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Strategies & Market Trends : Predictions + Projections -- Ignore unavailable to you. Want to Upgrade?

To: MechanicalMethod who wrote (12)	1/23/2002 5:50:40 AM
From: Steve Lee	Read Replies (1) \| Respond to of 26

22 DMA would make a bad signal line. It would always cause the next bar to suddenly snap back to the DMA, which is an unlikely scenario. Here is how a non mathematics/stats expert like me would derive the signal line: 1) Extrapolate the highs of the most recent two bars into the next bar 2) Extrapolate the lows of the most recent two bars into the next bar 3) Use the midpoint of the two results as the signal for the next bar. When working out the allowed range of the next bar, I would only use data from the previous 250 days. That should be plenty to take account of the possible variations, while also accounting for the most recent trading characteristics. I am undecided on whether to vary the range of the bar according to current volatility. I suspect doing so would give a more accurate next bar, but might have an impact on the ability to identify turns.