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Technical Analysis Techniques

TATechnics

Technical Analysis Notes Volume 1, Issue 1, 15-05-2010

Digital Filters Newsletter Spotlight


Many of you may have come across Digital Filters during the course of Digital Filters— A small Introduction
your Technical Analysis journey. There are many Digital Filter available
A brief on new web site features
for the Metatrader platform. There are also many commercial Digital filter
available in the market. Most of these filters are based on the work done by
• Stock Scanner
Vladimir Kravchuk. He described the now well known SATL and FATL
indicators and derivatives of these Indicators. These Digital filters provide • Real Time Charts
significantly improved (in comparison with simple moving average) noise
suppression that in its turn allows reducing sharply the probability of ap- Review of Trading with KELI and VPA
pearance “false” signals for purchase and sell. Following are the main
indicators were provided by him. Soon.. On Tatechnics
FATL (Fast Adaptive Trend Line)– is formed with the digital Low pass
Filter FLF - 1. Filter FLF – 1serves to suppress noises of high frequency
and market cycles with very short periods of oscillation that can be consid-
ered as noise

SATL (Slow Adaptive Trend Line)– is formed with the digital Low Pass
Filter FLF - 2. Filter FLF – 2 serves to suppress noises and market cycles
with longer periods of oscillation.

RFTL (Reference Fast Trend Line)– support “fast” trend line

RSTL (Reference Slow Trend Line) – support “slow” trend line


EOD Stock Scanner
Continued in next page…..

More Details

Caption describing pic-


ture or graphic.

Coming Soon…
Real Time and EOD
data charts for the
S & P stocks.
Digital Indicators for Amibroker

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Technical Analysis Techniques

TATechnics

Technical Analysis Notes Volume 1, Issue 1, 15-05-2010

Digital Filters Soon.. On Tatechnics


We can calculate two momentum line based on the above Indicators as
follows

FTLM = FATL – RFTL


STLM = SATL – RSTL

In the result FTLM and STLM turn out more leveled (smoothed) and regu-
lar functions than the classical instrument Momentum, and therefore have
more forecasting value.

We can calculate two more derivative functions from the above Indicators.

One of them is the Range Bound Channel Index, RBCI.

RBCI is calculated as FATL –SATL

The other is PCCI Index (Perfect Commodity Channel Index) – is a per-


fect commodity channel index is calculated by the formula: Soon We will be providing Real
PCCI (k) = close – FATL
Time charts for the NSE futures
The PCCI is similar to the popular CCI, but considered better. stocks. The systems can be
watched in Real time !!

Vladimir proposes the following rules for developing a Trading system with the Digital filters (reproduced fro Original
Text)

• Growing SATL line is evidence of the bullish trend on the market. The point of the reversal beginning of the bear-
ish trend is considered the point of the local minimum of SATL. The point of finishing the reversal of the bearish
trend is the point where the sign of STLM changed from minus into plus

• Falling SATL line is evidence of the bearish trend on the market. The point of the bullish trend reversal beginning
is considered the point of the local SATL maximum. The point of finishing the bullish trend reversal is the point
where STLM sign changed from plus into minus.

• Close to horizontal the form of SATL is evidence of the neutral tendency.

• STLM interpretation requires special attention. Positive value of STLM is evidence of the bullish trend
and the negative one testifies the bearish trend. STLM is an advance indicator. Local minimum of STLM
always precedes the local minimum of SATL. Local maximum of STLM always precedes the local maxi-
mum of SATL. Achievement by STLM its points of extremes is necessary but insufficient condition for
the achievement by the curve of SATL the top or the bottom. Growing STLM at growing SATL is evi-
dence of the bullish trend acceleration. Horizontal and positive STLM at growing SATL is evidence of the
set bullish trend. The more absolute the value of STLM, the more potential the bullish trend has. Falling
STLM at falling SATL testifies the bearish trend acceleration.

Continued on next page...

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Technical Analysis Techniques

TATechnics

Technical Analysis Notes Volume 1, Issue 1, 15-05-2010

Digital Filters Tatechnics…. New Features ...coming soon

• Horizontal and negative STLM at growing SATL testifies Real Time charts
the bearish trend setting. The more absolute value of
STLM, the more potential the bearish trend has. Soon we will have Real Time charts for the NSE Futures
• Growing “fast” FATL trend line at the growing “slow” stocks. The systems like VPA and KELI can be monitored
SATL trend line is evidence of the strong bullish trend on in Real Time.
the market.
• Falling “fast” line of FATL at the falling “slow” line of US Market Charts
SATL is evidence of the strong bearish trend on the mar-
ket. Soon the charting tool will be available for the S&P 500
• Growing FATL line at falling SATL line is evidence of US stocks. So the VPA system and KELI will be available
either bullish correction at the bearish trend or consolida- for these stocks as well. Also Real time charts will be
tion. available.
• Falling FATL line at growing SATL line is evidence of
either bearish correction at the bullish trend or consolida- EOD Stock Scanner
tion.
• The beginning or resuming the movement in one One of the most difficult task we all face is to eye ball
direction of FATL and SATL lines give signals either many charts and do short listing of the right stocks. In
on the tendency reversal or finishing the correction order to overcome we are going to introduce a stock
and resuming price movement in the SATL direc- scanner to scan the stocks for different Trading systems
tion.
• More details can be obtained from http://www.fin-
ware.com/article1.html

The Derivative Indicators

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Technical Analysis Techniques

TATechnics

Technical Analysis Notes Volume 1, Issue 1, 15-05-2010

Review of Trades based on KELI

Let us look back and see how the KELI system performed in some of the stocks in the recent Past. First we will look at
the NIFTY EOD chart. We basically
had three Trades. In the beginning of
January we had a short trade triggered
at 5093. This trade was reversed in
February at 4880 resulting in a profit
of 213 points. The next Long trade was
again reversed at 5270 in mid April
again resulting in a profit of 390
points. The short trade was triggered
and is still in force. The current profit
is about 100 points. The overall profit
in the last 5 months would be in the
tune of 700 points.

However it is observed that KELI


works very well on the NIFTY. Also it
works well on some stocks. However
there are a few stocks in which KELI
provides too many unnecessary trades. In other words it provides many whipsaws. So it is better to check the previous
performances before one choose to trade with KELI. We are in the process of making a detailed study and provide a
list of stocks that work well with KELI system. Next let us look at the chart of HDFC Bank on a 60 min time frame.
First we had a long trade at 1990 in the last week of April and we had to close it at around 1965 resulting in a loss of
about 25 points. Then we reversed the
trade and went short at around 1965.
This trade was again reversed on the
10th of May at around 1880 resulting in
a profit of about 95 points. The long
trade initiated on the 10th May was
reversed on the 14th May at 1955
resulting in a profit approximately
about 75 points. The overall profit was
about 145 points. The KELI system is
also prone to whipsaws but aims at
minimizing losses and maximizing the
profit. As you can see the KELI system
works very well in many stocks. Soon
we will have a list of stocks that are
suited for the KELI system. Your feed-
back on the KELI system will help us
improve it further.

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