Traders.com

VT TRADER: TREND, MOMENTUM, VOLATILITY, AND VOLUME (TMV)

Our Traders’ Tip this month is based on Barbara Star’s article in this issue, “Trade Breakouts And Retracements With TMV.”

This trading system template based on the one described in Star’s article combines trend, momentum, and volatility indicators into an easy-to-use format, providing the trader with a multidimensional perspective of price behavior.

Our version of the TMV includes Keltner bands, CCI, and ADX. The volume oscillator was not included. Since the TMV is an analytic template made up of a series of indicators, traders are encouraged to experiment with their own mix of indicators. For additional information regarding the use of TMV, please refer to Star’s article.

We’ll be offering the TMV analytic template for download in our VT client forums at http://forum.vtsystems.comalong with hundreds of other precoded and free indicators and trading systems. The VT Trader step-by-step instructions for recreating this analytic template are as follows:

1. Ribbon → Technical Analysis menu → Trading Systems group → Trading Systems Builder command → [New] button
2. In the General tab, input the following text for each field:
   
   

   Name: TASC - 02/2012 - TMV Analytic Template
   Function Name Alias: tasc_TMVTemplate
   Label Mask: TASC - 02/2012 - TMV Analytic Template
   

3. In the Input Variable(s) tab, set up the following variables:
   
   

   [New] button...
   Name: KcPr
   Display Name: Keltner Channel Periods
   Type: integer
   Default: 13
   
   [New] button...
   Name: cciperiods
   Display Name: CCI Periods
   Type: integer
   Default: 13
   
   [New] button...
   Name: AdxPeriods
   Display Name: ADX Periods
   Type: integer
   Default: 10
   

4. In the Output Variable(s) tab, set up the following variables:
   
   

   [New] button...
   Var Name: MidKC
   Name: Middle Keltner Channel
   * Checkmark: Indicator Output
   Select Indicator Output Tab
   Line Color: dark blue
   Line Width: 1
   Ling Style: dashed
   Placement: Price Frame
   [OK] button...
   
   [New] button...
   Var Name: UpperKC
   Name: Upper Keltner Channel
   * Checkmark: Indicator Output
   Select Indicator Output Tab
   Line Color: purple
   Line Width: 1
   Ling Style: solid
   Placement: Price Frame
   [OK] button...
   
   [New] button...
   Var Name: LowerKC
   Name: Lower Keltner Channel
   * Checkmark: Indicator Output
   Select Indicator Output Tab
   Line Color: purple
   Line Width: 1
   Ling Style: solid
   Placement: Price Frame
   [OK] button...
   
   [New] button...
   Var Name: CCIndex
   Name: CCIndex
   * Checkmark: Indicator Output
   Select Indicator Output Tab
   Line Color: red
   Line Width: 2
   Ling Style: histogram
   Placement: Additional Frame 1
   [OK] button...
   
   [New] button...
   Var Name: CCIUpExtreme
   Name: CCIUpExtreme
   * Checkmark: Indicator Output
   Select Indicator Output Tab
   Line Color: black
   Line Width: 1
   Ling Style: dashed
   Placement: Additional Frame 1
   [OK] button...
   
   [New] button...
   Var Name: CCIDownExtreme
   Name: CCIDownExtreme
   * Checkmark: Indicator Output
   Select Indicator Output Tab
   Line Color: black
   Line Width: 1
   Ling Style: dashed
   Placement: Additional Frame 1
   [OK] button...
   
   [New] button...
   Var Name: CCIZero
   Name: CCIZero
   * Checkmark: Indicator Output
   Select Indicator Output Tab
   Line Color: black
   Line Width: 1
   Ling Style: dashed
   Placement: Additional Frame 1
   [OK] button...
   
   [New] button...
   Var Name: AdxPriceRising
   Name: AdxPriceRising
   * Checkmark: Highlights Enabled
   Select Highlights Tab
   Color: green
   [OK] button...
   
   [New] button...
   Var Name: AdxPriceFalling
   Name: AdxPriceFalling
   * Checkmark: Highlights Enabled
   Select Highlights Tab
   Color: pink
   [OK] button...
   

5. In the Formula tab, input the following formula via copy and paste:
   
   

   {Keltner Channels}
   
   MidKC:= Mov(TP(),KcPr,S);
   UpperKC:= MidKC + Mov((H-L),KcPr,S); 
   LowerKC:= MidKC - Mov((H-L),KcPr,S);
   
   {Commodity Channel Index}
   
   CCIndex:= CCI(cciperiods);
   CCIUpExtreme:= 100;
   CCIDownExtreme:= -100;
   CCIZero:= 0;
   
   {Average Directional Movement Index (ADX)}
   
   TH:= if(Ref(C,-1)>H,Ref(C,-1),H);
   TL:= if(Ref(C,-1)<L,Ref(C,-1),L);
   TR:= TH-TL;
                            
   PlusDM:= if(H>Ref(H,-1) AND L>=Ref(L,-1), H-Ref(H,-1),
            if(H>Ref(H,-1) AND L<Ref(L,-1) AND H-Ref(H,-1)>Ref(L,-1)-L, H-Ref(H,-1),
            0));
   
   PlusDI:= 100 * Wilders(PlusDM,AdxPeriods)/Wilders(Tr,AdxPeriods);
                          
   MinusDM:= if(L<Ref(L,-1) AND H<=Ref(H,-1), Ref(L,-1)-L,
             if(H>Ref(H,-1) AND L<Ref(L,-1) AND H-Ref(H,-1)<Ref(L,-1)-L, Ref(L,-1)-L,
             0));
   
   MinusDI:= 100 * Wilders(MinusDM,AdxPeriods)/Wilders(Tr,AdxPeriods);
                            
   DIDif:= Abs(PlusDI-MinusDI);
   DISum:= PlusDI + MinusDI;
      
   _ADX:= 100 * Wilders(DIDif/DISum,AdxPeriods);
   
   {ADX/Price Paint Bars Conditions}
   
   AdxPriceRising:= _ADX>ref(_ADX,-1) AND C>Mov(C,8,S);
   AdxPriceFalling:= _ADX>ref(_ADX,-1) AND C<Mov(C,8,S);
   

6. Click the “Save” icon to finish building the trading system.

To attach the trading system to a chart (Figure 14), select the “Add trading system” option from the chart’s contextual menu, select “TASC - 02/2012 - TMV Analytic Template” from the trading systems list, and click the [Add] button.

To learn more about VT Trader, visit www.vtsystems.com.

Risk disclaimer: Forex trading involves a substantial risk of loss and may not be suitable for all investors.

FIGURE 14: VT TRADER, ADX, CCI, AND KELTNER BANDS. Here is the TMV template attached to a EUR/USD one-hour candlestick chart.

—Chris Skidmore
Visual Trading Systems, LLC
212 871-1747,  This email address is being protected from spambots. You need JavaScript enabled to view it. , www.vtsystems.com