded, letting you
trade a closed system that starts with a fixed amount of money. The test
then tracks the profit from this investment. When a position is open, the
entire balance in the account is encumbered and no new position can be
taken. Entry and exit fees are tracked (either fixed or percentage). You
can specify an interest rate to be paid on the account while it is not
invested. Because percentage tests start with a fixed dollar amount and do
not allow money to be added, the ending balance can be used to quantify
performance.
placeholders
Characters used to hold up to nine parameter locations within formulas
and signals. The placeholders are &1, &2, &3, &4, &5, &6, &7, &8, &9.
(Point & figure formula parameters do not require matching placeholders in
the formula body.)
point & figure chart
One of the chart types produced by TechniFilter Plus. A point & figure
(P&F) chart consists of alternating columns of Xs (increasing prices) and
Os (decreasing prices). When demand overwhelms supply, you see a price
rise revealed by a breakout to the upside, graphically shown as a long
column of Xs. When supply exceeds demand, you see a price drop revealed by
a breakout to the downside, graphically shown as a long column of Os.
Unlike other charts, time is not a factor.
point & figure formulas
Logical formulas designed to search for point & figure patterns. They
require two parameters: a boxsize and a reversal. P&F formulas return a 1
for any day the formula is true and a 0 for any day the formula is false.
By default, TechniFilter Plus uses both the high and low time series to
perform calculations for a P&F chart. To override this default and use
another time series, you must insert a special line as the first line in
your P&F formula.
positive divergence
When Curve 1 is making new highs or lows but Curve 2 is not.
positive volume
Positive volume implies that current market activity will make the
price of the issue increase, which is a bullish sign. Positive volume
exists when money is moving into the stock. Technicians also use the term
accumulation for positive movement.
Positive Volume Indicator
A geometric volume indicator that measures price movement on days that
the volume has increased, beginning at an arbitrary value of 100. The
value of PVI only changes if the volume increases. If the volume
increases, the new value of the indicator is 1 times the old value of the
indicator plus the percentage change in price. It is bullish for PVI to be
above its long-term average because that situation indicates that, in the
long run, smart money is entering the issue.
post-fixed notation
A method of writing a mathematical formula that offers straightforward
calculations of very complex formulas. TechniFilter Plus lets you enter
formulas using the familiar algebraic method, but performs the calculation
using the faster, more efficient post-fixed notation method.
Price/Volume Trend
A weighted sum of volume where the weights are the percentage change in
price. PVT is a variation of the cumulative volume theme. In this case,
PVT is adjusted by a percentage of the volume and is interpreted in much
the same way as OBV. OBV makes the assumption that the day’s volume is
either all positive or all negative. PVT adds or subtracts a percentage of
the day’s volume. In formulas, you can use the building block P to
represent PVT.
prior formula reference
When working with a collection of formulas (like in a strategy or
report), later formulas sometimes will depend on earlier formulas. When
this happens, it is more efficient to refer to the prior formula rather
than rewrite it. When you want to use a prior formula, place its formula
number inside square brackets, [ ]. When a formula number is enclosed
within square brackets, it serves the same function as a building block.
recursive formulas
Formulas that derive their current value from the previous value of the
formula. As a result, recursive formulas must be computed every day
because you need to know yesterday’s value to get today’s value. For
example, exponential averages are recursively defined formulas. Today’s
value of a 10% exponential average is 10% of today’s price plus 90% of
yesterday’s exponential average value. Recursive formulas begin with an
initial value (perhaps the close) and hold the recursion values each day
thereafter.
Relative Strength Index
An indicator created by J. Welles Wilder that measures the internal
strength of a price curve by determining how much of the recent price
movement is up-movement ("recent" depends on the parameter n). The
calculation returns a number between 0 and 100.
result series
A type of time series. When two time series are combined through a
mathematical operation, a result series is formed.
reversal
An integer used to decide when to change columns in a point & figure
pattern. The reversal is one of the two parameters required to draw a P&F
chart. The other is boxsize.
selling pressure
One of two preliminary indicators used to compute the Demand Index.
Selling pressure tries to measure that part of the trading volume that
comes from selling the issue. This indicator uses price-movement
measurements to weight the volume as either up-volume or down-volume. Its
companion indicator is buying power.
semilog price scale
On a chart, this scale type shows distances between moves based on
percentage changes. Semilog scales show price moves of the same percentage
the same physical distance on the chart, regardless of the actual price.
Short-term Trading Index
The quotient of the ratio of NYSE advances to declines divided by the
ratio of up-volume to down-volume. TRIN values above 1 are bearish, and
values below 1 are bullish.
simple moving average
A moving average that gives equal weight to each price value in its
time span. For example, if the closing prices of a particular stock have
been recorded for the last 12 trading days, then the average closing price
of the 12-day span is the sum of the 12 prices divided by 12. By
calculating this simple average, you can determine if the price is above
or below its average value over the last 12 days. The other two moving
averages are weighted and exponential.
Smoothed Short-term Trading Index
An overbought or oversold indicator similar to Zwieg’s Breadth Thrust
Indicator. STIX high values are bullish; low values are bearish.
speed-resistance lines
Line segments drawn at an angle from the starting point of a trendline.
They represent support when an up-trendline is broken and resistance when
a down-trendline is broken.
spread-type analysis
Taking a long position on one issue and a short position on a second
issue, buying and selling both at the same time. You take profit based on
the difference (i.e., the spread) between the two positions; you don’t
really care about actual contract prices. Generally, spread trading (also
called straddling) is less risky than trading actual contract prices
because you are both long and short at the same time. As a result, it is
also less profitable.
standard deviation
A measure of how much the numbers in a modified series vary from the
arithmetic mean (simple average) of the numbers. Think of it as a measure
of dispersion, or volatility, of the modified series.
stochastics
A family of overbought/oversold indicators based on position in range.
The curves produced reflect where the current price is in relation to the
trading range over a period of time. The values vary between 0 and 100.
Values above 80 are overbought, and values below 20 are oversold.
stock test
A type of test that mimics how common stocks are traded, buying and
selling in fixed-share blocks. In each transaction, you buy or sell a
number of shares, paying or receiving the total cost of each purchase or
sale when it takes place, including any commissions. TechniFilter Plus
tracks the basis required to trade the system and uses this number to
compute return. When a position is opened, the rule specifies the number
of shares involved. You can make partial liquidations based on a
percentage or a specific number of shares, or close the entire position.
Multiple positions are allowed. Entry and exit fees are tracked (either
fixed or percentage).
strategy
A plan or system for making trading decisions. Strategies consist of
formulas, which are technical indicators; signals, which define logical
relationships among the formulas; and rules, which tell TechniFilter Plus
how to manage the trading process.
Strong Double Bottom
A standard point & figure pattern. This Double Bottom variation has an
extra condition placed on the relationship between the tops of the last
two O columns. Namely, the last O column must top at the same level as the
previous O column. The Strong Double Bottom, which occurs less frequently
than the Double Bottom, is considered a slightly stronger bearish signal.
Strong Double Top
A standard point & figure pattern. This Double Top variation has an
extra condition placed on the relationship between the bottoms of the last
two X columns. Namely, the last X column must bottom at the same level as
the previous X column. The Strong Double Top, which occurs less frequently
than the Double Top, is considered a slightly stronger bullish signal.
support/resistance lines
Straight lines constructed from past trading patterns. A support line
designates a price level above which an issue’s price is expected to
remain. A resistance line designates a price level below which an issue’s
price is expected to remain. After a support or resistance line is
breached, it often changes to the opposite designation. For example, in
the case of a support line breakout, some buyers at the support level
could have been left holding stock that they would rather be without. So,
when the price returns to this level, they become willing sellers. In the
case of a broken resistance line, buyers who missed the initial breakout
remain willing to buy when the price returns to the previous resistance
level, thus making it a support line.
Swing Index
Using the high, low, close and open on two consecutive days, this
indicator attempts to determine the "real" market price of a security by
measuring the price swing.
syntax
The structure of a TechniFilter Plus formula. To create a valid
TechniFilter Plus formula, you must be familiar with the parts of a
formula (e.g., building blocks, modifiers) and how they must be arranged.
tilde expressions
To use a fixed issue in a TechniFilter Plus formula, you enclose the
issue’s symbol within tilde expressions, ~< and >~. For example, to
compute the relative strength of an issue to the S&P 500 index (symbol
SPX), you could use the formula (( C/~<SPX>~)/TY00)*100. This formula
takes the issue’s close, and divides it by the close of SPX. The result
then is divided by the quantity at the beginning of the time series.
Finally, the ratio is multiplied by 100.
time series
When recorded over a length of time, each pricing element (high, low,
close, open, open interest, volume) determines its own time series. There
is also a family of technical indicators that combine price and volume to
form new time series known as volume indicators. You study time series
using formulas designed to identify specific technical patterns. Each time
series is represented by a single letter known as a building block, one of
the three formula-writing tools (e.g., the high time series building block
is H; the On-Balance Volume building block is K). The other
formula-writing tools are combiners and modifiers.
T-operator
A special building block that represents the most recently computed
quantity within the current formula. For example, (H+L+C)/TY10 is the
ratio of (H+L+C) to the same value 10 days ago. The T represents the
quantity on the other side of the combiner, a division sign. (H+L+C)/TY10
evaluates the same as (H+L+C)/(H+L+C)Y10, but without the T-operator the
H+L+C calculation must be done twice. In recursive formulas, T refers to
the result time series. So, TY1 is the previous day’s result.
trendlines
Diagonal support/resistance lines that indicate upward or downward
price movement. Support trendlines are drawn below the issue’s price and
trend upward. Resistance trendlines are drawn above the issue’s price and
trend down. Breakthrough of either trendline, particularly on large
volume, is a signal that the trendline is no longer viable.
Triple Bottom
A standard point & figure pattern. The most recent column is an O
column that is lower than the previous two O columns. Because it takes
five columns to form, it is considered a stronger bearish signal than the
Double Bottom, the Strong Double Bottom and the Bear Pattern formations.
Triple Top
A standard point & figure pattern. The most recent column is an X
column that exceeds the previous two X columns. Because it takes five
columns to form, it is considered a stronger bullish signal than the
Double Top, Strong Double Top and Bull Pattern formations.
units
A generic term used to refer to individual blocks of time in your data,
since you could be following the issue daily, weekly, monthly or
quarterly. Sometimes we use the phrase time units.
utility functions
A family of modifiers used for a variety of analytic functions such as
absolute value, log, exponential, sine, cosine and extreme values. The
parameter (0 through 99) determines which function is applied to the
original series. Many calculations for the U-modifiers can be done using
logical combiners such as > and <. Among other things, U-modifiers make it
possible to count and to determine where curves cross.
valley
A point on the curve that is lower than the point to its immediate
right and at least as low as the point to its immediate left. Making a
succession of lower price valleys is a bearish signal. One way to identify
lower valleys is to look at the slope of the trendline determined by the
valleys. If the slope is down, the valleys are falling. If it is up, then
they are rising.
vertical lines
A line tool that lets you see price values as you move the line across
a displayed chart.
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