In Part 2, of Designing a Trading System in MetaStock I blanketed the way to code the primary two of the 4 main components of a mechanical access machine. I had defined the coding of charge and liquidity. In this newsletter, I will cover the steps for coding the remaining additives, fashion and volatility, into MetaStock. In the end, you will have the complete codes for a mechanical entry device.
Let's begin with trend identity. Remember, 'the fashion is your friend' whilst trading. You always need to alternate with the trend, now not against it. Think of it this way, in case you had been swimming in the sea, and were given your self caught in a rip tide, is it less complicated to swim with the current or in opposition to it? It is the equal with buying and selling with a fashion.
There are many ways to perceive developments, and it's not specially essential which approach you operate. You just want to apply one. One of my favored strategies for figuring out trending stocks is to locate shares which are buying and selling at their present day highs. You can do that by way of stipulating that the highest excessive rate must had been finished inside the closing 'x' number of days.
Once once more, the variables you use will depend upon the time frame you are buying and selling. But for this case, you need the highest excessive rate inside the closing 240 days to have passed off within the ultimate 20 days.
Using the formulation reference section within the MetaStock Programming Study Guide, you may find the syntax of the highest excessive characteristic, and then plug inside the information. Then, using the 'less than' image, you could specify the number of days need to be less than 20. In MetaStock language that might be:
HHVBars(H,240) 1.Five and
ATR(21)/Mov(C,21,S)*100 1 and
Mov(v,21,s)*C > 200000 and
HHVBars(H,240) 1.Five and
ATR(21)/Mov(C,21,S)*a hundred < 6
You now have now a workable entry system. Not handiest did you construct a robust gadget, however it additionally adheres to the KISS predominant (Keep It Simple Simon). This system can be cut and pasted into the Explorer inside MetaStock. However, the entry is handiest the start of a a success trading machine. In later parts of this collection, you will find the rest of the additives which you want to design a profitable buying and selling system.