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Stochastic Simianer System Test

. To: metastock@xxxxxxxxxxxxx
. Subject: Re: Fw: buying oportunities:
. From: BAUDECB@xxxxxxxxxxxxx (Christian Baude)
. Date: Mon, 19 Oct 1998 00:35:02 GMT
. References: <000801bdfab7\$d9e71080\$19259cd1@xxxxxx>
. Sender: owner-metastock@xxxxxxxxxxxxx

On Sun, 18 Oct 1998 12:52:55 -0400, it was written:

I was looking through some of my saved e-mails and did not see a reply to this question. If anyone has a response to this question I would appreciate a post.

Thanks, Bill

From: michael.arnoldi@xxxxxxxx <michael.arnoldi@xxxxxxxx>

this formula was posted some time ago by someone in th group, and is suposed to indicate goog buying oportunities:

Stoch(25,18)<40 AND
Cross(Stoch(25,18),Mov(Stoch(25,18),3,S))
AND Stoch(15,9)> Stoch(25,18) AND
Stoch(15,9) > Mov(Stoch(15,9),3,S)

anyone recognise this formula ?

Here ya go.... from my MetaStock SIG archives:
===================================================

Stochastic Simianer@xxxxxxxxxxx (Thomas Simianer) :
%K = 5/3, 15/9 and 25/18, all with %D = 3

I search for shares with the %K=25 crossing above its %D. This should happen below the oversold-level of 20, or at least below 50. At the same time the 15/9-stochastic should be in an uptrend and ahead of the 25/18. The 5/3-stochastic should also be climbing and have the highest value of all.

These are the conditions for an exploration. The stocks meeting these conditions will be analysed with other indicators (i´m using mainly ROC, Stochastic RSI, MACD, KST ).

Sometimes you get a buy signal of two stochastics, but the third doesn´t fit. In this case wait, until all three turn to the same (upward) direction. This very often indicates the best point to buy after a last downward move.

I have only a buy-filter, because every attempt to construct an according sell-exploration lead me to the result, that stochastic is very unreliable on the sell-side!

Stoch(25,18 ) < 40 AND Cross(Stoch(25,18), Mov(Stoch(25,18 ),3,S))
AND
Stoch(15,9) > Stoch(25,18 ) AND Stoch(15,9) > Mov(Stoch(15,9 ),3,S)

You see, it´s not complicated and the first line is very arbitrary, but 40 is the value that showed good results.

You noticed perhaps, that the stochastic 5/3 doesn´t show up in this filter.

The reason is, that it changes often direction and if it is not complying with the others I delay a buy until it does!

Stoch(5,3) > Ref(Stoch(5,3),-1) AND Stoch(15,9)> Ref(Stoch(15,9),-1)
AND
Stoch(25,18)>Mov(Stoch(25,18),3,E)

sell:

Stoch(5,3) < Ref(Stoch(5,3),-1) AND Stoch(15,9) < Ref(Stoch(15,9),-1)
AND
Stoch(25,18) >Mov(Stoch(25,18),3,E)

From: "José Carlos Duarte Areia" <areia@xxxxxxxxxxxxxxx>
Date: Mon, 29 Sep 1997 13:55:40 -0300

"For example do you want to enter a trade when %K crosses %D and the 20 or 80 line is crossed?"

Yes George, what I want ,if possible,is to optimize either the %K and %D crosses and it numbers, and also optimize the 20/80 numbers lines everything in one formula. I don't know if it's correct to manipulate the 20/80 numbers or if those numbers are fixed. If not correct, I'm looking to a formula to found only the optimum number to %K and %D numbers where to enter a trade when %K crosses %D and the 20 or 80 line is crossed as you write above. With my formula I try one time and it optimize the %K and %D numbers and the 20/80 numbers, but the results are negatives, with TBR the securitie I used.

The trouble is that the indicator will not usually cross the 20 or 80 line on exactly the same day as %K crosses %D. This means you have to decide if you want the 20/80 line to cross first or he %K %D line to cross first. Then simply write your rules using an Alert to keep one or the other condition true while waiting for the second cross. The Alert() function is used for this purpose. In the following example Alert(condition,10) keeps the Alert condition true for 10 periods to wait for the second cross. To increase this alert period simply increase 10 to a larger number in the formula rules.

You could set an Alert() period. This could tell the System Tester that Stochastic must cross the 20 or 80 line first and after that the %K crossing %D would trigger a buy or sell.

The rules for something like this would be:

Stochastic Simianer System Test

Enter Long:

Close Long:

Enter Short:

Close Short:

You could optimize this test by replacing any number in the rules with an OPT variable. For example Stoch(5,3) might become Stoch(OPT1,OPT2). OPT1 might represent any number from 5 to 25 and OPT2 could do the same.

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