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Strategies & Market Trends : Technical Analysis- Indicators & Systems
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To: Paul Beattie who wrote (1595)6/17/1997 9:27:00 AM
From: Bruce A. Bowman   of 3325
 
Indicators that have different scales can't be used for crossovers to generate signals because the scales can change as the amplitudes change. What was a crossing today can move to a different day with a different scale. You'd need to lock the scale of the 2 indicators in order to keep the 2 from sliding in time as the amplitudes vary from day to day.

Without really thinking about it, one consideration might be to use log values of the indicators and another might be to attempt a conversion of both indicators to an oscillator scaled to 0/100 or -50/+50. In the first case you can rescale one of the indicators to match the other by adding coefficients to get them in the same range. The second case needs no adjustment.

Bruce
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