Trade analysis tools
Introduction
This applet uses a range of analysis tools to
analyse and to some extent permit a subjective projection of the prices of
shares, etc., into the future. There is no tool that can predict the future of
prices with certainty, the best that can be hoped is to find a tool that will
provide a probability greater than 50% (a random choice) of what is going to
happen, so that when a decision to buy or sell a stock or share, etc. is made,
there is a higher probability of
making the correct decision, rather than making a “blind”
guess. Trade analysists perhaps think that the more tools that you can use on a
problem, the greater the probability of making a correct decision. Personally,
I do not think this has any validity, as many of the tools that technicians use
are different variations of the same theme. Trade analysis, as a subject, seems
to be sadly lacking in its ability to put a probability of success on any of
the methods or tools that it contains. Not that this applet can do any better.
The thinking, so it appears, by a large number of technicians at the present
time, is that if you can understand and apply trade analysis then you are in a
better position of making a correct decision than your counterparts who do not
know the subject. This may be true, but by how much this position of making a
correct decision is better, no present tool nor any person can really answer. I
draw this observation to the reader’s attention in the hope that some
time in the future the subject of trade analysis will be placed on a better
statistical footing, with appropriate justification of the statistics used, by
a new generation of technicians than it is at the present time.
My interest in considering a selection of tools
for this applet stems mainly from the Fibonacci series and the subsequent
derivation of Fibonacci levels. The Fibonacci series contains numbers that
occur in nature and may be likened to the naturally occuring constant PI or the
exponential e. In addition and more to the point, the Fibonacci levels are
levels that appear to be levels that a forced process reaches rather than that
which a random process reaches. Such forced processes are those driven by
supply and demand, mass emotion, politics and naturally occuring events that we
understand to be behind market forces. Thus, if forex and other counters are
driven by forced processes they are likely candidates to be described by
Fibonacci levels. My selection of the non-Fibonacci related tools are those
that are more related to statistics and, which I believe, have a better footing
for correct decision making.
The Applet
The tools provided in this applet are:
Combinations of Fibonacci Gann angles, Levels and Time Zones
Each one of the hyperlinked tools refers to a
section which is contained within a companion document
(505k). This companion document
provides a brief description of the tools used in the applet and also provides
many links to internet sites on Fibonnacci mathematics, Elliot Wave, etc. Also,
there is a link to an accompanying applet which assists in the design of an Elliot Wave template. A table of the first
nineteen Fibonnaci levels is also provided
in a different accompanying document (83.5k).
The data files used for demonstrating these tools
are;
GBPUSDWeek, GBPUSD1 hour, GBPUSD2 hours, GBPUSD4
hours and GBPUSD1 Day.
Using the Applet
The Panel Layout
Figure 1 below, shows the panel for selecting the
data and tools and other parameters.
Figure 1 The
applet panel
The Data pull down menu
Figure 2 shows the data files that can be selected
from the pull down menu. Only one data file can be selected at any one time.
Should another data file be required then the applet must be reset by using
“Shift reload” for Netscape or “Ctrl Refresh” in
Explorer. The data file cannot be selected until markers are shown on the
screen according to Figure 3. This is because the data file loading is not
complete until these markers appear.
Figure 2 Data
pull down menu Figure
3 Marker
After the markers have appeared the data file is
selected by clicking on the file of choice in the pull down menu. The file will
load into the applet and appear as shown in Figure 4.
Figure 4 Screen
shot of applet after the data file has loaded
The Tools pull down menu
Figures 5a and 5b shows an expanded view of the
tools menu. As the list is longer than the menu can accommodate, there is a
pull-down scrollbar on the right-hand side for displaying the rest of the
tools.
Figure 5 (a)
Top portion of the tools menu (b)
Bottom portion of the tools menu
The selection with a mouse click of any one of
these tools will produce the required tool overlayed on the counter graph. A
screen shot of each of these tools, together with a description of each tool,
is shown in the companion document (505k).
The two primaries checkboxes
Figure 6 shows the Fibonacci and Gann primaries
only check boxes. These check boxes are used to reduce the number of Fibonacci
levels and the number of Gann radial when they are obstructing the counter
graph.
Figure 6 Fibonacci
and Gann primaries only checkboxes
The Grid checkbox
Figure 7 shows the grid checkbox superimposed on
the counter graph which has the grid displayed. The grid checkbox when clicked
with the mouse produces a grid so that the counter graph can be more easily
inspected. Like the counter graph, the grid is autoscaling to the particular
counter being displayed.
Figure 7 A
screen shot showing the counter graph with the grid superimposed
The Scrollbars
Figure 8 shows the two scrollbars that are used in
the Slow Stochastic Oscillator. The bottom scrollbar (%D), is used with the
slow stochastic oscillator as is the top scrollbar (MA or %K time periods). The
fast stochastic oscillator uses only the top scrollbar. The top scrollbar also
is doubled up to define the span of the moving average. This is because the
Moving Average tools (MAv.Simple and MAv.Exponential) cannot be used when using
the Stochastic Oscillator tool.
Figure 8 The
Moving Average scrollbar and the two Stochastic Oscillator scrollbars
A more full description of the function of these scrollbars is provided in the Stochastic Oscillator, Moving Average and
Exponential Moving Average
sections of the companion
document (505k).
For your comments and suggestions, mail the author: A.A.R.Townsend