December 2008

TRADERS' TIPS
Here is this month's selection of Traders' Tips, contributed by various developers of technical
analysis software to help readers more easily implement some of the strategies presented in this
and other issues.

You can copy these formulas and programs for easy use in your spreadsheet or analysis
software. Simply "select" the desired text by highlighting as you would in any word
processing program, then use your standard key command for copy or choose "copy" from
the browser menu. The copied text can then be "pasted" into any open spreadsheet or other
software by selecting an insertion point and executing a paste command. By toggling back
and forth between an application window and the open Web page, data can be transferred
with ease.

This month's tips include formulas and programs for:

TRADESTATION: Heikin-Ashi Candlestick Oscillator

WEALTH-LAB: Heikin-Ashi Candlestick Oscillator
AMIBROKER: Heikin-Ashi Candlestick Oscillator
eSIGNAL: Heikin-Ashi Candlestick Oscillator
NEUROSHELL TRADER: Heikin-Ashi Candlestick Oscillator
NEOTICKER: Heikin-Ashi Candlestick Oscillator
AIQ: Heikin-Ashi Candlestick Oscillator
TRADERSTUDIO: Heikin-Ashi Candlestick Oscillator
STRATASEARCH: Heikin-Ashi Candlestick Oscillator
WORDEN BROTHERS STOCKFINDER: Heikin-Ashi Candlestick Oscillator
VT TRADER: Heikin-Ashi Candlestick Oscillator
NINJATRADER: Heikin-Ashi Candlestick Oscillator
TRADE IDEAS: Stock Movement vs. Market Movement

or return to December 2008 Contents

TRADESTATION: HEIKIN-ASHI CANDLESTICK OSCILLATOR

In "Trading With The Heikin-Ashi Candlestick Oscillator" in this issue, author Sylvain Vervoort
uses heikin-ashi techniques to provide visual aids that complement one another.
He suggests displaying the results of his calculations by coloring candlestick bars based on
modified heikin-ashi rules. Vervoort provides two fully defined indicators, but makes it clear that
"no system is perfect," and recommends that traders adapt the rules to suit their circumstances.
With this in mind, we provide an EasyLanguage indicator (named "HA Candles Modified") with
listed conditions that allow the user to easily modify the code and test Vervoort's rules.
To download the EasyLanguage code for this study, go to the TradeStation and EasyLanguage
Support Forum (https://www.tradestation.com/Discussions/forum.aspx?Forum_ID=213).
Search for the file "HA CandleStick.E ." Translations of three studies included in the article,
"HA Crossover," "UpTrend_HA," and "H " are included in the E file.
This article is for informational purposes. No type of trading or investment recommendation,
advice, or strategy is being made, given, or in any manner provided by TradeStation Securities or
its affiliates.
 FIGURE 1: TRADESTATION, HEIKIN-ASHI INDICATORS. In this
sample TradeStation chart, Sylvain Vervoort's heikin-ashi
indicators are plotted on a daily chart of General Electric (GE). The
indicator "UpTrend_HA" is in the uppermost subgraph. It is what
causes the price bars to be colored green and red. "HA Crossover"
is in the subgraph directly below the price bars. "HACO" (heikin-
ashi candlestick oscillator) is in the bottom subgraph. These three
indicators are included in the file "HA CandleStick.E ," available
in the TradeStation and EasyLanguage Support Forum at
TradeStation.com.

Indicator: HA Candles Modified

inputs:
HollowColor( White ),
UpTrendColor( DarkGreen ),
DnTrendColor( Red ),
TEMALength( 34 ),
WickWidth( 1 ),
BodyWidth( 3 ) ;

variables:
BodySize( 0 ),
Outline( 0 ),
HaCValue( 0 ),
HaOpenValue( 0 ),
TMA1( 0 ),
TMA2( 0 ),
TMADiff( 0 ),
ZlHa( 0 ),
ZlCl( 0 ),
ZlDiff( 0 ),
Z1DiffPos( false ),
HABasic( false ),
DiffAndLastBasic( false ),
UpSigns( false ),
NoDojiReverse( false ),
GreenBar( false ),
Color( 0 ),
ColorW( 0 ) ;

Once
begin

switch BodyWidth
begin
case 2:
BodySize = 1 ;
case > 4:
BodySize = 4 ;
default:
 BodySize = BodyWidth ;
end ;

switch BodySize
begin
case 0:
Outline = 2 ;
case 1:
Outline = 3 ;
case 3:
Outline = 4 ;
default:
Outline = 5 ;
end ;

end ;

HaCValue = HaC ;
HaOpenValue = HaOpen ;

{ Crossover formula for trend determination }

TMA1 = TEMA( HaCValue, TEMALength ) ;
TMA2 = TEMA( TMA1, TEMALength ) ;
TMADiff = TMA1 - TMA2 ;
ZlHa = TMA1 + TMADiff ;
TMA1 = TEMA( MedianPrice, TEMALength ) ;
TMA2= TEMA( TMA1, TEMALength ) ;
TMADiff = TMA1 - TMA2 ;
ZlCl = TMA1 + TMADiff ;
ZlDiff = ZlCl - ZlHa ;

{ trend determination }
Z1DiffPos = ZlDiff >= 0 ;

{ basic Heikin-Ashi condition }

HABasic = HaCValue >= HaOpenValue ;

{ if prior bar was Green, then make this one green too }
DiffAndLastBasic = Z1DiffPos and HABasic[1] ;

{ make one more green if "upwards signs" exist }

UpSigns = ( ( HABasic[2] and DiffAndLastBasic[1] ) or
UpSigns[1] ) and ( Close >= Open or Close >=
Close[1] ) ;

{ don't let a Doji reverse an uptrend }

NoDojiReverse = ( AbsValue( Close - Open ) < ( High -
Low ) * 0.35 and High >= Low[1] ) and ( HABasic or
DiffAndLastBasic or UpSigns ) ;

GreenBar = HABasic or DiffAndLastBasic or UpSigns or

NoDojiReverse ;

if GreenBar then
begin

ColorW = UpTrendColor ;

if ( Close > Close[1] and Open < Close ) or

( Close < Close[1] and Open > Close ) then
Color = UpTrendColor
else
Color = HollowColor ;

end
else
begin

ColorW = DnTrendColor ;

if Close < Close[1] then

begin
if Open > Close then
Color = DnTrendColor
 else
Color = HollowColor ;
end
else if Close > Close[1] then
begin
if Open < Close then
Color = HollowColor
else
Color = DnTrendColor ;
end ;

end ;

{ outlined candles by "Solidus," see: https://www.

tradestation.com/Discussions/Topic.aspx?Topic_ID=67474 }

Plot1( Close, "C Outline A", ColorW, 0, Outline ) ;

Plot2( Close, "C Outline B" ) ;
Plot3( Open, "O Outline A", ColorW, 0, Outline ) ;
Plot4( Open, "O Outline B" ) ;
Plot5( Close, "C", Color, 0, Bodysize ) ;
Plot6( Open, "O" ) ;
Plot7( Close, "C Outline", ColorW, 0, Outline ) ;
Plot8( Open, "O Outline" ) ;
Plot9( High, "H", ColorW, 0, WickWidth ) ;
Plot10( Low, "L" ) ;

Function: HaC
HaC = 0.25 * ( AvgPrice + HaOpen + MaxList( High,
HaOpen ) + MinList( Low, HaOpen ) ) ;

Function: HaOpen
HaOpen = 0.5 * ( AvgPrice[1] + HaOpen[1] ) ;

--Mark Mills
TradeStation Securities, Inc.
A subsidiary of TradeStation Group, Inc.
www.TradeStation.com

BACK TO LIST

WEALTH-LAB: HEIKIN-ASHI CANDLESTICK OSCILLATOR

In "Trading With The Heikin-Ashi Candlestick Oscillator" in this issue, Sylvain Vervoort guides
us step by step in an entertaining tutorial on building a customized candlestick oscillator. Utilizing
the heikin-ashi chart's consistency, it provides an overlay tool that allows for some discretion to
help hold onto a profitable trade (Figure 2).
The heikin-ashi candlestick oscillator (H ) is available to Wealth-Lab Developer 5 users. To
power your chart analysis with H , just select «Extension Manager» from the Tools menu to
update the "Tasc Indicators" library (open source).
 FIGURE 2: WEALTH-LAB, HEIKIN-ASHI CANDLESTICK OSCILLATOR
(HACO). Here is how HACO signaled a downtrend in euros in
summer 2008.

Strategy Code:

using System;
using System.Collections.Generic;
using System.Text;
using System.Drawing;
using WealthLab;
using WealthLab.Indicators;
using TASCIndicators;

namespace WealthLab.Strategies
{
public class HACO_Demo : WealthScript
{
// Create parameter sliders

private StrategyParameter TemaPeriod;

private StrategyParameter timeoutPeriod;

public HACO_Demo()
{
TemaPeriod = CreateParameter("TEMA Period", 34, 10, 120, 1);
timeoutPeriod = CreateParameter("Timeout", 2, 1, 3, 1);
}

protected override void Execute()

{
// Plot HACO

int period = TemaPeriod.ValueInt;

HACO haco = HACO.Series( Bars, period, timeoutPeriod.ValueInt );
ChartPane hacoPane = CreatePane( 20, true, true );
PlotSeries( hacoPane, haco, Color.BlueViolet, LineStyle.Solid, 2 );
HideVolume();

for(int bar = period*3; bar < Bars.Count; bar++)

{
if ( haco[bar] == 1 )
{
SetBarColor( bar, Color.FromArgb( 130, Color.Green ) );
SetBackgroundColor( bar, Color.FromArgb( 50, Color.Green ) );
}
else if ( haco[bar] < 1 )
{
SetBarColor( bar, Color.FromArgb( 130, Color.Red ) );
SetBackgroundColor( bar, Color.FromArgb( 50, Color.Red ) );
}
}
}
}
}

--Eugene
www.wealth-lab.com

BACK TO LIST

AMIBROKER: HEIKIN-ASHI CANDLESTICK OSCILLATOR

In the article "Trading With The Heikin-Ashi Candlestick Oscillator" in this issue, author Sylvain
Vervoort presents an oscillator derived from a transformation of a heikin-ashi charting technique
originally introduced by Dan Valcu in a S C article in 2004.
The implementation of H (heikin-ashi candlestick oscillator) in AmiBroker is straightforward
compared to the MetaStock code presented in the article. We simply wrapped a zero-lag TEMA
(triple exponential moving average) into a function so we can call it multiple times without code
 repetition. Also added is a parameter that controls the H binary wave display correlated with
the background color in the candlestick chart indicating long/short positions.
The formula is presented in Listing 1. To use it, simply enter the code in the AmiBroker Formula
Editor, then choose Tools->Apply Indicator menu from the editor. You can use the Parameters
window (available from the right-click menu) to set the period for the T filter and to switch the
chart type.
A sample chart is shown in Figure 3.

FIGURE 3: AMIBROKER, HACO.Here is a daily chart of General

Electric (GE) with a red background indicating short positions and
green indicating long positions. The upper pane shows the HACO
binary wave.

LISTING 1
function ZeroLagTEMA( array, period )
{
TMA1 = TEMA( array, period );
TMA2 = TEMA( TMA1, period );
Diff = TMA1 - TMA2;
return TMA1 + Diff ;
}

/////////////////////
// Heikin-Ashi code
HaClose = (O+H+L+C)/4;
HaOpen = AMA( Ref( HaClose, -1 ), 0.5 );

avp = Param("Up TEMA avg", 34, 1, 100 );

avpdn = Param("Dn TEMA avg", 34, 1, 100 );

// Velvoort is using not original, but modified Heikin-Ashi close

HaClose = ( HaClose + HaOpen + Max( H, HaOpen ) + Min( L, HaOpen ) )/4;

// up average
ZlHa = ZeroLagTEMA( HaClose, avp );
ZlCl = ZeroLagTEMA( ( H + L ) / 2, avp );
ZlDif = ZlCl - ZlHa;

keep1 = Hold( HaClose >= HaOpen, 2 );

keep2 = ZlDif >= 0;
keeping = keep1 OR keep2;
keepall = keeping OR ( Ref( keeping, -1 ) AND ( C > O ) OR C >= Ref( C, -1 ) );
keep3 = abs( C - O ) < ( H - L ) * 0.35 AND H >= Ref( L, -1 );
utr = keepall OR ( Ref( keepall, -1 ) AND keep3 );

// dn average
ZlHa = ZeroLagTEMA( HaClose, avpdn );
ZlCl = ZeroLagTEMA( ( H + L ) / 2, avpdn );
ZlDif = ZlCl - ZlHa;
keep1 = Hold( HaClose < HaOpen, 2 );
keep2 = ZlDif < 0;
keeping = keep1 OR keep2;
keepall = keeping OR ( Ref( keeping, -1 ) AND ( C < O ) OR C < Ref( C, -1 ) );
keep3 = abs( C - O ) < ( H - L ) * 0.35 AND L <= Ref( H, -1 );
dtr = keepall OR ( Ref( keepall, -1 ) AND keep3 );

upw = dtr == 0 AND Ref( dtr, -1 ) AND utr;

dnw = utr == 0 AND Ref( utr, -1 ) AND dtr;

Haco = Flip( upw, dnw );

if( ParamToggle("Chart Type", "Price with color back|HACO wave" ) )

{
Plot( Haco, "Haco", colorRed );
}
else
{
Plot( C, "Close", colorBlack,
ParamStyle( "Style", styleCandle, maskPrice ) );
Plot( 1, "", IIf( Haco , colorPaleGreen, colorRose ),
styleArea | styleOwnScale, 0, 1 );
}

--Tomasz Janeczko, AmiBroker.com

www.amibroker.com

BACK TO LIST

eSIGNAL: HEIKIN-ASHI CANDLESTICK OSCILLATOR

For this month's Traders' Tip, we've provided the eSignal formula "H .efs," based on the
formula code from Sylvain Vervoort's article in this issue, "Trading With The Heikin-Ashi
Candlestick Oscillator." Figure 4 is a sample chart.
To discuss this study or download a complete copy of the formula code, please visit the E
Library Discussion Board forum under the Forums link at www.esignalcentral.com or visit our
E KnowledgeBase at www.esignalcentral.com/support/kb/efs/. The eSignal formula scripts
(E ) are also available for copying and pasting from the Stocks & Commodities website at
Traders.com.

FIGURE 4: eSIGNAL, HACO. This sample eSignal chart shows the

heikin-ashi candlestick oscillator.
/*********************************
Provided By:
eSignal (Copyright c eSignal), a division of Interactive Data
Corporation. 2008. All rights reserved. This sample eSignal
Formula Script (EFS) is for educational purposes only and may be
modified and saved under a new file name. eSignal is not responsible
for the functionality once modified. eSignal reserves the right
to modify and overwrite this EFS file with each new release.

Description:
Heikin-Ashi Candelstick Oscillator (HACO)

Version: 1.0 10/08/2008

Notes:
The related article is copyrighted material. If you are not
a subscriber of Stocks & Commodities, please visit www.traders.com.

Formula Parameters: Default:

Long Positions Color Lime
Short Positions Color Red
Up TEMA Average Length 34
Down TEMA Average Length 34
**********************************/

var fpArray = new Array();

var bInit = false;
var bVersion = null;

function preMain() {
setPriceStudy(true);
setShowCursorLabel(false);
setShowTitleParameters( false );
setStudyTitle("Heikin-Ashi Candelstick Oscillator");
setDefaultBarBgColor(Color.white, 0);
var x=0;
fpArray[x] = new FunctionParameter("UpColor", FunctionParameter.COLOR);
with(fpArray[x++]){
setName("Long Positions Color");
setDefault(Color.RGB(160, 255, 160));
}
fpArray[x] = new FunctionParameter("DnColor", FunctionParameter.COLOR);
with(fpArray[x++]){
setName("Short Positions Color");
setDefault(Color.RGB(255,160,160));
}
fpArray[x] = new FunctionParameter("Avg", FunctionParameter.NUMBER);
with(fpArray[x++]){
setName("Up TEMA Average Length");
setLowerLimit(1);
setDefault(34);
}
fpArray[x] = new FunctionParameter("Avgdn", FunctionParameter.NUMBER);
with(fpArray[x++]){
setName("Down TEMA Average Length");
setLowerLimit(1);
setDefault(34);
}
}

var xhaOpen = null;

var xhaC = null;
var xTMA1 = null;
var xTMA2 = null;
var xTMA1_hl2 = null;
var xTMA2_hl2 = null;
var xTMA1_2 = null;
var xTMA2_2 = null;
var xTMA1_hl2_2 = null;
var xTMA2_hl2_2 = null;
var bkeeping = false;
var bkeeping_Ref = false;
var bkeepall = false;
var bkeepall_Ref = false;
var bkeeping1 = false;
var bkeeping1_Ref = false;
var bkeepall1 = false;
var bkeepall1_Ref = false;
var butr = false;
var bdtr = false;
var butr_Ref = false;
var bdtr_Ref = false;
var nhaOpen = 0;
var nhaOpen_Ref = 0;
var nRes = 0;
var nRef = 0;

function main(Avg, Avgdn, UpColor, DnColor) {

var nState = getBarState();
var nhaC = 0;
var nDiff = 0;
var nZlDif = 0;
var nZlHa = 0;
var nZlCl = 0;
var nTMA1 = 0;
var nTMA2 = 0;
var nTMA1_hl2 = 0;
var nTMA2_hl2 = 0;
var bkeep1 = false;
var bkeep2 = false;
var bkeep3 = false;
var nupw = 0;
var ndnw = 0;

if (bVersion == null) bVersion = verify();

if (bVersion == false) return;
if ( bInit == false ) {
xhaOpen = efsInternal("Calc_haOpen", ohlc4());
xhaC = efsInternal("Calc_haC", ohlc4(), xhaOpen);
xTMA1 = efsInternal("TEMA", xhaC, Avg);
xTMA2 = efsInternal("TEMA", xTMA1, Avg);
xTMA1_hl2 = efsInternal("TEMA", hl2(), Avg);
xTMA2_hl2 = efsInternal("TEMA", xTMA1_hl2, Avg);
xTMA1_2 = efsInternal("TEMA", xhaC, Avgdn);
xTMA2_2 = efsInternal("TEMA", xTMA1_2, Avgdn);
xTMA1_hl2_2 = efsInternal("TEMA", hl2(), Avgdn);
xTMA2_hl2_2 = efsInternal("TEMA", xTMA1_hl2_2, Avgdn);
bInit = true;
}

if (nState == BARSTATE_NEWBAR) {
bkeeping_Ref = bkeeping;
bkeepall_Ref = bkeepall;
bkeeping1_Ref = bkeeping1;
bkeepall1_Ref = bkeepall1;
butr_Ref = butr;
bdtr_Ref = bdtr;
nhaOpen_Ref = nhaOpen;
nRef = nRes;
}

nTMA1 = xTMA1.getValue(0);
nTMA2 = xTMA2.getValue(0);
nTMA1_hl2 = xTMA1_hl2.getValue(0);
nTMA2_hl2 = xTMA2_hl2.getValue(0);
nDiff = nTMA1 - nTMA2;
nZlHa = nTMA1 + nDiff;
nDiff = nTMA1_hl2 - nTMA2_hl2;
nZlCl = nTMA1_hl2 + nDiff;
nZlDif = nZlCl - nZlHa;
bkeep1 = Alert1(xhaC, xhaOpen, 2);
if (nZlDif >= 0)
bkeep2 = true
else
bkeep2 = false;
if (bkeep1 || bkeep2)
bkeeping1 = true
else
 bkeeping1 = false;
if (bkeeping1 || (bkeeping1_Ref && (close(0) >= open(0)) || close(0) >= close(-1)))
bkeepall1 = true
else
bkeepall1 = false;
if (Math.abs(close(0) - open(0)) < (high(0) - low(0)) * 0.35 && high(0) >= low(-1))
bkeep3 = true
else
bkeep3 = false;
if (bkeepall1 || (bkeepall1_Ref && bkeep3))
butr = true;
else
butr = false;

nTMA1 = xTMA1_2.getValue(0);
nTMA2 = xTMA2_2.getValue(0);
nTMA1_hl2 = xTMA1_hl2_2.getValue(0);
nTMA2_hl2 = xTMA2_hl2_2.getValue(0);
nDiff = nTMA1 - nTMA2;
nZlHa = nTMA1 + nDiff;
nDiff = nTMA1_hl2 - nTMA2_hl2;
nZlCl = nTMA1_hl2 + nDiff;
nZlDif = nZlCl - nZlHa;
bkeep1 = Alert2(xhaC, xhaOpen, 2);
if (nZlDif < 0)
bkeep2 = true
else
bkeep2 = false;

if (Math.abs(close(0) - open(0)) < (high(0) - low(0)) * 0.35 && low(0) <= high(-1))
bkeep3 = true;
else
bkeep3 = false;
if (bkeep1 || bkeep2)
bkeeping = true;
else
bkeeping = false;
if (bkeeping || (bkeeping_Ref && (close(0) < open(0)) || close(0) < close(-1)))
bkeepall = true
else
bkeepall = false;
if(bkeepall || (bkeepall_Ref && bkeep3) == true)
bdtr = true
else
bdtr = false;
if (bdtr == false && bdtr_Ref && butr)
nupw = 1
else
nupw = 0;
if (butr == false && butr_Ref && bdtr)
ndnw = 1
else
ndnw = 0;
if (nupw == 1)
nRes = 1
else
if(ndnw == 1)
nRes = 0
else
nRes = nRef;

if (nRes == 1)
setDefaultBarBgColor(UpColor, 0);
else
if (nRes == 0)
setDefaultBarBgColor(DnColor, 0);
return;
}

function Calc_haOpen(xOHLC4) {
var nRes = 0;
var nRef = ref(-1);
if (nRef == null) nRef = 1;
if (xOHLC4.getValue(-1) == null) return;
 nRes = (xOHLC4.getValue(-1) + nRef) / 2;
if (nRes == null) return;
return nRes;
}

function Calc_haC(xOHLC4, xhaOpen) {

var nhaOpen = 0;
var nRes = 0;
if (xOHLC4.getValue(-1) == null) return;
nhaOpen = xhaOpen.getValue(0);
nRes = (xOHLC4.getValue(0) + nhaOpen + Math.max(high(0), nhaOpen) + Math.min(low(0), nhaOpen)) / 4;
if (nRes == null) return;
return nRes;
}

function Alert1(xhaC, xhaOpen, Length) {

var bRes = true;
for (var i = 1; i Length; i++) {
if (xhaC.getValue(-i) < xhaOpen.getValue(-i)) bRes = false; // >=
}
return bRes;
}

function Alert2(xhaC, xhaOpen, Length) {

var bRes = true;
for (var i = 1; i < Length; i++) {
if (xhaC.getValue(-i) >= xhaOpen.getValue(-i)) bRes = false; // <
}
return bRes;
}

var xEMA1 = null;

var xEMA2 = null;
var xEMA3 = null;
var bInitTEMA = false;

function TEMA(xPrice, Length) {

var nTEMA = 0;
if ( bInitTEMA == false ) {
xEMA1 = ema(Length, xPrice);
xEMA2 = ema(Length, xEMA1);
xEMA3 = ema(Length, xEMA2);
bInitTEMA = true;
}

if (xEMA1.getValue(0) == null || xEMA2.getValue(0) == null || xEMA3.getValue(0) == null) return;

nTEMA = 3 * xEMA1.getValue(0) - 3 * xEMA2.getValue(0) + xEMA3.getValue(0);
return nTEMA;
}

function verify() {
var b = false;
if (getBuildNumber() < 779) {
drawTextAbsolute(5, 35, "This study requires version 8.0 or later.",
Color.white, Color.blue, Text.RELATIVETOBOTTOM|Text.RELATIVETOLEFT|Text.BOLD|Text.LEFT,
null, 13, "error");
drawTextAbsolute(5, 20, "Click HERE to upgrade.@URL=http://www.esignal.com/download/default.asp",
Color.white, Color.blue, Text.RELATIVETOBOTTOM|Text.RELATIVETOLEFT|Text.BOLD|Text.LEFT,
null, 13, "upgrade");
return b;
} else {
b = true;
}
return b;
}

--Jason Keck
eSignal, a division of Interactive Data Corp.
800 815-8256, www.esignalcentral.com
BACK TO LIST

NEUROSHELL TRADER: HEIKIN-ASHI CANDLESTICK OSCILLATOR

The heikin-ashi candlestick oscillator and trading system described by Sylvain Vervoort in his
article in this issue can be easily implemented in NeuroShell Trader using the NeuroShell Trader's
ability to call external programs. The programs may be written in programming languages such as
C, C++, Power Basic, or Delphi.

FIGURE 5: NEUROSHELL, HACO. Here is a sample NeuroShell chart

demonstrating the heikin-ashi candlestick oscillator and
corresponding trading system.

After moving the MetaStock code given in the article to your preferred compiler, you can insert
the resulting heikin-ashi candlestick oscillator (H ) indicators into a chart (see Figure 5) as
follows:
1. Select "New Indicator …" from the Insert menu.
2. Choose the External Program & Library Calls category.
3. Select the appropriate External Dll Call indicator.
4. Set up the parameters to match your Dll and select "Indicator output is a Boolean value."
5. Select the Finished button.
To create a heikin-ashi candlestick oscillator–based reversal trading system, select "New Trading
Strategy …" from the Insert menu and enter the following in the appropriate locations of the
Trading Strategy Wizard:
Buy Long Market order if all of the following are true:
HACO( Open, High, Low, Close, 34, 34 )

Sell Long Market order if all of the following are true:

Not( HACO( Open, High, Low, Close, 34, 34 ) )

If you have NeuroShell Trader Professional, you can also choose whether the system parameters
should be optimized.
After backtesting the trading strategies, use the "Detailed Analysis…" button to view the backtest
and trade-by-trade statistics for the trading strategy.
Users of NeuroShell Trader can go to the S C section of the NeuroShell Trader
free technical support website to download a copy of this or any past Traders' Tips.
--Marge Sherald, Ward Systems Group, Inc.
301 662-7950, sales@wardsystems.com
www.neuroshell.com

BACK TO LIST
 NEOTICKER: HEIKIN-ASHI CANDLESTICK OSCILLATOR
In the article "Trading With The Heikin-Ashi Candlestick Oscillator" in this issue, author Sylvain
Vervoort uses heikin-ashi candle rules to highlight trend changes in price bars. This coloring
algorithm can be implemented in NeoTicker using formula language.
The formula indicator is called "T Uptrend HA" (Listing 1) with one parameter, avg, that
allows the user to adjust the number of periods that T is calculated (the default is 34). This
indicator plots vertical color bars that mark the highs and lows of the underlying data series
(Figure 6).
The H oscillator and background coloring can be produced from the same indicator code by
changing the plot value settings (refer to NeoTicker blog site for details).
A downloadable version of this indicator will be available at the NeoTicker blog site
(http://blog.neoticker.com).

FIGURE 6: NEOTICKER, HACO INDICATOR.

LISTING 1
$avg := param1;
haOpen := ((O(1)+H(1)+L(1)+C(1))/4 + haOpen(1))/2;
haC := ((O+H+L+C)/4+haOpen+maxlist(H,haOpen)+minlist(L,haOpen))/4;
TMA1 := tema(haC,$avg);
TMA2 := tema(TMA1,$avg);
$myDiff := TMA1-TMA2;
$ZlHa := TMA1+$myDiff;
TMA1 := tema(((h+l)/2), $avg);
TMA2 := tema(TMA1, $avg);
$myDiff := TMA1-TMA2;
$ZlCl := TMA1+$myDiff;
$ZlDif := $ZlCl-$ZlHa;
$keep1 := (haC(1)>=haOpen(1)) and (haC>=haOpen);
$keep2 := $ZlDif>=0;
keeping := $keep1>0 or $keep2>0;
keepall := keeping>0 or (keeping(1)>0 and C>=O or C>=C(1));
$keep3 := absvalue(C-O)<((H-L)*0.35) and H>=L(1);
utr := keepall>0 or (keepall(1)>0 and $keep3>0);
$keep1 := (haC(1)<0;
$keep3 := (absvalue(C-O)<(H-L)*0.35) and L<=H(1);
keeping := $keep1>0 or $keep2>0;
keepall := keeping>0 or (keeping(1)>0 and C0) or (keepall(1)>0 and C0) and (utr>0);
$dnw := (utr=0) and (utr(1)>0) and (dtr>0);
plot1 := h;
plot2 := l;
plot3 := choose($upw>0, clgreen,$dnw>0, clred, plot3(1));
success1 := barsnum(0) > $avg;
success2 := barsnum(0) > $avg;
success3 := barsnum(0) > $avg;
<O or C>0) or (keepall(1)>0 and C0) and (utr>0);
$dnw := (utr=0) and (utr(1)>0) and (dtr>0);
plot1 := h;
plot2 := l;
plot3 := choose($upw>0, clgreen,$dnw>0, clred, plot3(1));
success1 := barsnum(0) > $avg;
success2 := barsnum(0) > $avg;
success3 := barsnum(0) > $avg;

--Kenneth Yuen, TickQuest Inc.

www.tickquest.com

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AIQ: HEIKIN-ASHI CANDLESTICK OSCILLATOR

The AIQ code for Sylvain Vervoort's H indicator from his article, "Trading With The Heikin-
Ashi Candlestick Oscillator," is shown here. In Figure 7, I show both the color study and the
oscillator on a recent chart of Wells Fargo. Due to time constraints, I was not able to run any tests
of the indicator.
The code can be downloaded from the A website at www.aiqsystems.com and also from
www.tradersedgesystems.com/traderstips.htm.

FIGURE 7: AIQ, HACO INDICATOR. Here is a chart of Wells Fargo &

Co. showing both the color study and the HACO indicator.

!! TRADING WITH HEIKIN-ASHI CANDLESTICK OSCILLATOR

! Author: Sylvain Vervoort, TASC, December 2008

! Coded by: Richard Denning

! CODING ABBREVIATIONS:

H is [high].

H1 is valresult(H,1).
 L is [low].

L1 is valresult(L,1).

C is [close].

C1 is valresult(C,1).

O is [open].

V is [volume].

! INPUTS:

emaLen is 34.

!-------------------------HEIKIN-ASHI-----------------------------------

haC is (O + H +L + C) / 4.

DaysInto is ReportDate() - RuleDate().

end if DaysInto > 30.

endHAO is iff(end,O, haO).

haO is (valresult(endHAO,1) + valresult(haC,1)) / 2.

haH is Max(H,max(haO,haC)).

haL is Min(L,min(haO,haC)).

haCL is (haC + haO + haH + haL) / 4.

!---------------------end HEIKIN-ASHI---------------------------------

!---------------TYPICAL PRICE ZERO-LAG TEMA----------------

TP is (H+L+C)/3.

TMA1 is expavg(TP,emaLen).

TMA2 is expavg(TMA1,emaLen).

TMA3 is expavg(TMA2,emalen).

tpTEMA1 is 3*TMA1-3*TMA2+TMA3.

TMA4 is expavg(tpTEMA1,emaLen).

TMA5 is expavg(TMA4,emaLen).

TMA6 is expavg(TMA5,emalen).

tpTEMA2 is 3*TMA4-3*TMA5+TMA6.

Diff2 is tpTEMA1 - tpTEMA2.

zLAGtp is tpTEMA1 + Diff2.

!-----------end TYPICAL PRICE ZERO-LAG TEMA----------------

!-----------------HEIKIN-ASHI ZERO-LAG TEMA--------------------

 haTMA1 is expavg(haCL,emaLen).

haTMA2 is expavg(haTMA1,emaLen).

haTMA3 is expavg(haTMA2,emalen).

haTEMA1 is 3*haTMA1-3*haTMA2+haTMA3.

haTMA4 is expavg(haTEMA1,emaLen).

haTMA5 is expavg(haTMA4,emaLen).

haTMA6 is expavg(haTMA5,emalen).

haTEMA2 is 3*haTMA4-3*haTMA5+haTMA6.

Diff3 is haTEMA1 - haTEMA2.

zLAGha is haTEMA1 + Diff3.

!----------end HEIKIN-ASHI ZERO-LAG TEMA----------------------

zLAGdif is zLAGtp - zLAGha.

!------------------ HA CANDLE COLOR CODE-------------------------

rule1 if haCL >= haO or valrule(haCL >= haO,1).

rule2 if zLAGdif >= 0.

r1r2 if rule1 or rule2.

ruleA if r1r2 or (valrule(r1r2,1) and (C>=O or C>C1)).

rule3 if abs(C-O)<(H-L)*0.35 and H>=L1.

utr if ruleA or (valrule(ruleA,1) and rule3).

rule4 if haCL < haO or valrule(haCL < haO,1).

rule5 if zLAGdif < 0.

rule6 if abs(C-O)<(H-L)*0.35 and L>H1.

r4r5 if rule4 or rule5.

ruleB if r4r5 or (valrule(r4r5,1) and (C<O or C<C1)).

dtr if ruleB or (valrule(ruleB,1) and rule6).

upw if not dtr and valrule(dtr,1) and utr.

dnw if not utr and valrule(utr,1) and dtr.

endRes is iff(end,0,res).

res is iff(upw,1,iff(dnw,0,valresult(endRes,1))).

green if res = 1. !! USE THIS RULE FOR COLOR GREEN BAR

red if res = 0. !! USE THIS RULE FOR RED COLOR BAR

HACO is res. !! PLOT HACO AS CUSTOM INDICATOR

!---------------end HA CANDLE COLOR CODE-------------------------

--Richard Denning
For AIQ Systems
richard.denning@earthlink.net

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TRADERSTUDIO: HEIKIN-ASHI CANDLESTICK OSCILLATOR

Here is the TradersStudio code for Sylvain Vervoort's H indicator based on his article in this
issue, "Trading With The Heikin-Ashi Candlestick Oscillator."
In Figure 8, I show both the color study and the oscillator on a recent chart of natural gas. Due to
time constraints, I was not able to run any tests of the indicator.

FIGURE 8: TRADERSTUDIO, HACO INDICATOR. Here is a sample

chart of natural gas with both the color study and the HACO
indicator.

The code can be downloaded from the TradersStudio website at www.TradersStudio.com -

>Traders Resources->FreeCode and also from
www.TradersEdgeSystems.com/traderstips.htm.
Sub HA_OSC(xmaLen,startWith)

'xmaLen = 34
'green candle: startWith = 1
'red candle: startWith = 0
Dim haC As BarArray
Dim haO As BarArray
Dim haH As BarArray
Dim haL As BarArray
Dim haCL As BarArray
haC = (O+H+L+C)/4
haO = IIF(BarNumber = FirstBar,O,(haO[1] + haC[1])/2)
haH = Max(H,haO)
haL = Min(L,haO)
haCL = (haC+haO+haH+haL)/4

Dim zeroHAtemaa As BarArray

Dim haTMA1, haTMA2, haTMA3, haTMA4, haTMA5, haTMA6, haTEMA1, haTEMA2, diff1
haTMA1 = XAverage(haCL,xmaLen)
 haTMA2 = XAverage(haTMA1,xmaLen)
haTMA3 = XAverage(haTMA2,xmaLen)
haTEMA1 = 3*haTMA1-3*haTMA2+haTMA3
haTMA4 = XAverage(haTEMA1,xmaLen)
haTMA5 = XAverage(haTMA4,xmaLen)
haTMA6 = XAverage(haTMA5,xmaLen)
haTEMA2 = 3*haTMA4-3*haTMA5+haTMA6

diff1 = haTEMA1 - haTEMA2

zeroHAtemaa = haTEMA1 + diff1

Dim zeroLagTPP As BarArray

Dim tp, tma1, tma2, tma3, tpTEMA1, tma4, tma5, tma6, tpTEMA2, diff2
tp = (H+L+C)/3
tma1 = XAverage(tp,xmaLen)
tma2 = XAverage(tma1,xmaLen)
tma3 = XAverage(tma2,xmaLen)
tpTEMA1 = 3*tma1-3*tma2+tma3
tma4 = XAverage(tpTEMA1,xmaLen)
tma5 = XAverage(tma4,xmaLen)
tma6 = XAverage(tma5,xmaLen)
tpTEMA2 = 3*tma4-3*tma5+tma6
diff2 = tpTEMA1 - tpTEMA2
zeroLagTPP = tpTEMA1 + diff2

Dim k1, k2,k3,k4,k5,k6

Dim zeroLdif,upw,dnw
Dim dtr As BarArray
Dim utr As BarArray
Dim k1k2 As BarArray
Dim k4k5 As BarArray
Dim keepA As BarArray
Dim keepB As BarArray
Dim res As BarArray
zeroLdif = zeroLagTPP - zeroHAtemaa
k1 = IIF(haCL >= haO Or haCL[1] >= haO[1],1,0)
k2 = IIF(zeroLdif >= 0,1,0)
k1k2 = IIF(k1 = 1 Or k2 = 1,1,0)
keepA = IIF(k1k2 = 1 Or (k1k2[1] = 1 And (C>=O Or C>C[1])),1,0)
k3 = IIF(Abs(C-O)<(H-L)*0.35 And H >= L[1],1,0)
utr = IIF(keepA = 1 Or (keepA[1] = 1 And k3 = 1),1,0)
k4 = IIF(haCL < haO Or haCL[1] < haO[1],1,0)
k5 = IIF(zeroLdif < 0,1,0)
k6 = IIF(Abs(C-O)<(H-L)*0.35 And L>H[1],1,0)
k4k5 = IIF(k4 = 1 Or k5 = 1,1,0)
keepB = IIF( k4k5 = 1 Or (k4k5[1] = 1 And (C<O Or C<C[1])),1,0)
dtr = IIF(keepB = 1 Or (keepB[1] = 1 And k6 = 1),1,0)
upw = IIF(dtr = 0 And dtr[1] = 1 And utr = 1,1,0)
dnw = IIF(utr = 0 And utr[1] = 1 And dtr = 1,1,0)
If BarNumber = FirstBar Then
res = startWith
Else
res = IIF(upw = 1,1,IIF(dnw = 1,0,res[1]))
End If
plot1(res)

If res = 1 Then
barcolor(0) = vbGreen
Else
barcolor(0) = vbRed
End If
End Sub

--Richard Denning
For TradersStudio
richard.denning@earthlink.net

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STRATASEARCH: HEIKIN-ASHI CANDLESTICK OSCILLATOR
In "Trading With The Heikin-Ashi Candlestick Oscillator" in this issue, author Sylvain Vervoort
gives us a helpful way to trade candlestick patterns. Using the traditional heikin-ashi pattern as a
base, we have a complete indicator that provides a good foundation for further exploration.
Using the H indicator on its own, the results proved to be a good starting point. The indicator
did a good job of letting the winning trades continue while cutting the losing trades short. The
system also produced a large number of trades, which is helpful for additional filtering. However,
profitability per trade was rather low, running about 40% for the N 100 and S&P 500
components from 2004 to 2007.
In a separate test, the H was run alongside a variety of supporting trading rules. In just a short
time, we were able to improve profitability per trade, increase the returns, and cut the holding
periods nearly in half. Thus, the Haco can greatly benefit from the use of supporting indicators.
As with all other Traders' Tips, additional information, including plug-ins, can be found in the
shared area of the StrataSearch user forum. This month's plug-in contains a number of prebuilt
trading rules that will allow you to include this indicator in your automated searches. Simply
install the plug-in and let StrataSearch identify the benefits of using this indicator alongside other
trading rules.
See Figure 9 for a sample chart.

FIGURE 9: STRATASEARCH, HACO. In the center panel, green

identifies long positions while red identifies short positions.

Editor's note: The Strata-Search code is not shown here but can be found at our website at
www.traders.com in the Traders' Tips area.
--Pete Rast
Avarin Systems, Inc.
www.StrataSearch.com

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WORDEN BROTHERS STOCKFINDER: HEIKIN-ASHI CANDLESTICK

OSCILLATOR
Note: To use the indicators, rules, and charts discussed here, you will need the StockFinder
software. Go to www.StockFinder.com to download the software and get a free trial.
The heikin-ashi candlestick oscillator (H ) from Sylvain Vervoort's article in this issue can be
implemented in StockFinder using RealCode.
RealCode is based on the Microsoft Visual Basic.Net framework and uses the Visual Basic (VB)
language syntax. RealCode is compiled into a .Net assembly and run by our StockFinder
application. Unlike the scripting language that other trading applications use, RealCode is fully
compiled and runs at the same machine-language level as the StockFinder application itself. This
 gives you unmatched performance running at the same speed as if we (the developers of
StockFinder) wrote the code ourselves, with the flexibility of "run-time development and
assembly" that you get by writing your own custom code.

FIGURE 10: STOCKFINDER, HACO. Long positions are displayed

with a green background and short positions in red. To load this
chart in StockFinder, click the Shared Items button on the toolbar
and search for "HACO" on the Charts tab.

The H chart in Figure 10 can be added to your layout by clicking the Share menu in
StockFinder and searching for "H " on the chart tab. This chart implements Sylvain Vervoort's
heikin-ashi candlestick oscillator (H ) as a StockFinder rule used to shade the chart's
background either red or green.
Eight additional rules are also included on this chart that implement the four stages of the green
candle and red candle expert functions presented in the article. You can drag and drop these rules
onto the price history plot to paint it the correct colors using these conditions. You can also choose
which rule-based paint brushes are applied as well as the priority of how these rules are applied in
the colors tab of price history. This allows you to follow along with the article to see how the
various steps in the evolution of the green candles and red candles from the article would affect
how the symbol you are looking at would be colored.
Here's an example of the RealCode used to implement the first version of the green candle as a
rule in StockFinder:
RealCode:
'Green Candle v1
Static haOpen As Single
Static haC As Single
If isFirstBar Then
haOpen = Price.Open
Else
haOpen = (haOpen+(Price.Open(1)+Price.High(1)+Price.Low(1)+Price.Last(1))/4)/2
End If
haC = ((Price.Open+Price.High+Price.Low+Price.Last)/4+haOpen+ _
System.Math.Max(Price.High,haOpen)+System.Math.Min(Price.Low,haOpen))/4
If haC >= haOpen Then Pass

For more information or to start your free trial, please visit www.StockFinder.com.
--Bruce Loebrich and Patrick Argo
Worden Brothers, Inc.

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VT TRADER: HEIKIN-ASHI CANDLESTICK OSCILLATOR

Our Traders' Tip is inspired by "Trading With The Heikin-Ashi Candlestick Oscillator" by Sylvain
Vervoort in this issue. In the article, Vervoort introduces an indicator called the heikin-ashi
candlestick oscillator (H ). The H is the final digital representation (0/1 oscillator) of a
complex four-step process that Vervoort applies to the basic heikin-ashi candlesticks in an effort to
achieve more uniform uptrend and downtrend heikin-ashi candlestick patterns. A H reading of
"1" indicates a green modified HA candle while a reading of "0" indicates a red modified HA
candle.

FIGURE 11: VT TRADER, HACO. Here is the HACO attached to a

GBP/USD 30-minute candle chart.

We'll be offering the H indicator for download in our client forums. The VT Trader code and
instructions for creating the H indicator are as follows:
The heikin-ashi candlestick oscillator

1. Navigator Window>Tools>Indicator Builder>[New] button

2. In the Indicator Bookmark, type the following text for each field:

Name: TASC - 12/2008 - Heikin-Ashi Candlestick Oscillator (HACO)

Short Name: vt_HACO

Label Mask: TASC - 12/2008 - Heikin-Ashi Candlestick Oscillator (%avg%,%avgdn%)

Placement: New Frame

Inspect Alias: HACO

3. In the Input Bookmark, create the following variables:

[New] button... Name: avg , Display Name: Up TEMA average , Type: integer , Default: 34

[New] button... Name: avgdn , Display Name: Down TEMA average , Type: integer, Default: 34

4. In the Output Bookmark, create the following variables:

[New] button...

Var Name: HACO

Name: (HACO)

Line Color: black

Line Width: thin

 Line Type: solid

5. In the Formula Bookmark, copy and paste the following formula:

{Provided By: Capital Market Services, LLC & Visual Trading Systems, LLC (c) Copyright 2008}

{Description: December 2008 Issue - Trading with the Heikin-Ashi Candlestick Oscillator by Sylvain Vervoort}

{vt_HACO Version 1.0}

{Uptrend}

UpTMA1:= vt_TEMA(haC,avg,E);

UpTMA2:= vt_TEMA(UpTMA1,avg,E);

UpDiff:= UpTMA1 - UpTMA2;

UpZlHa:= UpTMA1 + UpDiff;

UpTMA1_2:= vt_TEMA((H+L)/2,avg,E);

UpTMA2_2:= vt_TEMA(UpTMA1_2,avg,E);

UpDiff_2:= UpTMA1_2 - UpTMA2_2;

UpZlCl:= UpTMA1_2 + UpDiff_2;

UpZlDif:= UpZlCl - UpZlHa;

Upkeep1:= SignalHold(haC>=haO,2);

Upkeep2:= UpZlDif>=0;

Upkeeping:= (Upkeep1 OR Upkeep2);

Upkeepall:= Upkeeping OR (Ref(Upkeeping,-1) AND (C>=O) OR C>=Ref(C,-1));

Upkeep3:= (Abs(C-O)<(H-L)*0.35 AND H>=Ref(L,-1));

Uptrend:= UpKeepall OR (Ref(Upkeepall,-1) AND Upkeep3);

{Downtrend}

DownTMA1:= vt_TEMA(haC,avgdn,E);

DownTMA2:= vt_TEMA(DownTMA1,avgdn,E);

DownDiff:= DownTMA1 - DownTMA2;

DownZlHa:= DownTMA1 + DownDiff;

DownTMA1_2:= vt_TEMA((H+L)/2,avgdn,E);

DownTMA2_2:= vt_TEMA(DownTMA1_2,avgdn,E);

DownDiff_2:= DownTMA1_2 - DownTMA2_2;

DownZlCl:= DownTMA1_2 + DownDiff_2;

 DownZlDif:= DownZlCl - DownZlHa;

Downkeep1:= SignalHold(haC<haO,2);

Downkeep2:= DownZlDif<0;

Downkeep3:= Abs(C-O)<(H-L)*0.35 AND L<=Ref(H,-1);

Downkeeping:= Downkeep1 OR Downkeep2;

Downkeepall:= Downkeeping OR (Ref(Downkeeping,-1) AND (C<O) OR C<Ref(C,-1));

Downtrend:= If(DownKeepall OR (Ref(Downkeepall,-1) AND Downkeep3)=1,1,0);

{HACO}

upw:= Downtrend=0 AND Ref(Downtrend,-1) AND Uptrend;

dnw:= Uptrend=0 AND Ref(Uptrend,-1) AND Downtrend;

HACO:= If(upw,1,If(dnw,0,PREV(0)));

6. Click the "Save" icon to finish building the HACO indicator.

To attach the indicator to a chart, activate the chart window's contextual menu and select "Add
Indicator." Select "12/2008 - Heikin-Ashi Candlestick Oscillator (HACO)" from the indicator list
and click [Add].
To learn more about VT Trader, visit www.cmsfx.com.
--Chris Skidmore
Visual Trading Systems, LLC (courtesy of CMS Forex)
(866) 51-CMSFX, trading@cmsfx.com
www.cmsfx.com

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NINJATRADER: HEIKIN-ASHI CANDLESTICK OSCILLATOR

The Haco indicator as discussed in "Trading With The Heikin-Ashi Candlestick Oscillator" by
Sylvain Vervoort in this issue is available for download at
www.ninjatrader.com/SC/December2008SC.zip.
Once it's been downloaded, from within the NinjaTrader Control Center window, select the menu
File > Utilities > Import NinjaScript and select the downloaded file. These indicators are for
NinjaTrader Version 6.5 or greater.
You can review the indicator's source code by selecting the menu Tools > Edit NinjaScript >
Indicator from within the NinjaTrader Control Center window and selecting H .
NinjaScript indicators are compiled D s that run native, not interpreted, which provides you with
the highest performance possible. See Figure 12 for a sample chart.
 FIGURE 12: NINJATRADER, HACO. This NinjaTrader screenshot
shows the HACO indicator applied to a one-minute chart of the
December 2008 S&P 500 emini contract.

--Raymond Deux & Josh Peng

NinjaTrader, LLC
www.ninjatrader.com

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TRADE IDEAS: STOCK MOVEMENT VS. MARKET MOVEMENT

"It's not the strongest of the species [traders] that survive, nor the most intelligent,
but the ones most responsive to change." --Charles Darwin
For this month's Traders' Tips, we've provided a strategy that came from our support forum. We
learned that by changing the original intent of a strategy to go long and instead short-sell each
opportunity, we turned a dismal strategy into a profitable one that the market has been rewarding
for a while. The strategy is based on the Trade Ideas inventory of alerts and filters and is
backtested with trading rules modeled in The OddsMaker.
The strategy is simple: Find stocks with prices that are rising faster than the market and go long on
those, and find stocks that are falling faster than the market and short those. That part is easy; the
hard part is not overstaying your welcome and getting out before these trends reverse. So we made
the strategy to be when any long stock no longer trades above its 50-day moving average, sell it.
This strategy also appears on the Trade Ideas blog at http://marketmovers.blogspot.com/.

FIGURE 13: TRADE IDEAS, STOCK STRATEGY. Here is the Trade

Ideas PRO configuration for the strategy.

Description: "SHORT - Rising Faster Than Market Above 50 Day SMA"

Source: email support question based on an online article by Jim Van Meerten,
MSN Money:
http://articles.moneycentral.msn.com/Investing/StrategyLab/Rnd18/P2/Strategy.aspx

Provided by:
Trade Ideas (copyright (c) Trade Ideas LLC 2008). All rights reserved. This sample
Trade Ideas strategy is for educational purposes only and may be modified to
further reflect a trading plan. Remember these are sketches meant to give an
idea how to model a trading plan. Use this 'as is' or modify it as many others
do. Know, however, that Trade-Ideas.com and all individuals affiliated with this
site assume no responsibilities for trading and investment results.

Copy this string directly into Trade-Ideas PRO using the "Collaborate" feature
(right-click in any strategy window)(spaces represent an underscore if typing):
http://www.trade-ideas.com/View.php?O=20000000000000000000000_1D_0&QRUI=2&MaxDNbbo=
0.1&MaxSpread=10&MinDia15=0.1&MinMA50R=1&MinPUp15=0.2&MinPrice=5&MinQqqq15=
0.1&MinSpy15=0.1&MinVol=500000&MinVol15=200&WN=SHORT+-+Rising+Faster+Than+Mkt+Above
+50+Day+SMA+-+Hold+120m+-+Start+30+After+Open+End+30+B4+-+SL+0.75+-+Exit+on+50+SMA+
Cross+

FIGURE 14: TRADE IDEAS, STOCK STRATEGY. Here is the

OddsMaker backtesting configuration for the strategy.

The strategy's filters stipulate that all three major indices (N , S&P, D ) must be up by
0.1% over a 15-minute period. Then, in order to ensure all the stocks are rising faster than the
markets, candidates must be up 0.2% over the last 15-minute period. Finally, the strategy stipulates
that all stocks must be one volatility bar above the 50-day S . This allows us to honor the exit
strategy of leaving when the stock dips below the 50 day S .
Given these filtered conditions, the strategy only produces an alert if a stock in this universe starts
running 200% (2 as a ratio) faster than normal.
Where one alert and 10 filters are used with the following specific settings:
Running Up Intermediate: 2 (run rate ratio)
Min Price = 5 ($)
Max Spread = 5 (pennies)
Min Distance from Inside Market = 0.1 (%)
Min Daily Volume = 500,000 (shares/day)
Min Volume 15 Minute Candle = 200 (%)
Min Up 15 Minute Candle = 0.2 (%)
Min NASDAQ Up 15 Minute Candle = 0.1 (%)
Min S&P Up 15 Minute Candle = 0.1 (%)
Min Dow Up 15 Minute Candle = 0.1 (%)
Min Up from 50 Day SMA = 1 (Volatility Bars)

The definitions of these filters appear here: http://www.trade-ideas.com/Help.html.

The problem with this strategy is that currently, the market is not rewarding the signal to go long
— it's actually rewarding the signal as a short opportunity. The OddsMaker summary provides the
evidence. Here is what the OddsMaker reported given the following trade rules:
On each alert, sell short
Buy back the stock if price moves up $0.75
Exit if the stock crosses the 50-day MA
Otherwise, hold the stocks for no more than 120 minutes
 Start trading only after the first 30 minutes of the session
Stop new trades 30 minutes before the end of the session.

The results (last backtested for the period of 9/23/2008 to 10/14/2008) are as shown in Figure 15.
Learn how to interpret these backtest results from The OddsMaker by reading the user's manual at
http://www.trade-ideas.com/OddsMaker/Help.html.

FIGURE 15: TRADE IDEAS, STOCK STRATEGY. Here are the results
from the OddsMaker backtesting results for "Over Extended Up
Move."

--Dan Mirkin, dan@trade-ideas.com

Trade Ideas, LLC
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Originally published in the December 2008 issue of Technical Analysis of S C

magazine. All rights reserved. © Copyright 2008, Technical Analysis, Inc.

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