esignal formula reference

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FORMULAS & STUDIES

THIS CHAPTER DEFINES eSignal Advanced Charting formulas and studies and provides you with the basics required to start applying formulas to eSignal Advanced Charts. It is organized into the following four sections:

– The eSignal Formula Engine and Formula Basics

– The eSignal Formula Library (descriptions of the over 50 customizable sample formulas)

– eSignal Advanced Charting Studies (descriptions of over 20 technical studies)

– eSignal Advanced GET Premium Technical Studies

The eSignal Formula EngineeSignal uses simple JavaScript language for developing custom studies, so you’ll be able to test your trading strategies on days, weeks and years of historical data. The sample formulas are written in JavaScript and are saved in plain text as .efs files in the formula folder under the eSignal directory. You can view and modify them in eSignal’s formula editor, or you can open the editor and use your knowledge of Java-

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Script to create your own custom formulas from scratch. You can also modify or cre-ate formulas in any text editor.

Formula Basics

The Lifetime of a FormulaYou create a formula when you add it to a chart. When a formula is created, a func-tion called preMain ( ) is called once for the formula and then the main ( ) function is called for each available bar. Whenever you change a formula’s properties (by select-ing Edit Studies from the Advanced Chart right-click menu), the initial formula destructs and a new formula is created that reflects your formula properties changes.

Lifetime of a Global VariableA Global variable comes to life the first time setGlobalValue(…) is called. A global variable remains available in the global variable pool until removeGlobalValue(…) is called, or when eSignal is closed.

Formula IterationThe main ( ) function is used to build individual bars and is called once for each chart bar. Bars are iterated from left to right (from the oldest to the newest bar). Whenever another tick occurs, the main ( ) function is called to iterate the most recent bar so that it is based on the latest data.

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Sample Formula The following section displays a sample formula for an RSI Color Line Bar Formula.

Comments that explain the various parts of the formula are contained within the /* */

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markers. When you open a formula in the Formula Editor Window, various compo-nents of the formula are color coded so that you can identify them more easily. We’ll discuss this in further detail later in the Formula Editor section of this appendix.

Basic Formula Elements

Punctuation MarksPunctuation marks are used in formulas to separate or group formula elements, to declare inputs or variables, to identify the end of a statement, and to include com-ments. Commonly-used punctuation marks are defined in the table below.

; A semicolon is used to end a statement

( ) Parentheses group elements so that they are calculated first. They are also placed around array elements to define them.

, Commas are used to separate inputs or variables and also separate parameters or inputs that are part of a set required by a reserved word or statement.

: Colons are used to declare the list of inputs or variables in a statement.

“ “Quotation marks define a text string

[ ] Square brackets are used to reference a value from a previous bar.

/* */ /* */ are placed around comments that you want to include in a formula (i.e. /*comment*/) and are ignored in calculating the formula

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OperatorsOperators are symbols that represent an operation. For example, * indicates multipli-cation. The following table displays common mathematical operators, their meanings and an example of each.

Mathematical

Operator Meaning Example

+ Addition A+B

++ * Add one to the operand and return a value. If used postfix, with opera-tor after operand (for example, x++), then it returns the value before incrementing. If used prefix with operator before operand (for example, ++x), then it returns the value after incrementing.

if x = 3, then y= x++ sets y to

3 and increments x to 4. If x is 3,

then the statement y = ++x

increments x to 4 and sets y to 4.

- Subtraction A-B

-- Subtract 1 from var-- or --var This operator subtracts one from its operand and returns a value. If used postfix (for example, x--), then it returns the value before decrement-ing. If used prefix (for example, --x), then it returns the value after decrementing.

if x is three, then the statement y = x-- sets y to 3 and decre-

ments x to 2. If x is 3, then the

statement y = --x decre-

ments x to 2 and sets y to 2.

* Multiplication A*B

/ Division A/B

% Percentage 10%

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String OperatorsString Operators are used to link two text expressions or strings as detailed in the table below.

Relational OperatorsRelational operators are used to compare the value of two operands.

+ Used to link two text expressions together in a series

+= Can also be used to link strings. For example, if the variable mystring has the value "alpha," then the expression mystring += "bet" evaluates to "alphabet" and assigns this value to mystring.

== Equal, Returns true if the operands are equal. 3 == var1

!= Not equal (!=) Returns true if the operands are not equal. var1!= 4

> Greater Than. Returns true if left operand is greater than right operand. var2 > var1

>= Greater Than or Equal to. Returns true if left operand is greater than or equal to right operand. var2 >= var1var1 >= 3

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Assignment OperatorsAn assignment operator assigns a value to its left operand based on the value of its right operand.

The basic assignment operator is equal (=), which assigns the value of its right oper-and to its left operand. That is, x = y assigns the value of y to x. Additional assign-ment operators are shorthand for standard operations, as shown below:

< Less Than. Returns true if left operand is less than right operand. var1 < var2

<= Less Than or Equal to. Returns true if left operand is less than or equal to right operand. var1 <= var2var2 <= 5

= Equals Assigns the value of the second operand to the first operand

+= x += yx = x + y

Adds 2 numbers and assigns the result to the first.

-= x -= y x = x - y

Subtracts 2 numbers and assigns the result to the first.

*= x *= y x = x * y

Multiplies 2 numbers and assigns the result to the first

/= x /= y x = x / y

Divides 2 numbers and assigns the result to the first

%= x%= y x = x% y

Computes the modulus of two numbers and assigns the result to the first.

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&= x &= yx = x & y

Performs a bitwise AND and assigns the result to the first operand.

^= x^=y

x = x ^ y

Performs a bitwise XOR and assigns the result to the first operand.

|= x|= y

x = x | y

Performs a bitwise OR and assigns the result to the first operand.

<<= x <<= y

x = x << y

Performs a left shift and assigns the result to the first operand

>>= x >>= y

x = x >> y

Performs a sign-propagating right shift and assigns the result to the first operand

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Bitwise OperatorsBitwise operators treat their operands as a set of bits (zeros and ones), rather than as decimal, hexadecimal, or octal numbers. For example, the decimal number nine has a binary representation of 1001. Bitwise operators perform their operations on such binary representations, but they return standard JavaScript numerical values.

&

a&b

Returns a one in each bit position if bits of both operands are ones.

^a^b

Returns a one in a bit if bits of either operand is one.

|a|b

Returns a one in a bit position if bits of one but not both operands are one.

~ Flips the bits of its operand.example: ~ a

<< Shifts a in binary representation b bits to left, shifting in zeros from the right. example: a<< b

>> a >> b

Shifts a in binary representation b bits to right, discarding bits shifted off.

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Logical OperatorsLogical operators take Boolean (logical) values as operands and return a Boolean value.

Reserved Words/Statements

&& expr1 && expr2 Returns expr1 if it converts to false. Otherwise, returns expr2.

|| expr1 || expr2 Returns expr1 if it converts to true. Other-wise, returns expr2

! !expr If expr is true, returns false; if expr is false, returns true.

Break Statement that terminates the current while or for loop and transfers pro-gram control to the statement following the terminated loop.

Comments Notations by the author to explain what a script does. Comments are ignored by the interpreter.

Continue Statement that terminates execution of the block of statements in a while or for loop, and continues execution of the loop with the next iteration.

Do…while Executes its statements until the test condition evaluates to false. State-ment is executed at least once

For Statement that creates a loop that consists of three optional expressions, enclosed in parentheses and separated by semicolons, followed by a block of statements executed in the loop.

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VariablesVariables are placeholders that hold a value that is subject to change. Once you define and assign a value to a variable, you can reference it throughout a formula to perform a calculation.

Sample Variable

var vValue = call("/library/RSIStandard.efs", nInputLength)

You declare a variable by putting var in front of it. In the above statement, the vari-able has been declared as vValue (var vValue).

The variable var v Value is then assigned the value call ("/library/RSIStan-dard.efs", nInputLength) which calls the RSIStandard.efs formula from the eSig-

For…in Statement that iterates a specified variable over all the properties of an object. For each distinct property, JavaScript executes the specified statements.

Function Statement that declares a JavaScript function name with the specified parameters. Acceptable parameters include strings, numbers, and objects.

If…else Statement that executes a set of statements if a specified condition is true. If the condition is false, another set of statements can be executed.

Return Statement that specifies the value to be returned by a function.

Switch Allows a program to evaluate an expression and attempt to match the expression's value to a case label.

var Statement that declares a variable, optionally initializing it to a value

While Statement that creates a loop that evaluates an expression, and if it is true, executes a block of statements.

with Statement that establishes the default object for a set of statements.

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nal Formula Library, considers the number of bars used in the formula and returns the value of the Standard RSI Study.

For a detailed, up-to-date list of common variables used in eSignal’s Library of for-mulas, go to www.esignal.com/advcharting.

Global VariablesAll formulas can have access to global variables that are shared across/among all formulas. The following is an example of how to set up a global variable. You can access this formula by opening the formula file called Globalvaluetest.efs in the eSignal formula Editor window.

To open the Formula Editor window, select Editor from the Formulas menu, then open the file called GlobalValuetest.efs. This sample formula is shown below. It shows you how to set up a global variable. You can modify the formula to create your

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own global formula(s) and then save it under a different name to reflect the global variable you create.

Here is another example of a global variable that is used to set up a counter:

/* A global counter */

var vValue = getGlobalValue(“mycounter”);

if(vValue != null) {

setGlobalValue(“mycounter”, vValue+1);

} else {

setGlobalValue(“mycounter”, 1);}

To get further details about global variable properties, the methods used to set them up and to view a list of common global variables, go to www.esignal.com/advchart-ing.

Working With Dates & TimesIf you write your own formulas or modify one from the eSignal formula library, you’ll need to know how to work with dates and times.

Date Functions allow you to work with dates while time functions let you work with time.

Constructors The following is an example of how to construct date objects that can be used to get the new date and/or time.

var newDateObject = new Date();

var newDateObject = new Date(dateValue);

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var newDateObject = new Date(year, month, day, [hours], [minutes], [seconds], [mil-liseconds]);

var newDateObject = new Date(year, month, day);

var newDateObject = new Date(year, month, day, hour, minutes, seconds);

If dateValue is a numeric value, it represents the number of milliseconds since Janu-ary 1, 1970 00:00:00. The ranges of dates is approximately 285,616 years from either side of midnight. Negative numbers indicate dates prior to 1970.

Year: The full year (1980).

Month: 0-11 (January to December)

Day: 1-31

Hour: 0-23

Minutes: 0-59

Seconds: 0-59

Milliseconds: 0-999

Syntax Used to Access the Date ObjectOnce the date object is constructed, methods can be accessed by the following syn-tax:

var today = new Date();

var h = today.getHours();

var s = today.toString();

Local Time is defined as: the time on the computer from where the script is exe-cuted.

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UTC (Universal Coordinated Time) refers to the time as set by the World Time Standard. Also known as GMT (Greenwich Mean Time).

Date MethodsThe following is an example of a method used to get the date of an object:

gated( ) - Returns the day of the month of the date object according to local time.

gated( ) returns a value between 1 and 31.

var today = new Date( );

var date = “The Date is:” + today.getMonth( );

date += “/” + today.getDate( );

date += “/” + today.getFullYear( );

For a listing of other Date Function methods, refer to www.esignal.com/advcharting.

Time FunctionsThe following is an example of a method used to get the time of a particular variable.

teatime( ) – Returns the number of milliseconds since 1/1/1970 00:00:00 according to local time. Negative numbers indicate a date prior to 1/1/1970.

Units

1 second = 1000 milliseconds.

1 minute = 60 seconds * 1000 milliseconds = 60,000 ms

1 hour = 60 minutes * 60 seconds *1000 milliseconds = 3,600,000 ms

1 day = 24 hours * 60 minutes * 60 seconds * 1000 milliseconds = 86,400,000 ms

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var today = new Date();

var days = Math.round(today.getTime( ) / 86400000) + “days elapsed since 1/1/1970”;

For a listing of other time properties and functions, go to www.esignal.com/advchart-ing.

Color Functions The Color object is a static class meaning that all methods and properties are fixed. The Color class can not be created using the new operator. If the Color class is con-structed, an error will occur.

Color Properties You may want to define the color of the bars a formula draws on an Advanced Chart. The following is an example of how to set the bar color to white.

white – RGB(0xFF, 0xFF, 0xFF)

setBarFgColor(Color.white)

Color MethodsThe following methods are used to create a color’s RGB value:

RGB(rValue, gValue, bValue) – creates an RGB value.

rValue is a value between 0 and 255 (or 0x00 to 0xFF)

gValue is a value between 0 and 255 (or 0x00 to 0xFF)

bValue is a value between 0 and 255 (or 0x00 to 0xFF)

setBarFgColor(Color.RGB(0x00, 0xFF, 0x00) );

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For a listing of how to set other bar colors and to view more detail on color methods, go to www.esignal.com/advcharting

Using Arrays An array represents an array of elements. eSignal provides support for creation of arrays of any data type.

ConstructorsArray( )

Array(size)

Array(element1, element2, …, elementN)

Propertieslength – The number of elements in the given array object.

Array Methodsconcat(array2) Concatenates array2 into the array object.

Array a = new Array(1,2,3);

Array b = new Array(4,5,6);

a.concat(b);

Contents of a is now: { 1, 2, 3, 4, 5, 6 }

For a listing of additional array methods, go to www.esignal.com/advcharting

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The eSignal Formula LibraryCustomizable Formula Studies The basic eSignal package provides more than 50 customizable sample formulas and over 20 analytical studies that you can apply to eSignal’s Advanced Chart window. You can access studies (Add Study) and formulas (Add Formula) via the right click or Chart Options menus.

eSignal also offers a Premium Technical Analysis package from Advanced GET that provides over 15 proprietary formulas. If you subscribe to the Advanced GET ser-vice, the Advanced GET formulas are also available through the main Advanced Chart window right-click menu (select Add Advanced to access them).

eSignal Advanced Charting Formulas are stored and accessed in plain text JavaS-cript, making them easy to view and modify. You can also modify or create a formula in any text editor.

When you right-click on an Advanced Chart window and select Add Formula, you will see the formula folders shown in Figure 21-1. Each of these formula folders and the sample formulas they contain is described in the next section.

Figure 21-1. Advanced Charting Formula Folders

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HelpersThe eSignal Advanced Charting formula Library includes the following “Helper” formulas. They are called Helpers because they use color coding to make it easier for you to spot issue price trends and the entry and exit signals of various studies.

123 Down Bar Study

(file name=123down.efs)When you examine a bar chart for signs that a price trend is strengthening or weak-ening, it is helpful to visualize a series of bars that may signal up or down trends. A series of bars with lower highs and lower lows indicates a downward trend in the price of an issue.

The 123 Down Bar Study makes it easy to spot down trends by color coding 3 or more consecutive bars that have lower highs. So, if there were 7 consecutive bars with lower highs, bars 3 through 7 would be color coded green in the 123 Down Bar Study to visually display this downward price trend.

The 123 Down Bar Study gives you a quick view of bars where there are lower highs, signifying a downward price trend. The 123 Down Bar Study appears as a sep-arate study below the main area of the Advanced Chart Window.

Lower Lows also indicate a downward trend. So, you might want to plot both the 123 Down Study and the Lower Lows Price Study (appears on the main area of the chart)

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on the same chart to confirm downward price trends and to pinpoint lower low prices as shown in Figure 21-2.

Figure 21-2. 123 Down Bar and Lower Lows Price Studies

Lower Low Price Study

123 Down Bar Study

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123 Up Bar Study

(file name=123up.efs)The 123 Up Bar Study color codes 3 or more consecutive bars that have higher highs. A series of bars with higher highs may indicate an upward price trend.

You might add both the 123 Up Bar Study and a Higher High Helper formula to an Advanced Chart Window. The Higher High formula plots in the chart bar area and connects the actual Higher High prices. The 123 Up Bars would be clearly color coded as a separate study below the chart and the Higher High prices would be plot-ted over the chart making it easy to spot the Higher High bar prices and price trends.

Higher Highs Study

(file name=HH.efs)The Higher Highs Study is displayed on the main chart area and is shown as a line connecting bars with higher highs. If you run the Advanced Chart window cross hairs over the Higher High bars, your cursor window will display the actual higher high price associated with a particular bar.

Lower Low Study

(file name=LL.efs)The Lower Low Study is displayed on the main chart area as a line that connects the bars with lower lows. As you run the Advanced Chart window cross hairs over the Lower Low bars, your cursor window will display the actual lower low price associ-ated with a particular bar.

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Moving Average Cross Over Study

(file name=MA Cross Over.efs)The Moving Average Cross Over study color codes penetrations of the 50 day mov-ing average making them simple to spot. If a bar’s closing price is greater than the 50 day moving average, it is color coded green. If the bar’s close is lower than the 50 day moving average, it is color coded red.

The Moving Average Cross Over is the simplest of the moving average systems. It often makes sense to combine it with another system that identifies ranging markets, when price whipsaws back and forth across the Moving Average, resulting in losses.

Moving Average Cross Over Trading Signals

Signals are generated when price crosses the Moving Average:

Go long when the price crosses above the MA from below.

Go short when price crosses below the MA from above.

MACD Color Study

(file name=MACD Color.efs)The MACD (Moving Average Convergence/Divergence) is a trend-following momentum indicator that shows the relationship between two moving averages of prices. The MACD is the difference between a 26-day and 12-day exponential

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moving average. A 9-day exponential moving average, called the "signal" (or "trigger") line, is plotted on top of the MACD to show buy and sell opportunities.

MACD Trading Signals

The basic MACD trading rule is to sell when the MACD falls below its signal line. Similarly, a buy signal occurs when the MACD rises above its signal line. It is also popular to buy/sell when the MACD goes above/below zero.

The MACD Color Study sits below the price area of an Advanced Chart. This study makes it easier for you to see buy and sell signals because it colors bars that are below its signal line red (a sell signal) and colors bars that are above its signal line green (a buy signal).

RSI Color Line Study

(file name=rsicolorline.efs) This formula plots an RSI study where when the RSI falls below 30 (aka: oversold), the RSI line turns green. When the RSI goes above 70 (aka: overbought), the RSI line turns red indicating an overbought condition.

RSI Color Line Bar Study

(file name=rsicolorlinebar.efs)The RSI Color Line Bar Study is an RSI study with custom formatting. When the RSI goes below 30 (aka: oversold), a big green bar appears (and the RSI line turns a thicker black). When the RSI goes above 70 (aka: overbought), a red bar appears (and the RSI line turns thicker black).

The great thing about this formula is that when the RSI goes < 30 or > 70, you get a visual indicator (the red or green bar) that really stands out. The RSI Color Line Bar

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study is an enhancement over the standard RSI study, because with the standard RSI study you have to look to see if the line is < 30 or > 70, and this requires more effort.

Library Formulas

Accumulation/Distribution

(file name=AccDist.efs)Accumulation/Distribution is a momentum indicator that associates changes in price and volume and can be a leading indicator of price movements. The indicator is based on the premise that the more volume accompanying a price move, the more significant that price move will be.

When the Accumulation/Distribution moves up, it shows that an issue is being accumulated (bought), as most of the volume is associated with upward price movement. When the indicator moves down, it shows that an issue is being distributed (sold), as most of the volume is associated with downward price movement.

Traders use the Accumulation Distribution indicator to uncover divergences between volume and price activity. These divergences can indicate that a price trend is weakening.

Trading Signals

Look for divergences between price action and volume and:

1 Go long when there is a bullish divergence. A bullish divergence occurs when prices are flat to down but the Accumulation Distribution Index is moving upward.

2 Go short when there is a bearish divergence. A bearish divergence occurs when prices are moving up but the Accumulation Distribution is moving downward.

3 When using these trading signals, stop-loss orders are often placed below the most recent low (when going long) and above the latest high (when going short).

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Aroon Indicator

(file name =Aroon.efs)The Aroon indicator system was developed by Tushar Chande and can be used to determine whether a stock is trending or not and how strong the trend is.

The Aroon indicator consists of two lines, Aroon(up) and Aroon(down). The Aroon up and down lines use a single parameter (number of time periods) in the calculation.

Aroon (up) formula:

[ (# of periods) - (# of periods since highest close during that time) ] / (# of periods) x 100.

Aroon (down) formula:

[ (# of periods) - (# of periods since lowest close during that time) ] / (# of periods) x 100.

Interpretation Guidelines:

1 When Aroon(up) and Aroon(down) are moving lower in close proximity, it sig-nals a consolidation phase is under way and no strong trend is evident.

2 When Aroon(up) dips below 50, it indicates that the current trend has lost its upward momentum. Similarly, when Aroon(down) dips below 50, the current down trend has lost its momentum.

3 Aroon (up) values above 70 indicate a strong trend in the same direction as the Aroon (up or down) is under way. Values below 30 indicate that a strong trend in the opposite direction is underway.

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Aroon Oscillator

(file name =ArrOsc.efs)This formula plots the Aroon Oscillator which is a single line that is defined as the difference between Aroon(up) and Aroon(down) for a default of 14 periods.

Since Aroon(up) and Aroon(down) both oscillate between 0 and +100, the Aroon Oscillator ranges from -100 to +100 with zero serving as the crossover line.

The Aroon Oscillator signals an upward trend when it rises above zero and a down-ward trend when it falls below zero. The farther away the oscillator is from the zero line, the stronger the trend.

Aroon (down)

(file name = AroonDown.efs)Aroon (down) for a given time period is calculated by determining how much time (on a percentage basis) elapsed between the start of the time period and the point at which the lowest closing price during that time period occurred. When the stock is setting new lows for the time period, Aroon(down) will be 100. If the stock has moved higher every day during the time period, Aroon(down) will be zero.

Aroon (up)

(file name=ArronUp.efs)Aroon(up) for a given time period is calculated by determining how much time (on a percentage basis) elapsed between the start of the time period and the point at which the highest closing price during that time period occurred. When the stock is setting

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new highs for the time period, Aroon(up) will be 100. If the stock has moved lower every day during the time period, Aroon(up) will be zero

Average True Range

(file name=ATR.efs)The Average True Range (ATR) indicator was developed by J. Welles Wilder and measures a security's volatility. ATR does not provide an indication of price direction or duration, simply the degree of price movement or volatility.

Wilder designed ATR with commodities and daily prices in mind because commodi-ties were (and still are) often subject to opening gaps and limit moves. A limit move occurs when a commodity opens up or down its maximum allowed move and does not trade again until the next session. The resulting bar or candlestick would simply be a small dash.

In order to accurately reflect the volatility associated with commodities, Wilder tried to account for gaps, limit moves and small high/low ranges in his calculations.

Wilder defined the true range (ATR) as the greatest of the following:

The current high less the current low.

The absolute value of: current high less the previous close.

The absolute value of: current low less the previous close.

If the current high/low range is large, chances are it will be used as the ATR. If the current high/low range is small, it is likely that one of the other two methods would be used to calculate the ATR. The last two possibilities usually arise when the previ-ous close is greater than the current high (signaling a potential gap down and/or limit move) or the previous close is lower than the current low (signaling a potential gap up and/or limit move). To ensure positive numbers, absolute values are applied to differences.

Typically, the Average True Range (ATR) is based on 14 periods and can be calcu-lated on an intraday, daily, weekly or monthly basis. For this example, the ATR will

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be based on daily data. Because there must be a beginning, the first ATR value in a series is simply the high minus the low and the first 14-day ATR is found by averag-ing the daily ATR values for the last 14 days. After that, Wilder sought to smooth the data set, by incorporating the previous period's ATR value. The second and subse-quent 14-day ATR value would be calculated with the following steps:

Multiply the previous 14-day ATR by 13.

Add the most recent day's TR value.

Divide by 14.

Chaikin Money Flow

(file name=Cmf.efs)Chaiken's Money Flow indicator is based on accumulation and distribution of the selected security. This is really a breakdown of the price action in an issue and is based on the assumption that if the issue price closes above the mid-point of the trad-ing day then there has been accumulation. If the reverse is true and the price closes below the mid-point then there has been a distribution. Chaiken's Money Flow is then determined by adding up the accumulations and the distributions for X number of days and then dividing by the X value.

eSignal’s Chaikin Money flow formula uses a default of 21 periods and considers the close, low, high, and volume for the issue in the calculation.

Interpreting the Chaikin Money flow

Traditionally, positive numbers are considered bullish while negative numbers are bearish. Positive and negative numbers over .10 or under -.10 are considered impor-tant enough to warrant your attention. Numbers above +.25 or under -.25 are thought to be even more important. The way this indicator is supposed to work is when it’s showing highly bullish or negative numbers, the price of the underlying-

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stock is supposed to continue in that direction.

EMA/EMA with Reference

(file names: emawithref.efs and ema.efs)An EMA (Exponential Moving Average) assigns a weight to the price data as it is calculated. The more recent the price the heavier its weighting. The oldest price data in the exponential moving average is never removed from the calculation, but its weighting is lessened the further back it gets in the calculations.

The longer the period you use to calculate an exponential moving average, the more accurate the result. So you may want to retrieve chart data going back one year or more before adding this formula to your chart.

eSignal uses a default of 50 periods in this formula. For example, to calculate a 50 period exponential moving average:

1 Add up the closing prices for the first 50 periods and divide by 50. This is the result for the 50th period (there are no results for periods 1 through 49).

2 Then take 49/50 of the 50th period result plus 1/50 of the 51st period close. This is the 51st day result, etc.

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Keltner Channels

(file name =Keltner.efs)Keltner Channels were created by Chester Keltner who was a famous grain market trader with over 30 years of commodity trading experience. He was one of the first to pioneer systems work using trend-following rules.

The Keltner Channel is a volatility-based envelope technique that uses the range of high and low. Moving average bands and channels, like the Keltner Channels, all fall into the general category of envelopes. Envelopes consist of three lines: a middle line and two outer lines. Envelope theory states that the price will most likely fall within the boundaries of the envelope. If prices drift outside our envelope, this is con-sidering an anomaly and a trading opportunity.

Keltner Channels Trading Signals

When the price touches or moves outside either of the outer bands, a reaction toward the opposite band is expected. When price reaches the upper band, it is believed to be overbought, and when price reaches the lower band, it is believed to be oversold.

Moving Average

(file name=MA.efs)This formula draws a simple moving average for a period of 50 bars that is based on the closing price for each bar. A moving average is the average price of an issue over the previous n-period closes. For example, a 50-period moving average is the aver-

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age of the closing prices for the past 50 periods, including the current period. For intraday data the current price is used instead of the closing price.

Moving averages help you observe price changes. They smooth price movement so that the longer term trend becomes less volatile and therefore more obvious.

Moving Average Price Signals

1 When the price rises above the moving average, this is a bullish indication. When the prices falls below, this is a bearish indication.

2 When a moving average crosses below a longer term moving average, this indi-cates a down turn in the market. When a short term moving average crosses above a longer term moving average, this indicates an upswing in the market.

Trading Signals

Signals are generated when price crosses the Moving Average:

Go long when price crosses above the Moving Average from below.

Go short when price crosses below the Moving Average from above

Shorter length moving averages are more sensitive and identify new trends earlier, but also give more false alarms. Longer moving averages are more reliable but only pick up the big trends.

As a general rule of thumb, it is best to use a moving average that is half the length of the cycle that you are tracking. Commonly used moving average periods are:

– 200 day (40 Week) moving averages are popular for tracking longer cycles;

– 20 to 65 day (4 to 13 Week) moving averages are useful for intermediate cycles; and

– 5 to 20 Days for short cycles.

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MACD

(file name=MACD.efs) Moving Average Convergence and Divergence (MACD) is a trend-following indica-tor that is the difference between a fast exponential moving average (fast EMA) and a slow exponential moving average (slow EMA). The name was derived from the fact that the fast EMA is continually converging toward and diverging away from the slow EMA.

MACD Interpretations and Uses

One line crossing another indicates either a buy or sell signal. When the MACD rises above its signal line (a moving average of the MACD line), an upturn may be start-ing, suggesting a buy. Conversely, when the MACD crosses below the signal line this may indicate a down trend and a sell signal. Crossover signals may be applied to daily, weekly and intraday charts. However, crossover signals are often more reliable when applied to weekly charts.

Another interpretation is that a positive MACD value is bullish while a negative MACD value is bearish.

Overbought/Oversold Indicator

The MACD can signal overbought and oversold conditions, if analyzed as an oscilla-tor that fluctuates above and below a zero line. The market is oversold (buy signal) when both lines are below zero, and it is overbought (sell signal) when the two lines are above the zero line.

Identifies Divergences

Another popular interpretation is that when the MACD is making new highs or lows, and the price is not also making new highs and lows, it signals a possible trend rever-

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sal. This type of interpretation is often confirmed with an overbought/oversold oscil-lator.

A bearish divergence occurs when the MACD is making new lows while prices fail to reach new lows. This can be an early signal of an uptrend losing momentum. A bullish divergence occurs when the MACD is making new highs while prices fail to reach new highs. Both of these signals are most serious when they occur at relatively overbought/oversold levels. Weekly charts are more reliable than daily for diver-gence analysis with the MACD study.

MACD Fast

(file name=MACDFast.efs)This formula plots a MACD Fast Line which is a Fast 12 period Exponential Moving Average.

MACD Slow

(file name=MACDSlow.efs)This formula plots a MACD Slow Line which is a 26 period Exponential Moving Average that is smoothed by a 9 period Exponential Moving Average.

On Balance Volume and OBV With Reference

(file names=OBVwithRef.efs and OBV.efs)On Balance Volume (OBV) is a cumulative total of volume. It shows if volume is flowing into or out of a security. When an issue closes higher than its previous close,

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all of the day's volume is considered to be up-volume. When the issue closes lower than the previous close, all of the day's volume is considered to be down-volume.

OBV analysis assumes that OBV changes precede price changes. The theory is that a rising OBV shows that the “smart money” is flowing into a security. When the public then moves into the security, both the security and the OBV will continue to rise.

If an issue’s price movement precedes OBV movement, a "non-confirmation" has occurred. Non-confirmations can occur at bull market tops (when the security rises without, or before, the OBV) or at bear market bottoms (when the security falls with-out, or before, the OBV).

The OBV is in a rising trend where each new peak is higher than the previous peak and each new trough is higher than the previous trough. Likewise, the OBV is in a falling trend when each successive peak is lower than the previous peak and each successive trough is lower than the previous trough. When the OBV is moving side-ways and is not making successive highs and lows, it is lacking a meaningful trend.

RSI Enhanced

(file name=RSIEnhanced.efs)The RSI Enhanced formula plots the relative strength of the average upward and downward movement for a given number of bars and intervals (14 periods is the default in this formula).

The Enhanced RSI calculation is as follows:

The enhanced RSI formula uses a default period of 14 days to plot the study. On day 15, the values of days 1-14 are used, on day 16 the calculation is based on the aver-age of the first 14 days, averaged with the value of day 15, day 17 uses the new aver-age calculated for day 15 and averages it with day 16, day 18 uses the new average

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from day 16 and averages it with day 17, and so on. The Enhanced RSI is usually a smoother, flatter line than the Standard RSI.

RSI Standard

(file name=RSIStandard.efs)Relative strength of the average upward movement versus the average downward movement. eSignal uses a default period of 14 in this formula and uses closing bar prices in the calculation.

RSI Standard Calculation

The standard RSI uses the number of bars picked, 14 for example, and uses each value every time for the calculation. Day 15 uses the values of days 1 - 14, day 16 uses the values of days 2 - 15, day 17 uses the values for days 3 - 16, and so on.

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Stochastic % D Line

(file name=StochasticD.efs)The % D line is one of the two lines used to plot the stochastic indicator. The Sto-chastic %D (a.k.a.Slow Stochastic) applies further smoothing to the Stochastic oscil-lator, to reduce volatility and improve signal accuracy. Therefore it is often considered to provide a more reliable signal than the Stochastic oscillator.

The %D Line is calculated by smoothing %K line. This is normally done using a fur-ther 3 period simple moving average. A moving average of the blue Stochastic %K line provides the data to calculate the red Stochastic %D line. %K values greater than 1 affect the smoothing of the %K line.

The Stochastic % D line is plotted on a chart with values ranging from 0 to 100. The value can never fall below 0 or above 100. Readings above 80 are strong and indicate that price is closing near its high. Readings below 20 are strong and indicate that price is closing near its low.

When the %D line changes direction prior to the %K line, a slow and steady reversal is usually indicated.

A very powerful move is underway when the indicator reaches its extremes around 0 and 100. Following a pullback in price, if the indicator retests these extremes, a good entry point is indicated.

Many times, when the %D line begins to flatten out, this is an indication that the trend will reverse during the next trading range.

Stochastic Highest High

(file name=Stochastichh.efs)This formula plots a Stochastic study that is calculated by using the Highest High for the specified interval.

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Stochastic %K Line

(file name=StochasticK.efs)This formula plots a Stochastic %K Line which compares where an issue’s price closed relative to its price range over a given time period. The %K line is one of the two lines that make up the Stochastic Oscillator. As closing prices reach the upper band, they tend to rise and when prices approach the lower bands they tend to fall. A moving average of the Stochastic %K line provides the data to calculate the Stochas-tic %D line. %K values greater than 1 affect the smoothing of the %K line.

Trading Signals

Buy when the %K Line falls below a specific level (e.g., 20) and then rises above that level. Sell when the %K line rises above a specific level (e.g., 80) and then falls below that level.

Look for divergences. For example, where prices are making a series of new highs and the %K Line is failing to surpass its previous highs.

Stochastic Lowest Low

(file name=StochasticLL.efs)This formula plots a Stochastic study that is calculated using the Lowest Low during for specified interval.

Stochastic RSI

(file name=StochasticRSI.efs)This formula plots a Stochastic study that is calculated using the lowest and highest values of RSI over the specified interval. The Stochastic RSI was developed by Wells Wilder. This formula compares the average up and down price movements of a market.

By default, eSignal’s Stochastic RSI formula uses a 14-period RSI that is based on the closing price. So the Stochastic RSI is calculated by averaging all of the up closes

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and down closes for 14 periods. Then, the up closes are divided by the down closes. The formula then creates an index by scaling the value between 0 and 100.

Signals:

If the Stochastic RSI hovers near 100 it signals accumulation or a buy signal.

Conversely a Stochastic RSI line that is near zero indicates distribution or a sell sig-nal.

Ultimate Oscillator

(file name=Ultimateoscillator.efs)Developed by Larry Williams, the "Ultimate" Oscillator combines a stock's price action during three different time frames into one bounded oscillator. Values range from 0 to 100 with 50 as the center line. Oversold territory exists below 30 and over-bought territory extends from 70 to 100.

Three time frames are used by the Ultimate Oscillator and can be specified by the user. eSignal’s Ultimate Oscillator uses typical values of 7-periods, 14-periods and 28-periods. Since these three time periods overlap, i.e. the 28-period time frame includes both the 14-period time frame and the 7-period time frame, this means that the action of the shortest time frame is included in the calculation three times and has a magnified impact on the results.

The Ultimate Oscillator can be used on intraday, daily, weekly or monthly data. The time frame and number of periods used can vary according to desired sensitivity and the characteristics of the individual security.

It is important to remember that overbought does not necessarily imply time to sell and oversold does not necessarily imply time to buy. A security can be in a down trend, become oversold and remain oversold as the price continues to trend lower. Once a security becomes overbought or oversold, traders should wait for a signal that a price reversal has occurred. One method might be to wait for the oscillator to cross above or below -50 for confirmation. Price reversal confirmation can also be accom-

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plished by using other indicators or aspects of technical analysis in conjunction with the Ultimate Oscillator

Volume Moving Average Color Study

(file name-VMAcolor.efs)When you apply the Volume Moving Average Color Study to an Advanced Chart, it plots a 50 day volume weighted moving average study below the chart using a col-ored line format. It enables you to see at a glance the bars in the chart that are trading above the 50 day volume moving average by coloring the line corresponding to these bars green, or to see the bars in the chart that are trading below the moving average by color coding the line corresponding to these bars red.

Volume

(file name=Volume.efs)This formula plots volume as a line study below the main Advanced Chart window.

Volume Moving Average

(file name=VolumeMA.efs)This formula plots a 13 period moving average of volume.

Williams’ %R

(file name=WilliamsPercentr.efs)The Williams’ Percent R study was created by Larry Williams, a well-known author and trader. The formula examines a period of trading days to determine the trading

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range (highest high and lowest low) during the period. Once the trading range is found, the formula calculates where today’s closing price falls within that range.

The goal of the Williams % Study is to measure overbought and oversold market conditions. The %R always falls between a value of 0 and 100.

Williams %R Trading Rules

1 Sell when %R reaches 10% or lower

2 Buy when it reaches 90% or higher.

The %R works best in trending markets, either bull or bear trends. eSignal uses a default value of 14 periods to calculate this study. Some technicians prefer to use a value that corresponds to 1/2 of the normal cycle length. If you specify a small value for the length of the trading range, the study is quite volatile. Conversely, a large value smooths the %R, and it generates fewer trading signals.

Most Significant High-Most Significant Low

30 Period Most Significant High

(file name =30msh.efs)This formula plots the Most Significant High price that occurred during the past 30 periods.

OHLC Formulas

Get Previous OHLC

(file name=getPrevOHLC.efs)This is a combination of the PrevHigh.efs and PrevLow.efs formulas and also uses the supporting formula "getPrevOpen.efs". This takes yesterday's High and Low and shows them on today's chart. Some traders like to plot the previous Open, High, Low or Close on the chart. They use these points to determine where support or resistance

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might be located. When you plot the Get Previous OHLC study on a chart, there are always two thick black lines. The black line on top is the previous day’s High; the line at the bottom is the previous day’s Low.

Get Today’s OHLC

(file name=getTodayOHLC.efs)This is a combination of formulas (Todays High.eps) and (Todays Low.efs) that uses the supporting formula "getTodays Open.efs". This takes today's High and Low and shows them on today's chart. Some traders like to plot the current day’s Open, High, Low or Close on the chart. They use these points to determine where support or resis-tance might be located. When you plot this study on a chart, there are always two thick black lines. The black line on top is the current day’s High and the line at the bottom is today’s Low.

Previous Close

(file name=Prev Close.efs)This formula plots the previous day’s closing price as a flat line directly in the main chart area. Figure 21-3 shows an intraday chart for Intel going back for a period of three days. As you can see a flat line is drawn over bars for each day. This flat line represents the previous day’s closing price. Plotting the previous day’s close over the

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current day’s bars lets you see where an issue is trading relative to its closing price the previous day.

Figure 21-3. Previous Close Formula

On March 12th, the previous day’s closing price of 33.42 is plotted as a flat line over the March 12th intraday bars. And, on March 13th, the previous day’s closing price of 32.99 is plotted as a flat line over the March 13th intraday bars. You can clearly see that all of the March 12th and 13th intraday bars are trading well below the previ-

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ous day’s 33.42 and 32.99 closing prices, an indication of further downward pres-sure.

On March 14th, some of the intraday bars are above the previous day’s close of 31.34, perhaps indicating some level of support.

Then, on March 15th the majority of the intraday bars for Intel are trading above the previous close of 30.97, perhaps indicating that a short-term bottom is in place and some upward movement may ensue.

Previous High

(file name=Prev High.efs)

Figure 21-4. Previous High Study

This formula plots the previous day’s high price as a flat line directly in the main chart area. Figure 21-4 shows an intraday chart for Intel going back for a period of three days. As you can see a flat line is drawn over bars for each day. This flat line represents the previous day’s high price. Plotting the previous day’s high over the current day’s bars enables you to see where an issue is trading relative to its high price on previous days.

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On March 13th, the previous day’s high 33.02 is plotted as a flat line over the March 12th intraday bar, on March 14th, the previous day’s closing price of 32.06 is plotted as a flat line over the March 14th intraday bars, on March 15th, the previous day’s close of 31.65 is plotted as a flat line over the March 15th intraday bars.

You can clearly see that all of the intraday bars for the period of March 13-15 are below the previous day’s highs for those days. And, for each successive day, the pre-vious day’s high is at a lower price. This indicates a pattern of downward pressure that has not yet reversed itself. You can see, however, that on March 15th, the intra-day bars are approaching the previous day’s high, perhaps indicating that a reversal will occur and the previous day’s high price may be penetrated to the up side.

Previous Low

(file name=Prev Low.efs)This formula plots the previous day’s low price as a flat line directly in the main chart area. Figure 21-5 shows an intraday chart for Intel going back for a period of three days. As you can see a flat line is drawn over bars for each day. This flat line represents the previous day’s low price. Plotting the previous day’s low over the cur-rent day’s bars enables you to see where an issue is trading relative to its low price the previous day.

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On March 13th, the previous day’s low price of 32.31 is plotted as a flat line over the

Figure 21-5. Previous Low Formula

March 13th intraday bars, on March14th, the previous day’s low price of 31.05 is plotted as a flat line over the March 14th intraday bars, on March 15th, the previous day’s close of 30.80 is plotted as a flat line over the March 15th intraday bars. You can see that while all of the March 13th intraday bars traded well below the previous day’s low of 32.31, the next day, March 14th, many of the intraday bars traded above or broke through the previous day’s low, and on March 15th, all of the intraday bars were above the previous day’s low price and appear to be trending upward. If this trend continues, the pattern of lower lows seen on March 13-15th may reverse itself, indicating a possible short-term bottom and upward price reversal.

Previous Open

(file name=Prev Open.efs)This formula plots the previous day’s open price as a flat line directly in the main chart area. Figure 21-6 shows an intraday chart for Intel going back for a period of three days. As you can see a flat line is drawn over bars for each day. This flat line represents the previous day’s open price. Plotting the previous day’s open over the

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current day’s bars enables you to see where an issue is trading relative to its open price the previous day.

On March 13th, the previous day’s open of 32.47 is plotted as a flat line over the

Figure 21-6. Previous Open Formula

March 12th intraday bar, on March 14th, the previous day’s opening price of 32.01 is plotted as a flat line over the March 14th intraday bars, on March 15th, the previous day’s open of 31.26 is plotted as a flat line over the March 15th intraday bars.

You can see that all of the intraday bars for the March 13-14 period traded the closest to the previous day’s open at the open and then proceeded to decline throughout the day to close well below the previous day’s open. This indicates a relatively strong down trend. Finally, on March 15th, Intel opened well below the previous day’s open

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but steadily climbed, and then crossed the previous day’s open line and rose well above it, indicating a reversal to the upside.

Previous Day Daily Bars

(file name=Previous Day DailyBars.efs)This formula plots lines representing the previous day’s open, high, low, and closing prices over the bars of an intraday chart. This enables you to quickly visualize where an issue is trading relative to its previous day’s trading range.

Today’s High

(file name=Todays High.efs)You can apply the Today’s High formula to an intraday chart to view where the issue traded throughout the day in relation to its high on the day.

Looking at this chart (see Figure 21-7) helps you spot key resistance points and price congestion areas below the daily high.

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Figure 21-7. Today’s High Formula

Today’s Low

(file name=Todays Low.efs)You can apply the Today’s Low formula to an intraday chart to view where the issue traded throughout the day in relation to its low on the day. Looking at this chart can help you spot key resistance points and areas of price congestion above the daily low. As shown in Figure 21-8, The daily low price for Intel was 30.80. This low price was

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at market open and Intel quickly rose above the daily low to close at 31.61, perhaps indicating that the 30.80 daily low price was an area of price support.

Figure 21-8. Today’s Low Study

Today’s Open

(file name=Todays Open.efs)You can apply the Today’s Open formula to an intraday chart to view where the issue traded throughout the day in relation to its open on the day. Looking at this chart can help you spot key resistance points and areas of price congestion around the daily

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open. As shown in Figure 21-9, the daily open price for Intel was 30.87. This open

price occurred shortly after the market open and Intel quickly rose above the daily open to close at 31.61, exhibiting decent upward price movement.

Figure 21-9. Today’s Open Formula

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Today’s Daily Bars

(file name=TodaysDailyBars.efs) This formula plots lines representing today’s open, high, low, and closing prices over the bars of an intraday chart. This enables you to quickly visualize where an issue is trading in relation to the current day’s trading range.

Figure 21-10. Today’s Daily Bars Study

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Other Formulas

Expired Formula

(file name=expiredformula.efs) Run this formula to delete any expired studies and save disk space.

Global Value Test

(file name=GlobalValuetest.efs) Shows you how to set up a global variable that applies across all formulas.

Pivots A pivot is a proprietary indicator that shows turning points in an issue’s price perfor-mance. Pivot points are useful as starting or ending points when drawing GANN boxes, Regression Trend Channels, Fibonacci Time and other studies and tools.

The eSignal Formula Library includes 5 separate pivot formulas:

Pivot Point Formula

(file name-PivotPoint.efs)This formula plots pivot points which can be considered as a test price for a short-term trend. A pivot point represents a weighted average of the previous day's session since it is the average of the high, low and close. If an issue rallies above a pivot point, this may be an indication of price strength in the issue. Conversely, a price move below a pivot point would suggest weakness in the issue.

Pivot points are used primarily as support/resistance numbers. Of the first pivot val-ues, the pivot point itself is the best support/resistance level. The 1st and 2nd sup-

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port/resistance levels have less reliability. Pivot numbers are very popular on the exchange floors and are used by a significant number of traders.

Since pivot points are based on daily data, you don’t want to plot pivot points on a daily chart. Figure 21-11 shows the Pivot Point formula plotted on an intraday chart for INTC.

Figure 21-11. Pivot Point Study

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Pivot Point Resistance Level 1

(file name=PivotPointR1.efs) This formula plots the price points that show the first level of price resistance for an issue.

Figure 21-12. Pivot Point Resistance Level 1 Study

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Pivot Point Resistance Level 2

(file name=PivotPointR2.efs) This formula plots the price points that show the second level of price resistance for an issue. In Figure 21-13, the dark line represents the Pivot Point Resistance Level 2 Study while the dotted line represents the Pivot Point Resistance Level 1 study.

Figure 21-13. Pivot Point Resistance Level 2 Study

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Pivot Point Support Level 1

(file name=PivotPointS1.efs)This formula plots the price points that show the first level of price support for an issue.

Pivot Point Support Level 2

(file name=PivotPointS2.efs)This formula plots the price points that show the second level of price support for an issue. As you can see in Figure 21-14, the Pivot Point Support Level 2 Line is plotted as a solid line while the Pivot Point Support Level 1 line is plotted as a dotted line.

Figure 21-14. Pivot Point Support Level 1 and 2 Studies

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RSI Plot Types

Figure 21-15. The 7 RSI Plot Types

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You can apply any of the following RSI Plot Type formulas to an Advanced Chart Window. All seven different plot styles are shown in Figure 21-15.

RSI Dot Plot

(file name=RSI PlotDot.efs)Plots a Standard RSI formula using a dotted line style

RSI Flat Line Plot

(file name=RSIPlotFlatlines.efs)Plots a Standard RSI formula using a flat line style.

RSI Histogram Plot

(file name=RSIPlotHistogram.efs)Plots a Standard RSI study as a histogram.

RSI Histogram Base Plot

(file name=RSIPlotHistogrambase.efs)Plots a Standard RSI study using a histogram with a base line at 50%.

RSI Line Plot

(file name=RSI PlotLine.efs)Plots a Standard RSI study as a line.

RSI Line &Histogram Plot

(file name=RSIPlotLineandHistogram.efs)

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Plots a Standard RSI study line and histogram

RSI Square Wave Plot

(file name =PlotSquareWave.efs)Plots a Standard RSI study using a square wave plot.

eSignal Advanced Charting StudiesIn addition to the over 50 customizable formulas that come with eSignal, eSignal also includes more than 20 Advanced Charting Studies. The following section details the studies and outlines customization options for each.

eSignal Price Studies All of the follopwing eSignal price studies plot on the price panel.

Bollinger BandsCreated by John Bollinger, Bollinger Bands are used to show when prices are consol-idating and about to break out. They work by calculating a moving average that is above and below a standard exponential moving average by a fixed number of stan-dard deviations (usually 2). These bands indicate overbought and oversold levels rel-ative to a moving average. A standard deviation is a measure of volatility, and volatility is a measure of price swings. Large changes in volatility are shown as wide bands, while lower volatility causes the bands to narrow.

Trading Signals

Contracting bands are a sign that the market is about to trend. Often the bands con-verge into a narrow neck, then exhibit sharp price movements. The first breakout is often a false move, preceding a strong trend in the opposite direction.

A move that starts at one band normally carries through to the other, in a ranging

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market.

A move outside the band indicates a strong trend that is likely to continue - unless there is a quick price reversal.

A trend that hugs one band signals that the trend is strong and likely to continue.

To help spot the end of a trend, look for divergence on a Momentum Indicator.

Donchian ChannelChannels are lines that surround price movements of a stock, which help in project-ing future price action. The Donchian Channel indicator was created by Richard Donchian.While the Donchian family carefully guards the details of the exact formu-las, generally it uses the highest high and the lowest low of a period of time to plot the channel. The Donchian Channels study requires a ”look back” period or length. The default length for eSignal’s Donchian Channels study is 20 periods.

Trading Signals

Donchian Channels give signals as follows. If you are in an uptrend then the bottom line is the important line. When the bottom line turns down and the price action of the next bar goes lower, then the trend is down. These channels are sometimes used as a guide to setting trailing stops.

Properties

You can change defaults for this study by right clicking on it, selecting Edit Study from the right-click menu, and selecting Donchian Channels from the pull-down list in the Edit Study dialog box. The Study Properties dialog box appears as displayed

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below. You can change the length in bars used to calculate the study, add an offset value, and customize channel display options.

Figure 21-16. Specifying Donchian Channel Properties

EnvelopeAn envelope is two moving averages that are offset by a fixed moving average. They are placed above and below a middle or base line moving average. Price envelopes (or percentage bands) are plotted at a set percentage above and below a moving aver-

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age. They are used to indicate overbought and oversold levels and can be traded on their own or in conjunction with a momentum indicator.

While envelopes use percent instead of standard deviation for setting the band's off set, they are similar to Bollinger Bands in this way: the edges of the envelope repre-sent buyers or sellers who have pushed prices to extremes. When price hits an extreme it usually turns around and finds a new stability point.

So these bands basically set upper and lower boundaries of a price movement. For example, if the price hits the upper band, a sell signal would be initiated, and if the price hits the lower band a buy signal would be created. Deciding on the percentage shift is trickier and depends on the overall volatility of the stock for the period you are examining. If the volatility were high you would move the bands apart more, and if it were low you would move them closer in.

Trading Signals

In a Ranging Market (one where price moves back and forth across the moving average), movement that starts at one price band often carries through to the other band. If you act on this signal, you should place a stop loss order below the most recent low when you go long or above the latest high if you go short. Close your position if price turns up near the lower band or crosses back above the moving aver-age (from below).

In a Trending Market (one where the price stays above (up-trend) or below the moving average(down-trend)):

Go long when price goes down but stays above the moving average and then moves higher. Close your long position when price returns to the upper band or crosses below the moving average.

Go Short when price moves up from the lower band but stays below the moving average. Cover your short position when the price returns to the lower band or crosses above the moving average.

Properties

You can right click, select Edit Study, select Envelope from the pull-down study menu and then view or change the normal parameters for these moving averages,

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such as Length, Offset, and Source, along with the color and thickness of the line. In addition you can set the Percent for the envelope which is simply how much to offset the MA. In the figure below the Percent is set to 10%, and the top and bottom mov-ing averages (blue lines) are 10% above and below the price of the basis moving average (the red line). The Percentage should be set so that about 90% of price activ-ity is contained within the bands. So you may need to adjust band width to accommo-date periods of higher volatility.

Table 21-1. Specifying Envelope Study Properties

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Linear RegressionLinear regression is a statistical tool that is used to predict future values from past values. In the case of security prices, it is commonly used to determine when prices are overextended.

A linear regression trend line uses the least squares method to plot a straight line through prices so as to minimize the distances between the prices and resulting trend line.

A linear regression trend line is simply a trend line drawn between two points using the least squares fit method. The trend line is displayed in the exact middle of the prices. If you think of this trend line as the "equilibrium" price, any move above or below the trend line indicates overzealous buyers or sellers.

You can view and change the following linear regression study settings: source (Close is the default), number of bars (0 or all bars is the default), number of standard deviations (1 is the default value), and specify other channel color and line options. To specify study settings, right click on the study, select Edit Study, select Linear

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Regression from the pull-down study list, make your changes and then specify how to apply them.

Figure 21-17. Specifying Linear Regression Properties

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Moving AverageA Moving Average indicator shows the average value of a security’s price over a period of time. When calculating a moving average, a mathematical analysis of the security’s average value over a predetermined time period is made. As the security’s price changes, its average price moves up or down.

There are five types of moving averages: simple (also referred to as arithmetic), exponential, triangular, variable, and weighted. Moving averages can be calculated on any data series, including a security’s open, high, low, close, volume, or another indicator. A moving average of another moving average is also common.

The only significant difference between the various types of moving averages is the weight assigned to the most recent data. Simple moving averages apply equal weight to the prices. Exponential and weighted averages apply more weight to recent prices.

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Triangular averages apply more weight to prices in the middle of the time period. And variable moving averages change the weighting based on the volatility of prices.

When you apply a Moving Average to an eSignal Advanced Chart, by default it is a 10 period simple moving average. You can right click, select Edit Study, select Mov-

ing Average from the drop-down study menu.

Figure 21-18. Specifying Moving Average Properties

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To change the type of moving average:

1 Select Simple to display a Simple moving average that takes the sum of the last n periods and divides by that number.

2 Select Exponential to display an Exponential Moving Average.

3 Select Weighted to display a Weighted moving average that attaches greater weight to the most recent data.

4 Select Volume Weighted to display a Volume Weighted moving average that attaches greater weight to days having greater trading volume.

Change the Interval value number to adjust the number of intervals used to calculate the moving average.

Change the Offset number to shift the plot of the moving average left (negative off-set) or right (positive offset) by the offset number of price intervals.

Change the Source field to indicate the data you want to use (choices are open, high, low, close) to calculate the moving average.

Parabolic SARThe Parabolic Time/Price System, developed by Welles Wilder, is used to set trailing price stops and is usually referred to as the "SAR" (stop-and-reversal). The Parabolic SAR can provide excellent exit points.

Signals

You should close long positions when the price falls below the SAR and close short positions when the price rises above the SAR. If you are long (i.e., the price is above the SAR), the SAR will move up every day, regardless of the direction the price is

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moving. The amount the SAR moves up depends on the amount that prices move. You should be long when the SAR is below prices and short when it is above prices.

Additional Studies All of the additional studies described in the following section plot in their own panel in the Advanced Chart window.

Accumulation/DistributionThe Accumulation/Distribution is a momentum indicator that associates changes in price and volume. The indicator is based on the premise that the more volume accompanying a price move, the more significant the price move.

When the Accumulation/Distribution moves up, it shows that the security is being accumulated (bought), as most of the volume is associated with upward price movement. When the indicator moves down, it shows that the security is being distributed (sold), as most of the volume is associated with downward price movement.

Average True RangeThe Average True Range (ATR) is a measure of volatility. It was introduced by Welles Wilder in his book New Concepts in Technical Trading Systems and has since been used as a component of many indicators and trading systems.

Trading Signals

High ATR values often occur just before market tops and bottoms.

Low ATR values are often found during extended sideways periods, such as those found at tops and after consolidation periods.

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ChoppinessChoppiness is a function of market direction. A market that is trending has a low choppiness number while a trend less market has a high choppiness number.The Choppiness Index ranges between 0 and 100, the higher the index the choppier the price action is and the lower the index the more trending the price action.

Since Choppiness is a trending indicator it has a length, which sets the look back period (in eSignal the default length is14 periods).

There are two bands in the Choppiness indicator: Upper Band and Lower Band. To Edit parameters for the Choppiness Study:

1 Right click on the study and select Edit Study from the menu.

2 In the Study Properties dialog box that appears, you may change:

-Length

-Upper Band

-Lower Band

-Display Color and Line Properties

-Upper Band (default value=61.8) - You may toggle the Upper Band line on or off and specify its color and line properties.

-Lower Band - (default value = 38.2) You may toggle the Lower Band line on or off and specify its color and line properties.

3 When you are finished making changes, click the Apply This button, followed by the OK button to apply your changes to the current Advanced Chart window.

Click Apply This to make the changes to the current study while the Properties window is open. Click Apply All if you made property changes to several studies and want them all to change while the window is still open. If you would like to have specific settings apply to all future uses of the study, you need to use the "Save As Default" at the top of the window.

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Some traders interpret low Choppiness Index readings to indicate the end of

Figure 21-19. Setting Choppiness Study Properties

strong impulsive movements either up or down, while high readings occur after significant price consolidations.

Using the Choppiness Index

The Choppiness indicator (CI) has an inverse relationship to price and a trend is con-sidered broken when the CI is below the lower line and reverses. Again this does not tell you the direction of the market it just gives a fundamental different perspective on the general change of a trend. If other signals confirm that this is a turning point, it

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could be likely that we are headed towards a new trend direction down and it might be a good time to sell, or go short.

Commodity Channel IndexThe Commodity Channel Index (CCI) is a price momentum indicator that measures price excursions from the mean price as a statistical variation. It is used to detect the beginnings and endings of trends.

The CCI works best during strongly up trending or down trending markets. The CCI can be used in two different ways:

Normal CCI Method - If you are not looking at the CCI as a histogram, then a buy signal is generated when the CCI crosses the –100 value while moving up. When the CCI crosses the +100 value while moving down, a sell signal is generated.

Zero CCI Method - If you are looking at the CCI as a histogram, then a buy signal is generated when the CCI crosses the 0 value while moving up. When the CCI crosses the 0 value while moving down, a sell signal is generated.

To change any of the properties of the CCI study:

1 Right click on the study and select Edit Study from the menu.

2 In the Study Properties dialog box that appears, you may change:

Length - sets the number of intervals used to calculate the CCI

Source - sets the data source (Open, High, Low, or Close) used to calculate the CCI.

Upper Band - Sets the value of the Upper band.

Lower Band - Sets the value of the Lower Band.

Display - Sets the color and line properties for displaying the CCI.

Upper Band - You can toggle it on of off and set its color and line properties.

Lower Band -You can toggle it on of off and set its color and line properties.

When you are finished making changes, click the Apply This button, followed by the OK button to apply your changes to the current Advanced Chart window. Click Apply This to make the changes to the current study while the Properties

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window is open. Click Apply All if you made property changes to several studies and want them all to change while the window is still open. If you would like to have specific settings apply to all future uses of the study, you need to use the "Save As Default" at the top of the window.

.

Figure 21-20. Specifying Commodity Channel Index Properties

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Directional Movement (ADX/DMI)The ADX-DMI is actually three separate indicators:

1. The ADX indicates the trend of the market and is usually used as an exit signal.

2. The +DMI measures the strength of upward pressure.

3. The – DMI measures the strength of downward pressure.

These are based in how far a market has moved outside the previous day’s range.

Directional Movement Interpretation - When the ADX line reaches or exceeds the value of 40 and then makes a turn to the downside, this is generally accepted as a signal to take profits. This signal does not mean that the market will move in the opposite trend direction.

The ADX signal indicates that the current strong trend is over, and you should consider taking profits. The ADX works on all time frames, but seems to give the best signals on a Weekly or Monthly chart and works best in strong, trending markets.

IF the +DMI is above the -DMI, the market is in an uptrend. When the +DMI crosses above the –DMI, this can be used as a buy signal. If the +DMI is below the -DMI, the market is in down trend. When the +DMI crosses below the -DMI, this can be used as a sell signal.

Welles Wilder, the developer of the DMI, suggests what he calls the ‘extreme point rule’. This rule states, "On the day the +DMI crosses above or below the -DMI, don’t take the trade. Just take note of the high or the low of the day. Take the trade if the price breaks either the high or low the next day (depending on the direction of the market)."

To change any of the parameters of the ADX-DMI:

1 Right click on the study and select Edit Study from the right-click menu.

2 Select the Directional Movement study from the pull-down study list that appears in the Study Properties dialog box.

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3 The parameters for the Directional Movement study appear in the Study Proper-ties dialog box.

Figure 21-21. Specifying Directional Movement Study Properties

4 You can adjust the length of the +DMI and - DMI lines, change the colors and line styles, and adjust smoothing period and display options.

5 When you are done making changes click Apply This to make the changes to the current study while the Properties window is open. Click Apply All if you made property changes to several studies and want them all to change while the win-dow is still open. If you would like to have specific settings apply to all future uses of the study, you need to use the "Save As Default" at the top of the window.

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MACD The MACD (Moving Average Convergence/Divergence) is a trend-following momentum indicator that shows the relationship between two moving averages of prices. The MACD was developed by Gerald Appel, publisher of Systems and Fore-casts.

The MACD is the difference between a 26-day and 12-day exponential moving average. A 9-day exponential moving average, called the "signal" (or "trigger") line, is plotted on top of the MACD to show buy/sell opportunities.

MACD Interpretation - The MACD proves most effective in wide-swinging trading markets. There are three popular ways to use the MACD:

1 Crossover: When the MACD falls below its signal line, this is taken as a sell sig-nal. Similarly, a buy signal occurs when the MACD rises above its signal line. It is also popular to buy/sell when the MACD goes above/below zero.

2 Overbought/Oversold Conditions:. When the shorter moving average pulls away dramatically from the longer moving average (the MACD rises), it is likely that the security price is overextending (i.e. it is overbought) and will soon return to more realistic levels. MACD overbought and oversold conditions vary from security to security.

3 Divergences: An indication that an end to the current trend may be near occurs when the MACD diverges from the security. A bearish divergence occurs when the MACD is making new lows while prices fail to reach new lows. A bullish divergence occurs when the MACD is making new highs while prices fail to reach new highs. Both of these divergences are most significant when they occur at relatively overbought/oversold levels.

To change the properties of a MACD study:


2 Select the MACD study from the pull-down study list that appears in the Study Properties dialog box.

3 The parameters for the Directional Movement study appear in the Study Proper-ties dialog box.

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4 You can adjust the length of the MACD Fast and Slow Lines, change the data

Figure 21-22. Specifying MACD Study Properties

source, signal smoothing period and adjust colors and line types for the MACD Drop, Signal, Center and Histogram lines.

When you are done making changes click Apply This to make the changes to the current study while the Properties window is open. Click Apply All if you made property changes to several studies and want them all to change while the win-dow is still open. If you would like to apply specific settings to all future uses of the study, you need to use the "Save As Default" at the top of the window.

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Momentum (MOM)The Momentum study is calculated by subtracting the price for a given interval in the past from the current price. You determine how many intervals to go back for the price that is subtracted.

The momentum study is an indication of overbuying or overselling. A positive value indicates overbuying, while a negative value indicates overselling.

To change the properties of the Momentum study:


2 The parameters for the Momentum study appear in the Study Properties dialog box as displayed below

Length - specify the number of intervals to go back to calculate the study

Source - specify the data source (open, high, low, or close)

Display - Specify color and line properties for the Momentum indicator.

Center Line - Toggle the Center line on and off and specify its color and line properties

3 When you are done making changes click Apply This to make the changes to the current study while the Properties window is open. Click Apply All if you made property changes to several studies and want them all to change while the win-dow is still open. If you would like to apply specific settings to all future uses of the study, you need to use the "Save As Default" at the top of the window.

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Figure 21-23. Specifying Momentum Properties

Money FlowThe Money Flow Index (MFI) is a momentum indicator that measures the strength of money flowing in and out of a security. It is related to the Relative Strength Index (RSI) but whereas the RSI incorporates only prices, the MFI also accounts for volume. Instead of using "up closes" versus "down closes," money flow compares the current interval's average price to the previous interval's average price and then weighs the average price by volume to calculate money flow. The ratio of the

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summed positive and negative money flows is then normalized to a scale of 0 to 100. You choose how many intervals to go back for the previous price.

To change the properties of the Money Flow study:


2 The parameters for the Money Flow study appear in the Study Properties dialog box as displayed below

Length - specify the number of intervals to go back to calculate the study

Upper Band - specify the Upper Band percentage.

Lower Band - specify the Lower Band percentage

Display - specify color line and thickness styles

Upper Band Display - display or hide the Upper Band and specify line and thickness styles.

Lower Band Display - display or hide the Lower Band and specify line and thickness styles.

When you are done making changes click Apply This to make the changes to the current study while the Properties window is open. Click Apply All if you made property changes to several studies and want them all to change while the win-dow is still open. If you would like to apply specific settings to all future uses of the study, you need to use the "Save As Default" at the top of the window.

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Figure 21-24. Specifying Money Flow Study Properties

On Balance Volume (OBV)On Balance Volume (OBV) is a momentum indicator that relates volume to price change. It was developed by Joe Granville and was originally presented in his book New Strategy of Daily Stock Market Timing for Maximum Profits.

On Balance Volume is a running total of volume. It indicates whether volume is flowing into or out of a security. When the security closes higher than the previous

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close, all of the day’s volume is considered up-volume. When the security closes lower than the previous close, all of the day’s volume is considered down-volume.

You can customize your OBV study line, style and color options by right clicking on the study, selecting Edit Study, and entering your preferences. Click Apply This to make the changes to the current study while the Properties window is open. Click Apply All if you made property changes to several studies and want them all to change while the window is still open. If you would like to apply specific settings to all future uses of the study, you need to use the "Save As Default" at the top of the window.

Williams’ %RWilliams’ %R (pronounced "percent R") is a momentum indicator that measures overbought/oversold levels. It was developed by Larry Williams.

The interpretation of Williams’%R is very similar to that of the Stochastic Oscillator, except that %R is plotted upside-down and the Stochastic Oscillator has internal smoothing. To display the Williams’ %R indicator on an upside-down scale, it is usu-ally plotted using negative values (for example, -20 percent). (For the purpose of analysis and discussion, simply ignore the negative symbols.) Readings in the range of 80 to 100 percent indicate that the security is oversold, while readings in the 0 to 20 percent range suggest that it is overbought.

As with all overbought/oversold indicators, it is best to wait for the security’s price to change direction before placing your trades. For example, if an overbought/oversold indicator (such as the Stochastic Oscillator or Williams’ %R) is showing an over-bought condition, it is wise to wait for the security’s price to turn down before selling the security. (The MACD is a good indicator to monitor change in a security’s price.) It is not unusual for overbought/oversold indicators to remain in an overbought/over-sold condition for a long time period as the security’s price continues to climb/fall. Selling simply because the security appears overbought may take you out of the security long before its price shows signs of deterioration.

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Rate of Change (ROC)The Price Rate-of-Change (ROC) indicator displays the difference between the cur-rent price and the price x time periods ago. The difference can be displayed either in points or as a percentage. The momentum indicator displays the same information but expresses it as a ratio.

Price OscillatorThe Price Oscillator displays the difference between two moving averages of a secu-rity’s price. The difference between the moving averages can be expressed in either points or percentages.

The Price Oscillator is almost identical to the MACD, except that the Price Oscillator can use any two user-specified moving averages. (The MACD always uses 12 and 26 day moving averages, and always expresses the difference in points.)

Moving average analysis typically generates buy signals when a short-term moving average (or the security’s price) rises above a longer-term moving average. Con-versely, sell signals are generated when a shorter-term moving average (or the secu-rity’s price) falls below a longer-term moving average. The Price Oscillator illustrates the cyclical and often profitable signals generated by these one- or two- moving-average systems.

RSIThe Relative Strength Index (RSI) is a price-following oscillator that ranges between 0 and 100. A popular method of analyzing the RSI is to look for a divergence in which the security is making a new high, but the RSI is failing to surpass its previous high. This divergence is an indication of an impending reversal. When the RSI then turns down and falls below its most recent trough, it is said to have completed a

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"failure swing." The failure swing is considered a confirmation of the impending reversal.

RSI can be used to identify the following significant chart patterns:

Tops and Bottoms. The RSI usually tops above 70 and bottoms below 30. It usually forms these tops and bottoms before the underlying price chart.

Chart Formations. The RSI often forms chart patterns such as head-and-shoulders or triangles that may or may not be visible on the price chart.

Failure Swings (also known as support or resistance penetrations or breakouts). This is where the RSI surpasses a previous high (peak) or falls below a recent low (trough).

Support and Resistance. The RSI shows, sometimes more clearly than prices themselves, levels of support and resistance.

Divergences. As discussed above, divergences occur when the price makes a new high (or low) that is not confirmed by a new high (or low) in the RSI. Prices usually correct and move in the direction of the RSI.

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Figure 21-25. Specifying RSI Study Properties

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Stochastic The Stochastic oscillator compares where a security's price closed relative to its price range over a given time period and is designed to indicate when the market is over-bought or oversold. It is based on the premise that when a market’s price increases, the closing prices tend to move toward the daily highs and, conversely, when a mar-ket’s price decreases, the closing prices move toward the daily lows.

A Stochastic displays two lines, %K and %D. The %K line is calculated by finding the highest and lowest points in a trading period and then finding where the current close is in relation to that trading range. The %K line is then smoothed with a moving average. The %D line is a moving average of %K.

Stochastic Signals

Sell Signal - The Stochastic generates a sell signal when there is a crossover of the %K and the % D lines and both are above the band set at 75.

Buy Signal -The Stochastic generates a buy signal when there is a crossover of the %K and the %D lines and both are below the band set at 25.

Aggressive Use of Stochastics

Sometimes Stochastics is used more aggressively by using a pyramid system of add-ing to positions during a strong trend. As a major trend continues, you could use all of the crossing the the %K and %D lines regardless of where the Stochastics lines cross. If you were to do this in an up trending market, you would look at all Stochas-tics upturns as additional buy signals and would add to your position, regardless of whether %K or %D reached the oversold zone. In an up trending market, Stochastics

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sell signals would be ignored, except to take short-term profits. The reverse would be true in a down trending market.

To change Stochastics properties:

1 Right click on the Advanced Chart window and select Edit Study

2 %K Length-specify the number of bars used to find the Stochastic.

Figure 21-26. Specifying Stochastics Properties

3 %K Smoothing -specify the period of the moving average that is used to smooth %K.

4 %D Smoothing number box contains the period of the moving average that is applied to %K to find %D.

5 The %K Display selection list allows you to change %K color and line proper-ties.

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6 The %D Display selection list allows you to change %D color and line proper-ties.

7 The Upper and Lower Bands number boxes indicate at what level the bands will be drawn, enable you to change band colors, and let you toggle the upper and lower bands on and off.

When you are finished making your change, click Apply This to make the changes to the current study while the Properties window is open. Click Apply All if you made property changes to several studies and want them all to change while the window is still open. If you would like to apply specific settings to all future uses of the study, you need to use the "Save As Default" at the top of the window.

Volume Volume is the number of trades in a given security, for a specified time (interval) and date

To adjust Volume Study parameters:

1 Right click on the Advanced Chart window and select Edit Study

2 Select Volume from the pull-down study list. The dialog box appears as pictured in Figure 21-27.

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Figure 21-27. Setting Volume Study Properties

Using the Advanced Line ToolbareSignal also includes an Advanced Line Toolbar. The Advanced Line Toolbar enables you to draw more advanced studies and is pictured in Figure 21-28.

Figure 21-28. Advanced Line Toolbar

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Gann Angles

Before drawing Gann Angles on the chart, normally, you would first want to Opti-mize the scale (by right clicking on the Gann Angles toolbar icon and pressing the Optimize button) and then draw the Gann Angles by putting your cursor on a Pivot Point and pressing your left mouse button twice. These Gann Angles then become support and resistance lines for the market to test.

To configure the Gann Angles, put your cursor on top of the Gann Angles button and click your right mouse button. This will open the Gann Angles properties sheet.

The Angle number boxes are used to indicate the price and time slope. The number box on the left indicates the number of price units to move and the number box on the right indicates the number of time units to move.

The Color selection list allows you to change the color of each line.

The Up On/Off buttons indicate if the corresponding line starting at the origin and moving up will be displayed.

The Down On/Off buttons indicate if the corresponding line starting at the origin and moving down will be displayed.

The Scale number box indicates the price unit that is used to determine the slope of the angles.

The Optimize button is used to instruct eSignal to examine the prices in the current chart and find the best possible scale for the Gann Angles. After pressing the Opti-mize button (if you haven’t already drawn the Gann Angles on the chart) the angles attached to your cursor that you can place on the chart will use the optimized scale. If you have already drawn the Gann Angles on the chart, after the Optimize process is

The Gann Angles tool is used to draw a “Fan” of angles from a point (usually a Pivot Point) using techniques originally developed by W.D. Gann.

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done, you must press either the Apply or OK button to see the change in the Gann Angles on the chart. The Gann Angles will be redrawn from the same origin using the optimized Scale.

To remove the Gann Angles, put your mouse cursor on top of the Gann Angles that you want to erase and click you right mouse button. When the Gann Angles proper-ties sheet appears, press the Remove button.

Gann Box

The Gann Box is similar to Gann Angles except that the angles inside of the Gann Box are directly related to each other. The angles inside of the Gann Box are used for support and resistance.

To configure the Gann box, put your cursor on top of the Gann Box button and click your right mouse button. This will open the Gann Box properties sheet.

The Colors section list allows you to change the color of the 1 X 4, 1X2, 1X1, 2X1, and the 4X1 lines that comprise the Gann Box.

The Scaling selection list allows you to choose between a Gann Box made using Fixed Increments for scaling and a Gann Box drawn using a Free Form scaling. The Fixed Increments scaling is used when you want the Gann Box to be drawn with the computer generated fixed interval patterns that are built into eSignal. This is the most commonly used setting. Free Form scaling should be used when you want the Gann Box to be drawn at any scale and in any increment that you want. With the Free Form scaling, you have total control of the box size.

The Width number box indicates the thickness of the lines that draw the Gann Box. A setting of 1 will draw the Gann Box using very thin lines and a setting of 100 will draw a Gann Box that is very thick and difficult to use.

The Box Color selection allows you to change the color of the box drawn around the Gann Angles that make up the Gann Box.

You use the Gann box to draw a “Box” of Gann Angles based on a Gann Wheel.

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The Box On/Off switch toggles the display of the outer lines that make the Gann Box. To turn the drawing of the outer lines on or off, put your mouse cursor on top of this button and press your left mouse button.

To remove the Gann Box, put your mouse cursor on top of the Gann Box that you want to erase and click your right mouse button. When the Gann Box properties sheet appears, press the Remove button.

TJ’s Ellipse

You need a starting and an ending point to draw an Ellipse. Click on a pivot (starting point), and then another pivot (ending point) and you will see the Ellipse coming down (or up) to “intercept” the market. Once the Ellipse has intercepted the market it will stop updating and the trend should change at that point. Please note that there are three different lengths of Ellipse, based upon the length of the trend.

Under Time Frames you have toggle buttons that let you control the display of the Short term, Medium term, and Long tern Ellipse.

The Color selection list allows you to change the color of the outer shell of the Ellipse.

The Line Width number box indicates the width of the lines used to draw the shell of the Ellipse.

The Markers toggle button, when on, leaves a mark at the starting and ending points used to draw the Ellipse.

The Shadows toggle button, when on, displays the projected path of the Ellipse, where it might intercept the market.

Select this tool to draw TJ’s Ellipse. TJ’s Ellipse is based upon both time and price and, although it’s a drawing tool, updates as the mar-ket changes.

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Andrew’s Pitchforks

Andrew’s Pitchforks need three points to be drawn. Wave 3 will usually end on either the Middle Line or the Upper/Lower Parallel Line. To find the points needed to attempt to predict where the Wave 3 will end, put the Pitchfork cursor on the begin-ning of Wave 1 (zero) and click your left mouse button once. Move the cursor to where Wave 1 is labeled and click your left mouse button once, then move the cursor to where Wave 2 is labeled and click your left mouse button one last time.

To configure the Pitchforks, put your cursor on top of the Pitchforks button and click your right mouse button. This will open the Pitchforks properties sheet.

The Parallel Lines On/Off buttons indicate if each of the Parallel Lines will be drawn.

The Value number boxes indicate what percentage of the Median Line to be used when drawing the associated Parallel Line. Please note that the standard percentage to be used with Andrews Pitchforks is 1 (1=100% times the Median Line) for both the upper and lower Parallel Lines. For extended Parallel Lines, 2 (2=200% times the Median Line) is recommended.

The Colors selection lists indicate what colors the associated Parallel lines will be drawn.

The Median Line Color selection lists indicate what color the Median Line will be drawn.

The Width number box indicates the thickness of the lines that draw the Pitchfork.

There will be times when Wave 2 retraces at a very steep rate. The Median Line Modify toggle button should be turned On under these circumstances. With Modify turned On, the Andrew’s Pitchfork will automatically adjust the direction and spac-

Click this tool to draw Andrew’s Pitchforks. Andrew’s Pitchforks were originally developed by Dr. Alan Andrews and are often used to find the top of Wave 3. The lines that make up the Pitchfork are support and resistance lines.

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ing of the Pitchfork to compensate for the steep Wave 2 retracement. Under normal market conditions, Modify should be turned Off.

To remove the Pitchfork, put your mouse cursor on top of the Pitchfork you want to erase and click your right mouse button. When the Pitchfork properties sheet appears, press the Remove button.

Profit Taking Index (PTI)

Move the PTI cursor to the point you believe is the end of Wave 2 and click your left mouse button. Next, move your mouse cursor to the point where you believe Wave 3 has ended and press your left mouse button for a second time. Lastly, move the PTI cursor to the last bar in what you believe is the Wave 4 and press your left mouse but-ton for the third time to place the PTI and Wave 4 channels on the chart. Please note that the PTI value will not automatically adjust as new bars are placed one the chart - you must redraw the PTI as the Wave 4 progresses.

To remove the PTI, put your mouse cursor right on top of the PTI that you want to erase and hit your right mouse button. When the PTI Properties sheet appears, press the Remove button.

Time and Price Squares

Recommend Usage:

Time & Price Squares help to identify changes in a trend, such as those found at the end of an Elliott Wave Three, Four or Five, or in A-B-C corrections as well as inter-

Click to manually draw a Profit Taking Index (PTI) and Wave 4 Channels in an area that is not identified as a Wave 4 by the Elliott Wave Count in eSignal.

Time & Price Squares are used to show the relationship of time peri-ods (X-Axis) versus prices (Y -Axis)

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mediate and minor price swings. Time & Price Squares in eSignal are values deter-mined by Gann (Time) & Fibonacci (Price).

The theory is markets tend to change trends at certain numbers from a Major high or low. As a general rule, use a primary pivot (a significant high or low point), as a start-ing point for your Time & Price Squares calculation. However, take the time to experiment with other pivots to see how this can enhance the use of this tool. Our studies have concluded that a combination of both Fibonacci and Gann can increase odds of picking up turning points. The time sequences have been tested out for all markets and time frames. In addition, our testing shows trading days to be more con-sistent than calendar days. This may be a different conclusion from standard belief; nevertheless this is our test result. (We have added the capability to use either calen-dar or trading days for this reason.) Unless you have a favorite sequence, we recom-mend experimenting with the following combination of numbers: Fibonacci numbers-- 13, 21, 34, 55, 89, 144, 233, 377, 610, 987, 1597, 2584, 4181, and so on. We have found 72 works well (half of 144 = 72). In addition, you can multiple these numbers by 10 or 100 to get a sequence that looks like 130, 210, 340, 550, 720, 890, 1440, 2330, 3770, 6100, and so forth. Gann numbers-- 45, 90, 180, 270 and 360. Other good numbers are 23 (half of 45), 113 (90+23), 135 (90+45), 225 (180+45), and so on. You can use 720 (360 x 2), 1080 (360 x 3), 1440 (360 x 4), 1800 (360 x 5), and so forth. You can also multiply these numbers by 10 or 100 to get a sequence that looks like 450, 900, 1800, 2700, 3600, 7200, 10800, 18000, and so on. If you are having difficulty with the Time & Price Squares tool, edit the "Price Scale" to see if this helps. This selection is located in the properties of the Time & Price Square menu. (Highlight a T&PS line and click your right mouse button to activate this menu.) Adjusting the price scale will often help generate better results. For example, with the Swiss Franc try changing the Price Scale to 0.0001, and for a normal stock try a 1.0 setting. Try experimenting using different price scale settings of 1.0, 0.1, 0.01, 0.001, 0.0001. The entire scheme of multiplying is really market dependent. For example, 90 (minimum ticks) is a good move from major lows or highs for the Swiss Franc but of course for the S&P it is not. Use appropriate Gann and Fib lines according to your scaling (to change values go into the Time & Price Squares proper-ties box). Markets can also use the price sequence as support and resistance levels. When the market trades into both a time and price sequence, this is called a Time & Price Square area.

The truth is there is no easy way of learning the Time & Price Squares tool short of experimenting with it on your own so you can pick up ways of adapting the tool to your individual trading style.

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Menu Functions:

Select the Time & Price Squares button to draw a graph of the intersection of prices you have set against the times you have set (periods), on your bar charts.

When the mouse cursor is inside a bar chart it will now look like a small arrow with the Time & Price Squares grid attached to it. Position the cursor at the bar that you wish to start on (usually a high or a low). Select with the LEFT MOUSE BUTTON. This will show a Time & Price Squares grid. As you move the mouse up and down, left and right, you will note that the periods or prices will show up only in the areas where the mouse has not been. To make the Time & Price Squares grid stay on the bar chart, Select again with the LEFT MOUSE BUTTON.

To abort the drawing of the Time & Price Squares grid, Cancel (with the RIGHT MOUSE BUTTON).

To adjust the time periods or the prices used in the Time & Price Squares grid, put your mouse on top of the Time & Price Squares button in the Global Tool Box and Call (RIGHT MOUSE BUTTON) the Time & Price Squares button.

NOTE: To see the Time & Price Squares that you have drawn, the Line button of the bar chart’s tool box must be on.

To change the Time open the adjust Time & Price dialog box and select the Time tab. Enter the number of periods you wish and Select the OK button.

To change the Price open the adjust Time & Price dialog box and select the Price tab. Enter the number of increments you wish and Select the OK button. Please note that the price increments are based on the base of the market you are looking at. For example, most stocks trade in 1/128ths. If you want the price to increase by 1 dollar, you would enter 128 in price. If you wish the price to increase by 5 dollars, enter 640 (5 x 128).

With the Calendar toggle box checked the Time & Price Square will use calendar days instead of trading days for the times you have indicated under the Times col-umn.

The color button is used to display what color is used to draw your Time & Price Square. To change this color, Select the color button and you will be presented with a

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pallet of colors. Select the color you want, and this change will be reflected on the color button.

Make or Break (MOB)

The MOB should be drawn from the top (market moving up) or bottom (market moving down) of the starting impulse pattern that is closest to the current market movement. For example, if the market is moving in a 5 Wave sequence up, and if you want to see the MOB level for the Wave 5, move the MOB cursor to the top of the Wave 3 and click your left mouse button (this will only work if Wave 4 has finished and Wave 5 is in progress). The Wave 3 high is the top of the starting impulse pat-tern. The Wave 4 is the bottom of the corrective pattern. The Wave 5 is the area in which the MOB will show a support area that will either “Make” the end of Wave 5 or “Break” the Wave 5 into an extension. The MOB is not limited to a 3-4-5 pattern; it works with any down-up-down or up-down-up pattern. The different colors of the MOB give you a visual indication of the range of the MOB area, and if you see a “Marker” on the MOB (looks like a block on the left side of the MOB in a different color), then you know that the MOB doesn’t have enough data to confirm the MOB level. If you get a “Marker” on the MOB, it is a good idea to keep deleting and redrawing the MOB as each new data bar is put on the chart until the “Marker” goes away. Inside of the MOB is a Time Marker indicating the probable time (place on the MOB) when the market will intersect with the MOB. The Time Marker will be simi-lar in color to the regular “Marker” but you can easily tell the difference by the inte-rior placement of the Time Marker.

To configure the MOB, put your cursor on top of the MOB button and click your right mouse button. This will open the MOB properties sheet.

The Zone colors selection list allows you to change the color of each of the MOB zones, as well as the Marker color.

Click this tool to draw a Make or Break (MOB). The MOB is an excellent tool that can help you find the target price area for the end of a Wave 5, or for any pattern that has an “impulse-correction-impulse’ pattern.

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To remove the MOB, put your mouse cursor right on top of the MOB you want to erase and hit your right mouse button. When the MOB Properties sheet appears, press the Remove button.

Advanced GET Premium Technical StudiesAdvanced technical studies from Advanced GET, a leading technical analysis soft-ware packages, are now available to eSignal subscribers as a premium service. If you subscribe to the Advanced GET service, you will have access to over 15 additional proprietary studies. Each of these studies is described in the following section.

You can add Advanced GET studies to a Chart window by right-clicking on an Advanced Chart window and selecting Add Advanced, then the specific tool you want to add from the sub-menu.

Auto GannThe Auto Gann Angles feature is used to display Gann support and resistance lines calculated by GET.

Recommended Usage:

The "Auto Gann Angles" is a feature in Advanced GET that quickly defines relevant Gann angles for current price action. When you first use the "Auto Gann Angles" feature, only Gann angles coming into a current price range are automatically dis-played. If, for example, you are looking for a major top, "Auto Gann Angles" projects resistance levels based on major Gann angles originating from previous sig-nificant points. If you are looking for a major bottom, "Auto Gann Angles" projects support levels.

When using "Auto Gann Angles" you can select Gann angle lines based on a default scale of 1, or you can select the "optimize." feature. Advanced GET will then opti-mize the best Gann angles it can for the data file you provide. Some purist Gann users might prefer to keep the scale set to 1. But we believe offering the optimized routine is a better approach. Our studies suggest that optimized angles for stocks, spreads, cross-rates, and foreign issues is a useful feature, and can often generate bet-ter results than sticking to a fixed setting.

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"Auto Gann Angles" can be used to reinforce major price pivot swings. It can even be useful to help identify minor price pivot swings. This is particularly effective when combined with other trading tools and studies, such as those tools used to iden-tify Type One and Type Two setups. "Auto Gann Angles" can be used in "momen-tum" price moves as well. It can provide a key Gann angle that supports or resists the current strong trend.

When you use "Auto Gann Angles" you have complete control of where angles orig-inate and, also, if the angles are moving up or down from a previous pivot. You can select which angles to use-- 1x1, 1x2, 1x4, 2x1, and 4x1.

When you use "Auto Gann Angles" you can select different target ranges. A target range is defined as, "a multiple of the range of the last bar." The target range selec-tion will determine how narrow or wide the target range will be. The default target range is 100%. When you take the range of the last bar and multiply by a factor of 1, Gann angles within that range that are turned ON-- will be displayed.

To become more familiar with how the target range selection can affect the number of Auto Gann angles to be displayed, experiment with the various target ranges. By experimenting you will see if a better combination of Gann angles will be produced. Try, for example, to widen the target range. Enter values such as 200, 300, 400, 500, or any combination. To keep a narrow target range, use the default of 100.

When using "Auto Gann Angles" you can select from which types of price pivot points to calculate the Gann angles lines. The “Pivot Types" default is set to primary and major pivots. Gann angles originating from primary lows/highs have higher pri-ority in defining the future path of trader's emotional cycle. The next line will be angles from major highs/lows, followed by the intermediate and minor pivots. All Gann angles could provide support and resistance for price swings. However, the higher hierarchy angles, such as angles from primary or major pivots, typically pro-vide stronger support/resistance. There are times when the primary and major pivots do not identify any angles. When this happens, turn on the lower pivots to see if other angles can be picked up.

When you use "Auto Gann Angles" you can select which direction to display the Gann angles within a target range, either up and down angles, only up angles, or only down angles. This feature is useful because it allows you to not display less relevant angles. In addition, it can allow for a less cluttered, more useful chart.

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The "Auto Optimized" selection allows for a new Gann angle optimization any time a chart is re-issued.

The "Auto Gann Angles" is a great feature because it can quickly provide relevant automatically drawn Gann angles to your analysis. However, for those who want to take Gann angles to its maximum potential, one should never abandon the use of other Gann tools such as the Gann Box and manually applied Gann Angles.

Menu Functions:

To display the Auto Gann Angles on a Bar chart, right click and select Add Advanced, then Auto Gann Angles. This opens the Auto Gann Angles dialog box. There are two sets of Gann Angles that can be displayed, five above the origin and five below. Each line is represented by a button that is labeled with the slope of the angle. The numbers indicate the number of price units to move per time units. To choose an angle, Select its toggle button. When the button is toggled ON (the green light in the left corner is on), the angle will be displayed. Use the scroll box to set whether the Up, Down or both sets of angles are displayed.

Use the Scale number box to set the price unit that is used in determining the slope of an angle.

If you want GET to optimize the scale for a specific chart, Select the OPTIMIZE but-ton. GET will then go back and calculate Gann Angles from all of the pivot points using a variety of different scales, selecting the best scale for you. PLEASE NOTE: this process can take from just a few seconds to a few minutes, depending on your data and the speed of your computer.

The Target % number box is used to control the range that you want to use to calcu-late the Auto Gann Angles.When this percentage is at 100%, the lines drawn will only be those that intersect within the last bar's range. If you increase this to 200%, the lines drawn will then be within twice the last bar's range.

Auto Optimize: Optimizes for each new chart quick loaded. Otherwise each chart would have to be optimized again after it is loaded.

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Auto Trend ChannelsAuto Trend Channels are Regression Trend Channels that are automatically drawn by GET based upon the degree of Pivots and the trend direction. The break of an Auto Trend Channel is usually used as an entry or exit signal.

The Trend Line On/Off button indicates if the Trend line will be displayed. The Trend Line does not have to be displayed for the Automatic Trend Channels to work properly. Press your left mouse button on this button to turn the display of the Trend Line On or Off.

The Trend Line Source selection list allows you to choose which prices are used in the calculation of the regression line:

Open= The regression line will be calculated using the open prices of the bars.

High = The regression line will be calculated using the high prices of the bars.

Low= The regression line will be calculated using the low prices of the bars.

Close = The regression line will be calculated using the closing prices of the bars.

(H+L)/2= The regression line will be calculated using the value derived from adding the highs to the lows and dividing by 2.

(H+L+C)/3= The regression line will be calculated by using the value derived from adding the highs with the lows with the close and dividing by 3.

(O+H+L+C)/4 = The regression line will be calculated by using the value derived by adding the opens with the highs with the lows with the closes and dividing by 4.

H-L Flip = the H-L flip indicates that the Automatic Trend Channels should be calcu-lated using the Low of the bars when the trend is up and the High of the bars when the trend is down.

The Trend Line Color selection list allows you to choose the color in which the Trend Line will be drawn.

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The Upper Channel On/Off button indicates if the Upper Channel of the regression line will be displayed. Press your left mouse button on this button to turn the display of the Upper Channel On or Off.

The Upper Channel Std. Devs, check box indicates if the standard deviation of the regression line should or should not be used for the Upper Channel. When this box is checked, the Upper Channel will use the standard deviation indicated in the number box directly below it. If the Std. Devs. check box is not checked, the Upper Channel is drawn using the highest or lowest bars in the trend encompassed by the channels.

The Upper Channel Color selection list allows you to choose the color used to draw the Upper Channel line.

The Lower Channel On/Off button indicates if the standard deviation of the regres-sion line will or will not be used for the Lower Channel. When this box is checked, the Lower Channel will use the standard deviation indicated in the number box directly below it. If the Std. Devs. check box is not checked, the Lower Channel will be drawn using the highest or lowest bars in the trend encompassed by the channels.

The Lower Channel Color selection list allows you to choose the color that will be used to draw the Lower Channel line.

The Minimum Pivot selection list allows you to choose the degree of Pivots you wish the Automatic Trend Channels to use as the starting point of the Trend Channel. If Primary is highlighted, the Automatic Trend Channels will only use the Primary Pivot points as starting points for the channels and will not change until a new Pri-mary Pivot point is in place.

The Pearson’s R On/Off button indicates if the Pearson’s R value will be shown at the bottom of the Automatic Trend Channels. As the Pearson’s R value gets closer to the value of 1, this means the calculated regression line is matching the actual value of the data. This means the regression line is “fitting” the trend very well. As the Pearson’s R value gets closer to the value of 0, the trend line does not match the value of the data. This means the regression line does not “fit” the trend very well. Think of this value as a percentage -- A 90 percent match is very good while a 6% match is very bad.

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Bias ReversalThe Bias Reversal indicates a potential change in trend (a reversal of a bias) point. When the Bias Reversal is drawn at the top of the screen, it indicates some degree of a change in trend and the market should move down. The opposite is true when the Bias Reversal is drawn at the bottom of the chart. If the Bias Reversal gives you a false signal, a line will eventually be drawn at the base of the signal or will be removed from the chart if the Filter is enabled.

When checked, the Filter removes any Bias Reversal signals that have been marked false signal. When this is not checked, false Bias Reversal signals are designated as “True” or “False” when the next price bar after the signal has been verified.

The Top and bottom Color lists allow you to alter the colors used to draw the Bias Reversal.

The Sensitivity selection list lets you choose between a Normal or tight sensitivity level of the Bias Reversal calculation. The Normal setting should be used in most cir-cumstances. The Normal setting will give you more signals, some of which will be “false” or smaller changes. The Tight setting is less sensitive to the market and will give you less Bias Reversal points. When using the tight setting you will have less false signals, but you will have less good signals too.

Elliott WavesElliott Waves is one of the core Advanced GET studies available in eSignal. The simplified Elliott Wave theory states that you will have a 5 wave sequence in a direc-tion, some kind of corrective pattern (most of the time), and then a new 5 wave sequence in the opposite direction.

Elliott Waves must be used in conjunction with the Elliott Oscillator.

To obtain the optimum wave count, we recommend using between 300-600 bars of data. Once you are experienced with how the wave counts are affected by Pivots, using 150 or more bars is acceptable for a wave count. Caution: Using less than 150 bars or more than 800 bars of data might result in inconsistent or bad wave counts.

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GET gives you a large amount of control in how the Elliott Wave counts are calcu-lated. The Default Elliott Wave count can be used under most circumstances, but there may be times when you need to alter the way Elliott Waves are calculated based upon the market conditions. This is when you would want to use an Alternate Elliott Wave count. Under Alternate Counts:

The Wave 4 number box indicates the percentage that Wave 4 can overlap Wave 1 before the Wave count is considered invalid and has to be recalculated. The default for any Futures contract is 17% (to account for slippage) and 0% for all other issues.

The Wave 1-3 number box indicates the maximum % level of the length of Wave 3 that the Wave 1 can be labeled. This percentage is important in the way the Wave 4 time channels and PTI are calculated. The default Wave 1-3 ratio is 50%. This means if you take the length of Wave 3, the Wave 1 could be labeled anywhere up to 1/2 the length of Wave 3. This does not mean that it will be labeled right at the 50% mark, but it could be labeled anywhere from the 1% up to 50% level according to this per-centage. If you decrease this number to 20%, this means that the Wave 1 has to be labeled somewhere between 1% and 20% of the length of Wave 3.

The Alternate 1 - Aggressive count button, when on, indicates that you will have an aggressive change in the Elliott Waves. You will want to use this setting when you are watching Wave 4 in progress and the Elliott Wave Oscillator has not only pulled back to the zero line, but has crossed the zero line and has retraced over the zero line more than 38%

The Alternate 2 - Short Term count button, when on, indicates that a shorted Elliott Wave count should be used. The Short Term count could be used to see a 5 Wave sequence inside of a strong Wave 3.

Normally, once a 5 Wave sequence is detected, the default Elliott Wave count looks for a new Wave 3 in the opposite direction, with the first price target being the previ-ous Wave 4.

The Alternate 3 - Long Term count button, when on, indicates that a much longer Elliott Wave count than normal should be used. This count should be used when the market fails to move strongly away from the end of a 5 Wave sequence. The Long Term count can look at the market on a bigger picture when this happens to deter-mine if the end of the previous Wave 5 might have really been the end of a Wave 3,

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with a Wave 5 still to be placed. This wave count should be used with the Alternate 3 Oscillator and not with the 5,35 Oscillator.

The Original button returns the Wave 4 settings and Wave 1-3 setting, along with the Elliott Waves, back to their original (default) settings.

The Labels selection list allows you to select what degrees of Elliott Wave counts are displayed on the chart. Major labels are identified as large numbers, inside of disks. Intermediate labels are smaller numbers. Minor labels are small roman numerals.

Under Colors, you have the color selection lists for the Original Elliott Waves and the original ABC colors. The colors you select from Waves and ABC are the colors in which the Original (default) Elliott Waves will be drawn. Below the Original Elliott Wave colors you have the color selection lists for any of the Alternate Elliott Waves and any of the Alternate ABC colors. The colors you select for Waves and ABC are the colors that will be used to draw any of the Alternate Elliott Waves.

The Number of Bars number box indicates the number of bars to use for the Elliott Wave count. We recommend a minimum of 150 and a maximum of 800 to get a good Elliott Wave count.

Moving AverageA Moving Average is the average price of an issue over a specified period of time. For a five period average, you would take the sum value (often the closing price of the bar) over five days, compute the sum, and divide by five. It helps you see when an old trend has reversed and a new trend has begun.

A crossover of a Moving Average and the closing prices of the bars on the chart is usually taken as an entry or exit signal. The longer the length of the Moving Average, the slower it reacts to the market and, conversely, the shorter the Moving Average, the more sensitive the moving average will be to price changes.

To change any Moving Average settings, right click, select Edit Studies and find the Moving Average whose settings you want to change in the list, highlight the Moving Average and press the Edit button. This opens a dialog box where you can change any of the Moving Average parameters.

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The Length number box indicates the number of periods used to calculate the Mov-ing Average.

The Offset number box indicates the number of periods the Moving Average should be shifted forward (+ number) or backwards (-number).

The Source selection list allows you to choose what prices are used in the calculation of the Moving Average.

Open = The Moving Averages will be calculated using the open prices of the bars.

High= The Moving Average will be calculated using the highs of the bars

Low= The Moving Average will be calculated using the lows of the bars.

Close = The Moving Average will be calculated using the closing prices of the bars.

(H+L)/2 = The Moving Average will be calculated using the value derived from add-ing the highs with the lows and dividing by 2.

(H+L+C)/3 = the Moving Average will be calculated by using the value derived from adding the highs with the lows with the closes and dividing by 3.

(O+H+L+C)/4 = The Moving Average will be calculated by using the value derived from adding the opens with the highs with the lows with the closes and dividing by 4.

Put a check in the Exponential check box if you want the Moving Average to be cal-culated Exponentially.

The Color selection list allows you to change the color of the Moving Average.

The Band One number box is used to adjust where, in relation to the price scale, the Moving Average gets displayed. When both Band One and Band Two are set to 0 (the default setting), only one moving average will be displayed. Increasing this number will move the Moving Average up on the price scale and decreasing this number will move the Moving Average down the price scale.

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The Adjust Bands check box indicates if you want to display the Adjust Bands indi-cator on the chart. The Adjust Bands indicator causes secondary lines to be displayed above or below the bands whenever the odds favor the price penetrating the bands.

The Adjust Bands Color selection list allows you to choose the color of the Adjust Bands lines when drawn on the chart.

The Optimize Normal button, when pressed, will adjust the Band One and Band Two settings to make them intersect as many high and low points on the chart as possible.

The Optimize Aggressive button, when pressed, will adjust the Band One and Band Two settings in a similar way to Optimize Normal, but more attention will be paid to the steeper trends.

The Optimize DMA button, when pressed, will open the Optimize DMA dialog box. From this dialog box you can adjust the number of Primary and Major Pivots used to calculate the best Length and Offset for the DMA.

Parabolic SARParabolic SAR is a display of “Stop and Reverse” points for a particular market. When the market touches or crosses a point, this indicates you should reverse your position. If you are long, for example, go short. If you are short, go long. The Para-bolic SAR assumes that you are always in the market.

The Acceleration Start number box contains the number of the initial acceleration.

The Acceleration Increment number box contains the number that determines how much to increase acceleration over time.

The Acceleration Maximum number box contains the maximum amount of accelera-tion that can be achieved.

The Optimize button instructs GET to find the best acceleration values for the issue you are looking at. It does this by looping through thousands of combinations of vari-ables until it finds the best set of variables that provide the most profit if you stop and reverse at every indicated point.

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The Fine Tune button is similar in function to the Optimize button, except it takes the current values for the acceleration and makes more minute adjustments to the vari-ables to find the best profit.

The Attributes Color selection list allows you to select the color in which the Para-bolic SAR will be drawn on the chart.

The Attributes Thickness number box allows you to increase or decrease the thick-ness of the lines that are used to draw the Parabolic SAR. The lines get thinner as they approach the value of 1 and thicker as they approach the value of 5.

PivotsPivots are a proprietary indicator that show the trend turning point of the issue’s price performance. These Pivot points are labeled Primary (P), Major (J), Intermediate (I), or Minor (M), depending on how long the issue maintains a particular price move-ment. Pivots are useful as starting or ending points when drawing Gann Boxes, Regression Trend Channels, Fibonacci Time, and other studies and tools.

When looking at a bar chart with Pivots displayed, you will notice that some of the Pivots are labeled in a different color than the majority of the Pivots. These are Smart Pivots, GET attempts to label these projected Pivot points as accurately as possible, but does not guarantee that they will not change. Any Pivot that is labeled in red (the default Smart Pivot color) will most likely be a Pivot of that degree, but has met the conditions of a Pivot of at least the next lesser degree. For example, if you see a Pri-mary (P) pivot labeled as a Smart Pivot, it will most likely be a Primary (P) Pivot, but has met the conditions of a Major (J) Pivot.

The Pivots Color selection list allows you to choose the color used to draw the Piv-ots.

The Smart Pivots Color selection list allows you to choose the color used to draw the Smart Pivots.

The Pivots Types check boxes indicate what degrees of pivots will be displayed on the chart.

Primary Pivots = P

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Major Pivots = J

Intermediate Pivots = I

Minor Pivots = M

Price ClustersPrice Clusters show areas where Fibonacci Extensions & Retracements tend to clus-ter in a given time period. The longer length bars are the areas where the most price activity took place.These bars are areas of support and resistance. The color differ-ence does not indicate anything; it only makes visual differentiation easier.

The Pivots Types check boxes indicate what degrees of Pivots will be used to calcu-late the Price Clusters.

The Number of Bars number box indicates the amount of bars the Price Clusters will use when calculating.

The Price number box indicates in what increments the prices will be divided to group the Retracement and Extension values.

The Color selection list allows you to change the color of the Price Clusters.

The Fibonacci section allows you to select any combination of Retracements, Exten-sions, and Elliott Extensions. When the corresponding check box has been checked, each type of Fibonacci measurement will be used to calculate the Price Clusters.

The Direction check boxes indicate whether you want the Price Clusters to be calcu-lated on Rallies, Declines, or both.

The On/Off buttons indicate if the corresponding ratio will be used in the calculation of the Price Clusters. To include/exclude a ratio from being used in the calculation, put your mouse cursor on the adjacent On/Off button and press your left mouse but-ton.

The Ratio number boxes indicate the Fibonacci ratios used in the calculation of the Price Clusters.

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The value in the Weight number box indicates the amount of importance the corre-sponding Fibonacci ratio will have. If the numbers in all of the Weight number boxes are equal, then each one of the Fibonacci ratios will have equal importance. For example, if one of the Fibonacci ratios has a weight of 100, and the remaining weights are all set at 50, then its importance will be twice as much during the calcu-lation than those having the lesser weight of 50.

TJ’s WebTJ’s Web is a display of resistance and support zones calculated using a proprietary Fibonacci formula. There are three areas displayed: Neutral Zone (NU, ND), Resis-tance Area (RA, RB, RC, RD), and Support Area (SA, SB, SC, SD).

TJ’s Web is an excellent way to get the support and resistance areas for the trading range of the next bar. As a general rule, the market pauses at each level, and if the market goes to Support Area A (SA), it will move to Resistance Area A (RA). The same is true for all of the Support and Resistance Area combinations.

The Color selection list allows you to change the color of the TJ’s Web.

The Mode selection list allows you to choose from 4 types of TJ’s Webs. The Auto-matic setting allows GET to determine what separation factor to use to calculate the TJ’s Web level. The Reduced setting is used when the market is expected to be trad-ing in a smaller, tight range. The Normal setting is used when the market is expected to behave in an average trading range. The Extended setting is used when a large amount of volatility is expected for the next trading day. The Automatic setting is usually the best setting.

Trade ProfileThe Trade Profile is a proprietary study developed by Tom Joseph of Advanced GET that can indicate areas of previous buying and selling.

The Colors selection list allows you to select the color that is used to draw the Buy Zone and the Sell Zone on the chart.

The Mult. Factor number box under Range Parameters indicates how many times the calculated Trade Profile range should be multiplied before it is displayed.

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The Average Range number box under Range Parameters indicates the range used to calculate the Trade Profile.

The # of Profile Levels number box indicates the maximum number of Profile Bars to display on the bar chart.

The Include Today check box, when checked, will include the latest data including any current market data prior to the close of the market on the current day.

XTL (eXpert Trend Locator) General Description: The XTL (eXpert Trend Locator) is a study Tom Joseph developed that uses a statistical evaluation of the market that can tell the difference between random market swings (noise) and directed market swings (trends).

Recommended Usage: The XTL is a simple but powerful tool that is not compli-cated to use. If the bars are blue in color, then the trend is up. If the bars are red in color, then the trend is down. When you have a bar turn from its normal color to blue or black, this first signal is called a Break Out Bar. An entry is taken when the bar following the Break Out Bar is the same trend color as the Break Out Bar, and the range exceeds 150% of the Break Out Bar in the direction of the trend. You would place a stop below the low of the Break Out Bar if the trend is up, and you would place a stop above the high of the Break Out Bar if the trend is down. As the market moves in the direction of the trend, you would use a trailing stop to follow the trend. To find an exit, you can use a variety of exit methods, but we recommend using the Regression Trend Channels. Please note that the XTL not a mechanical trading sys-tem. The XTL is one of the many studies (methods) available.

Menu Functions:

The Period number box is used to indicate the number of bars used to calculate the XTL. You can also change the color of the Up Bars, Down Bars, and Neutral Bars.

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Elliott TriggerThe Elliott Trigger is a confirming signal that Wave 4 has actually ended when the Oscillator retraces below the zero line.

During Elliott Wave 4, the Elliott Oscillator needs to pull back to the zero line to sig-nal the end of Wave 4. Many times the Oscillator pulls back to the zero level and continues to stay below the zero line for some time. The Elliott Trigger should only be used after the Oscillator has pulled back to the zero line. Once the Oscillator has pulled back to zero, wait for the Elliott Trigger to cross above the zero line. This pro-vides confirmation that the Wave 4 is over.

To change any of the parameters of the Elliott Trigger, put your mouse cursor inside of the Elliott Trigger window and hit your right mouse button. Press your left mouse button on the menu choice that says Properties.

The Color selection list allows you to choose the color of the Elliott Trigger.

The Time Framing Term check box should only be checked when you are using the Alternate 3 Oscillator (10,70,Osc.) in combination with the Alternate 3 - Long Term Elliott Wave count.

JTI (Joseph Trading Index)The Joseph Trend Index (JTI) is based upon a trend tracking and strength algorithm developed by Tom Joseph. This indicator can be used in conjunction with the Expert Trend Locator (XTL) as a confirmation of a trend due to the fact that they are inde-pendent calculations and are not related.

Recommended Usage:

The primary objective while designing the JTI was to create a study that kept you from taking positions against a major trend. The JTI can also act as an early warning signal prior to a breakout of a trend and at the end of the trend. The JTI can also be used as a conformation/confidence indicator when used in conjunction with the XTL to add positions during a trend.

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Menu Functions:

The Trend Length drop down box indicates what trend length the JTI will display.

The Fast Mode check box is used when you want the JTI to be extremely sensitive to any change in the trend strength. This setting should be used with caution due to the fact that it can give many false signals.

The Band 1 and Band 2 number boxes indicate at what level the upper and lower bands will be drawn.

The Bands Color selection list allows you to change the color of the bands drawn on the JTI.

The Trend Strength Color boxes indicate and allow you to change the color used for the different trend strengths when the JTI is drawn.

OSCSelect OSC to add the Advanced GET Oscillator study to an Advanced Chart win-dow. An Oscillator is simply the difference between two moving averages displayed as a histogram. Simple Moving Averages are used in this Oscillator.

When looking at an Elliott Wave count, you should be looking at the Elliott Oscilla-tor to qualify the accuracy of the count. In a 5 Wave sequence, the Elliott Oscillator should pull back to the zero line to signify the end of the Wave 4. Under normal con-ditions you will want to use the 5,35 Oscillator (Tom’s Osc.). When the market is going into an extended 5th Wave, you should use the 5,17 Oscillator (Extended). When using the Alternate Count 3 - Long Term Elliott Wave setting, you should use the 10,70, Oscillator (Alternate 3).

The Break Out Bands qualify the Wave 3. If the program is labeling a movement in the market as a Wave 3, the Elliott Oscillator should be above the Break Out Bands. If the Elliott Oscillator is not above the Break Out Bands, then there is a good chance that the market is not really in a Wave 3 and the Elliott Wave count will be relabeled.

To change any of the Oscillator parameters, put your mouse inside of the Oscillator window, right click and select Edit Studies. The Study Properties dialog box opens.

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The Mov Avg number boxes indicate the two moving averages used in the calcula-tion of the moving average.

The Oscillator Color selection list allows you to change Elliott Oscillator colors.

RSIThe Relative Strength Index (RSI) is designed to indicate a market’s current strength or weakness depending on where prices close during a given period. It is based on the premise that higher closes indicate strong markets and lower closes indicate weak markets. The RSI is displayed as three lines, the RSI and two moving averages of the RSI. The RSI is calculated by finding the percentage of positive closes (the current close is higher than the previous close) to negative closes (the current close is lower than the previous close).

Generally, a buy signal is generated when the RSI moves up through the lower band (band set to 30), and a sell signal is generated when the RSI moves down through the upper band (band set to 70). However, the buy and sell level will vary somewhat depending on the length you choose for the RSI calculation. A shorter length will result in the RSI being more volatile. A longer length results in a less volatile RSI, which reaches extremes far less often. Different uses will have slightly different lev-els at which the price changes direction. These levels are usually close to each other. The vast majority do seem to change direction at 30 and 70. It is important to note that this is not a hard and fast rule, and we recommend playing with the band levels until you find the best one for the issue you are looking at.

The moving averages of the RSI can be used in the same method as a moving aver-age on a chart.

To change any of the parameters of the RSI, put your mouse cursor inside of the RSI window, right click and select Edit Studies. The Study Properties dialog box opens.

The RSI Length number box indicates the number of bars used to calculate the RSI.

The Source selection list lets you to choose what prices are used to calculate the RSI.

Open = The RSI will be calculated using the open prices of the bars.

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High = The RSI will be calculated using the highs of the bars.

Low = The RSI will be calculated using the lows of the bars.

Close = The RSI will be calculated using the closing prices of the bars.

(H+L)/2 = The RSI will be calculated by using the value derived from adding the highs with the lows and dividing by 2.

(H+L+C)/3 = The RSI will be calculated by using the value derived by adding the highs with the lows with the closes and dividing by 3.

(O+H+L+C)/4 = The RSI will be calculated by using the value derived by adding the opens with the highs with the lows with the closes and dividing by 4.

The Color selection list allows you to change the color of the RSI.

The Moving Average number boxes indicate the number of periods that will be used to calculate the two moving averages.

The Moving Average Color selection list allows you to choose the color of the mov-ing average.

The Exponential button, when On, changes the calculation of the moving average from a simple moving average to an exponential moving average.

The Upper and Lower Bands number boxes indicate at what level the bands will be drawn.

The Bands Color selection list allows you to change the color of the bands drawn on the RSI.

StochasticThe Stochastic is designed to indicate when the market is overbought or oversold. It is based on the premise that when a market’s price increases, the closing prices tend to move toward the daily highs and, conversely, when a market’s price decreases, the closing prices move toward the daily lows. A Stochastic displays two lines, %K and

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%D. %K is calculated by finding the highest and lowest point in a trading period and then finding where the current close is in relation to that trading range, %K is then smoothed with a moving average. %D is a moving average of %K.

A sell signal is generated when you have a crossover of the %K and the %D when both are above the band set at 75. A buy signal is generated when you have a cross-over of the %K and the %D when both are below the band set at 25. These signals are not valid if a False Bar appears above or below the crossover signal. The False Bar is a proprietary Stochastics cycle study that can help weed out many of the false Sto-chastics signals. If a False Bar appears over the Stochastics signal, you should just ignore the Stochastics signal as if it had never occurred.

An alternate, more aggressive method of using the Stochastics is by using a pyramid system of adding on positions during a strong trend. As a major trend continues, you could use all of the crossing of the %K and %D regardless of where the Stochastics lines cross. For example, if you follow this approach in an up trending market, you would take all upturns by the Stochastics as additional buy signals (to pyramid your positions), regardless of whether %K or %D reached the oversold zone. The Stochas-tics sell signals would be ignored, except to take short-term profits. False bar signals would be ignored. The reverse would be true in a down trending market.

To change any of the Stochastics parameters, put your mouse cursor inside of the Stochastics window, hit your right mouse button and select Edit Studies.

The Length number box indicates the number of bars used to find a moving average when calculating %K.

The %K number box indicates the period of the moving average that is applied to %K to find %D.

The Bar Color selection list allows you to change the color of the False Bar. When the False Bar is displayed above or below a Stochastic signal, GET has determined that it is most likely a false signal. You should ignore the Stochastic signal as if it never happened.

The %K Color selection list allows you to change the color of the %K.

the %D Color selection list allows you to change the color of the %D.

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The Upper and Lower Bands number boxes indicate at what level the bands will be drawn.

The Bands Color selection list lets you change the color of the bands drawn on the Stochastics.

Time ClustersTime Clusters use the relationship of Pivot Points to the Fibonacci Time extensions. If you were to manually draw Fibonacci Time extensions from every Pivot Point combination on the chart, you would begin to see areas where there is clustering of various Fibonacci numbers. Time Clusters are a graphical representation of these areas.

Time Clusters give you an indication of where a potential change in trend may occur. The bigger the cluster, the greater the likelihood that a change in trend will happen that day. The highest point in a Time Cluster has the greatest probability that the cor-responding time period will contain the bar that is the change in trend point. Time Clusters were not designed to be used alone; they should be used as a confirming indicator or as a gauge of when a change in trend will potentially happen.

Since Time Clusters are specific to each market, it is suggested that you optimize the Time clusters using all of the bars contained in your data file.

To change any of the Time Cluster parameters, put your mouse cursor inside of the Time Clusters window, hit your right mouse button and select Edit Studies.

The Pivots Types check boxes indicate what degrees of pivots will be used to calcu-late the Time Clusters.

The Direction check boxes indicate what Pivot combinations you want to use for the Time clusters calculation. for example, if you check High <-> High, then all of the Pivot Points on the top half of the bar chart (changes from an uptrend to a down trend) will be used as the points for the Fibonacci Time extensions. If you check High <-> Low, then pivot points on both the top and the bottom part (changes in trend going both directions) of the bar chart will be used.

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The Min Bars number box indicates the minimum number of bars allowed between Pivot Points that will be considered valid for the Time Clusters calculation.

The Color selection list allows you to select the color of the Time clusters.

The Optimize button is used to display the Time Clusters Optimize dialog box. From this dialog box you can choose from a selected list of prebuilt ratios, you can opti-mize the Time Clusters using a specific number of bars, or you can optimize the Time Clusters using all of the data located in your file.

The Calculate Use All Bars as check boxes indicate if all of the bars in the data file will be used to optimize the Time Clusters.

The ‘Number Of’ number boxes indicate the specific number of bars in the data file you want to use to optimize the Time Clusters.

The Calculate button, when pressed, either examines your data using the number of bars indicated in the Number Of number box or examines the data using all of the bars and finds the ratios and weights that would have been best for this market so far.

The Prebuilt selection list allows you to browse through and select the prebuilt mar-ket ratios you want used in the optimization of the Time Clusters. Please Note: Only selected markets are included. If your market is not included, you should optimize using the Calculate method described above.

Press the Use Prebuilt button if you want the Time Clusters to be optimized using the market indicated in the Prebuilt selection list.

The On/Off buttons indicate if the corresponding ratio will be used in calculating the Time Clusters. To include/exclude a ratio from being used in the calculation, put your mouse cursor on the adjacent On/Off button and press your left mouse button.

The Ratio number boxes indicate the Fibonacci Time Ratio used in the calculation of the Time Clusters.

The value in the Weight number box indicates the amount of importance the corre-sponding Fibonacci Time Ratio will have. If the numbers in all of the Weight number boxes are equal, then each one of the Fibonacci Time Ratios will have equal impor-tance. For example, if one of the Fibonacci Time Ratios has a weight of 100, and the

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remaining weights are all set at 50, then its importance will be twice as much during the calculation than those having the lesser weight of 50.

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