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Strategies & Market Trends : Befriend the Trend Trading -- Ignore unavailable to you. Want to Upgrade?

To: Ken Adams who wrote (6867)	5/7/2000 6:46:00 PM
From: KipferlMeister	Read Replies (1) \| Respond to of 39683

Ken, Could you please expand a bit on how OBV generates your buy/sell signals? For instance, working from the Ask Research set-up you referenced, what change in OBV would have prompted you to go long the second trade and short the third exactly at those moments? I've always discounted the value of OBV since studies have shown that it takes appreciably more volume to move a stock up than down, rendering OBV divergences meaningless. But I'd love a reason to reconsider my take on the indicator. Thanks... -Michael

To: Ken Adams who wrote (6867)	5/8/2000 9:32:00 AM
From: Dr. Stoxx	Respond to of 39683

Ken, No reason to feel bad about suggesting changes to the system for improvement. And your results are certainly an improvement. My problem, in looking at the same chart, is seeing clearly OBV buy and sell signals. As you know, with OBV there is no "overbought" or "undersold" line. And while I see where trendlines would give about 3 or 4 clear signals (where a trendline connecting highs gets crossed during a downtrend, e.g.), the drawing of trendlines can be a very subjective business indeed. And it requires a waiting period before each trade so that the current pattern can be established. Each new break establishes a new trend, which cannot be plotted until enough data is on the screen. What I like about the MA crossover signal is that it is 100% objective. No questions asked. You look at the 5MA and at the 8MA, and you trade in the direction of greater figure (long if 5, short if 8). What I don't like, and here is where OBV can really be helpful, I think, is that it sometimes gets us into false swings, and too often leaves too much money on the table... ...but having said that, no system can always predict exact tops and bottoms. TC