Internal Strength Trading

[dusant]

Matt,
Very frankly, I am still in the process of developing an intraday method. Unfortunately, different traders gauge things differently from different time frames, so I cannot "impose" a trading time frame of my choice. I've pinpointed an algorithm for an hourly method, which seems to stand the test, but I cannot rely on it unless completely satisfied.
I am posting the latest updated chart of the hourly EUR-USD chart with my set of algorithms.
The band on the bottom indicates the current secular trend. The dots above or below the price bars, indicate the short term trend. A glance should display whether trades on the long or short side should be contemplated.
There are two more windows in the chart. The middle window plots my Candle Strength Bullish and Bearish indicators.
Depending on the strength of the various candles, the Bullish/Bearish Indicators will rise or fall. The rising indicator means increasing strength, and the falling indicator means increasing weakness.
Thus a rising bullish indicator will indicate increasing bullish strength, and a rising bearish indicator will indicate increasing bearish strength.
There are times, when either of the indicators
The Candle Strength Osc (plotted in the top window) moves like any other Osc, which should be obvious also from the chart.
However, there still is a lot of work and research to be done on this method.
Dusant

PS: It is a sound technique to follow the trend. If the trend is weak, shorting opportunities should be looked at.

[MattH]

cheers - will take a look

[dusant]

Matt,
Here is a practical problem, when the hourly chart of the GBP-USD is showing a buy signal, whereas on the daily, we should only contemplate short signals.
I am still in the process of ironing out those "glitches" so that my hourly charts also follow the trend of the daily charts, without hurting the pocket.
Dusant

[markash]

dusant....

Interesting charts. If you don't mine me asking, what .Net charting package are you using? I have looked at a couple but cannot find one that meets my requirements. Even had a stint of writing my own.

regards

[dusant]

Markash,
Presently I am using Metastock, and all the algorithms have been developed in the same software.
Dusant

[neil4x]

Dusant, the practical problem you mentioned is not such a problem, remember the price does not move in a straight line but osscilates even in a strongly trending market, you merely have to drop down your time frames to get a fairly reliable indicator of possible trend direction.
So if you take a signal from your hourly indicator use it to trade 5 minute charts, indicator from daily chart, trade hourly charts etc.

Can I ask if you what sample of currency pairs you compare before arriving at your 'best' signal?

Neil

[dusant]

Neil,
I wish it was as simple as it sounds.
As far as the indicators are concerned, its simple to just apply them in lower time frames, but do they "respond" in the same way as in the way as they are designed for the daily? Mine don't. The parameters used in the daily charts do not co-incide as well in the hourly mode.
Therefore, I am in the process of fine tuning them.

As explained earlier, the "best" signals I choose are those, where the internal strength of each pair are far away from each other and showing diverging towards each other. The respective Internal Strength of each of the two currencies in the pair should be exhibiting strength in one and weakness in the other. That would give us the quickest move.

The charts I draw are from Metastock, but the Internal Strength indicators are computed in a spreadsheet, and then integrated into the Metastock charts. The signals of LE, LX, SE and SX are generated by metastock.

BTW, I am not plugging metastock as a charting product, because there are other equally good softwares also available.

Dusant

[neil4x]

Congratulations on all your hard work and study, you must have taken the saying "The only place you can find success before work is in the dictionary" to heart
Here are two web address you may find of value.

Relative Strength Index
Get with the strength

Good Luck