Metastock Indicator Formula |
Relative Vigor Index Signals |
Relative Vigor Index Signals (RVI):
Introduction:
After 6-years practice of making trading and technical strategies I succeeded in finding innovative tool. I am able to identify the beauty of western and Japanese concept of technical analysis. I started thinking how to give a little mix concept of these broad psychological studies into one. For achieving this goal I pointed opening price has significance in Japanese and less significance in western studies. I used these parameters with close for finding difference and tried to give meaning to the whole day of volatility. I was confused that what term I will use to give appropriate meanings On other side simultaneously I was in linked and doing different free e-mail courses. Onwards i found an e-mail where I got this concept in details but that was unfinished, little confused and difficult to code in meta-stock. For the time being I was thinking how I was accurate about the concept for measuring vigor of the pattern, which indicate primary strength. The concept first introduces by John Ehlers who was the creator of the highly acclaimed MESA and EPOCH trading programs.
The philosophy of the relative vigor index:
The philosophy behind the index is that the price tends to close higher than they
open in an up markets and closes lower than they open in down markets. The basic assessment of the concept is to identify energy of the moves, which usually established by where the price closes at it each eve of the up ladder. For achieving the goal every concept is based on the certain logics. This concept is near to the logic especially matched with the candle patterns, the white candle and the black candle a Japanese concept.
Logic of the concept:
Close – Open
For determining concept we need a yardstick that must have certain range of the particular day. Obviously in this regards we need the whole day activity in a sense of making particular range and that range could suppose to be as the day of high and low. I.E.
Range = High – Low
It is then for measuring we need to divide with actual concept for the purpose of
translating vigor of the move. I.E.
Relative Vigor Index (RVI) = (close – open) / (High – Low).
Through this it is very simple to visualize actual day of the activity for making inference of the day trading or specific swing trading strategy.
For making efficient signals I adjusted the logic with moving average concept along with it and also put barriers for pointing out the overbought and oversold region, which is based on the oscillator parameters. The reason is that each price reflects the consensus of value among the mass of market participants at the moment or day of the trade. This is only moving average, which represents an average consensus of values in a selected time period and its method. By default values I used 3 day moving average with simple average method in each parameter numbers box. It is then the narration quoted with double moving average for smoothening the curves into symmetrical face. And also, assigned overbought and oversold state for day basis traders.
Formula coding in meta-stock software:
x:= Input("Moving Average1", 1, 1000, 3);
y:=(CLOSE-OPEN)/Max((HIGH-LOW),0.000001)*100;
a:=Mov(y,x,S);
a;
80 ;0;-80
Advantage:
This indicator applicable to all types of tradable instrument and automatically adjusts price gaps to make right decisions without necessary adjustment in price graph. This is especially applicable for equities stock analysis where on every quarter to yearly basis cash dividend and stock dividend announced by the companies. If gap of cash and stock dividend after or before ex-price not finish will create problems for the analyst to give inference on the equity stock such as whether particular company need to sell or buy on last day before ex-dividend price in equity market.
Dis-Advantage:
As like other indicators it does not indicate how much the position size you need to execute for trading order in different time frame.
Rules and Conditions:
· Crossovers concept between RVI and if you put moving average line gives the force of specific direction. Through double-coated RVI concept with moving averages I made it easy to visualize and more interesting to identify consensus actual day of the trend.
· Buy signal ---- When RVI trade on bottom barrier -70 to -80.
· Accumulation signal---- When RVI trading below the mid line 0 indicate accumulation is intact and buy signal is expected.
· Sell signal---- When RVI signal trade on top barrier +70 to +80.
· Distribution signal---- When RVI trading above the mid line 0 indicate distribution is intact and Sell signal is expected.
· Overbought---- Above or just little below of the upper barrier at +80.
· Oversold---- Below or just little above the lower barrier at –70.
· If RVI trading at 0 barrier then reflect neutral or check with other indicator.
Good Trading,
Asad Tirmazie
Qualification of the indicator:
This indicator is not for recommendation to buy or sell, but rather provides you guideline for interpreting patterns or moves. This indicator should only be used by investors / traders / funds managing institutions and professionals of banks who are aware of the risk inherent in securities trading. I used my efforts as a man of ordinary prudence to provide best possible solution of the problems. I personally accept no liability whatsoever for any loss arising from any use of signals or conventions or rules and conditions of this indicator.
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| Formula: |
x:= Input("Moving Average1", 1, 1000, 3);
y:=(CLOSE-OPEN)/Max((HIGH-LOW),0.000001)*100;
a:=Mov(y,x,S);
a;
80 ;0;-80
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