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Strategies & Market Trends : Technical Analysis- Indicators & Systems
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To: Bill Sandusky who wrote (1913)7/6/1997 8:04:00 PM
From: wolfgangl   of 3325
 
Bill,

scaling should not be a problem. There is a mathematical standard procedure called Normalization. It works like that:

you take the entire range of values of the indicator, say -2400 to +850. That is 2400 + 850 = 3250 in total. Hence you have to add at least 2400 to each indicator value in order to lift all values into the positive range. In practise you would choose say 3000 in order to be on the sure side. In this case the new range would be from 600 to 3850. Then you divide all values by 3850. You end up with values that range from 0.1558 (or zero approximately)to 1. If you want the normalized range to be from 0 to 1 you would subtract the former value from 1. This difference you would again subtract from 1. Then the new indicator would run from 0 to 1 in a normalized range. (I hope I got it right. I should have a blackboard to write on)

Wolfgang
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