classical formula is:
// Classical ER
numerator = customclose - customclose[n]
for i =1 to n do
asssum = abs(customclose[i] - customclose[i-1])
next
denominator = summation[n](asssum)
ER = numerator / denominator
return ER
variabile: n - default n = 17
**
// ER squared (ER^")
// in bold character the difference
numerator = customclose - customclose[n]
for i =1 to n do
asssum = abs(customclose[i] - customclose[i-1])
next
denominator = summation[n](asssum)
ER = numerator / denominator
ER2 = ER * EXP(2) * customclose
// the addition of *customclose gives you the opportunity to compare ER with prices or any moving average.
return ER2
==> Cross of ER with levels -1, +1 is not sufficient for our purpose (several mistakes)
Crosses of ER and prices (or moving averages of them) is quite good too but, for some periods (like n <=11), could be hysterical: that could be good for intraday trading but maybe not for daily trading. (Many similarities with RSI indicator).
Not inserted in our desk, even if indicator is good.
Any source
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