Sunday, 9 March 2014

Amibroker AFL with Buy Sell Signals

I am posting another AFL, which can be useful to plan your trades. This AFL is particularly useful for traders who do swing trading. In swing trading the trader prefers to wait for a trading signal based on confirmed change of trend. This signal can take short to long trading days. In this trading system a trader can safely find an entry point, but waiting for an exit signal can take away some of the gains generated.

Most analyst advice, whenever a trade is entered, the exit point too must be decided based on some criteria. These criteria can be anything from percentage of return to specific price target.

What this AFL attempts to do is it gives an entry point along with a target price to wait for an exit. It also cautions the trader, with a stop loss level. The back ground color can be adjusted to suit the viewing comfort. The chart window also displays a trending ribbon, which serves as a trend indicator. The time frame can be adjusted for daily, weekly or monthly. In every time frame chosen, the entry and the exit points can vary. My opinion is to look for a weekly mode setting, which can give a meaningful value. A word of caution here – deploy this AFL along with other indicators for confirmation of trends. I suggest, the Stochastic Momentum Index for confirmation. I have tweaked the codes slightly to avoid booking profits too early.

Please back test this AFL before taking a call.
The AFL can be downloaded free from here

Happy trading and best wishes.

Tuesday, 11 February 2014

Candlestick chart pattern identification AFL

candlestick chart patternToday i am posting an AFL, which could point to finding some of the important candle patterns. The patterns include Morning Doji star, Morning star, Three white soldiers, Piercing Line, Downside Tasuki Gap, engulfing Pattern, Abandoned Baby, Dragon fly Doji and Harami. When these patterns are identified, the number 1 appears in the results window, indicating the confirmation of the pattern. The volume is also included in order to select the desired volume levels. The results can be exported using the File menu in the analysis window, in the form of CSV, txt or html format. It is better to export it the the .csv format, so that it can be easily manipulated and analyzed in MS Excel program.

This afl will not show any charts in the chart window, because this is meant for analyzing the stocks. it is quite tedious to check candle pattern one by one for the reversal patterns. This AFL comes in handy to do this work in the shortest possible time. 

This AFL can be stored anywhere in the computer, but its preferred destination is the customs folder in the formulas folder. The amibroker has all the options to run this afl. One can scan the entire symbol list or selected symbols. Similarly, it can be run for any number of days or a single day.

Under Apply to , there are three options all symbols, current symbol and use filter. This mean the user can select a single stock or multiple stocks. Under the range from a single day quote to date range specified quotations could be selected for explorations. The above description is for a new user.

Finally using the candlestick chart patterns for trading purpose, need sufficient knowledge of various candlestick patterns. I suggest that the readers  to take interest in acquiring knowledge about candlestick chart patterns.

Click here to download the AFL for pattern identification

Thursday, 23 January 2014

Amibroker AFL for Butterworth Trending System

After a long gap, I am posting another AFL here. This AFL is known as Butterworth Trending system. The basic purpose of this system is to identify buy or sell signals that carries a high winning ratio. This AFL is most suitable for delivery-based trades and strictly not for intraday trader.

Before deploying this AFL, I request the trader to study the charts generated by the AFL. Because this system is good as a trend indicator rather than a buy sell generator. Therefore using this system along with another system to enter trade is advisable. Since long-term goals are looked for with this AFL, I would suggest that use of weekly or monthly mode in the chart patterns. 

It is always better to use another indicator along with this trading system. I also would like to suggest another AFL - Stochastic Momentum Index (download from here) that can be used along with this AFL. The suggested settings are look back of 35 smooth I of 3- smooth 2 of3 and the signal also at 3. Combination of these two AFLs (plotted separately on the chart window) could give out an early alert to the trader. The trader must study the system well and develop a trading plan. If cleverly used, this AFL is bound to bring in some profits.

I am not the creator of the AFL mentioned here The AFL has been coded by R.Rajandran of Marketcalls, who is doing an excellent service to the trader community. All credits goes to him.

Happy trading and good luck.

Saturday, 11 January 2014

Trading Psycolology

Everyone is interested in making money in the share market. They enter the share market with high expectations, looking forward to make money with share trading. But in reality about 90 percent of the share trader often experience loss of money. Very small percentage of trader manages to win and stay in the share market. In this article we will be looking at. some prominent reasons why traders lose money in the share market. 

Greed and fear is the number one cause that damages a share trader.

Lack of knowledge of the share market and its functioning becomes the second most common reason.

Taking advantage of exposure or margins provided by the share   brokers, without considering the market trends

Ignoring the news related to the share markets, particularly individual share that is mostly under scanner or widely discussed.

Ignoring the risk management 

Ignoring the money management rules

All the above said causes are interlinked to one another. Let us take the first cause. Most of the traders who get affected are due to greed and fear. Traders who buy a share wait till the share  price begin to climb and sell it to take some profits. When the same share keeps on making new high, the same trader who sold it earlier tend to buy it and seek more profit. But this time the trader gets into trouble. The share price that was on the run slows down and begins to come down. The trader eventually sells the same share this time losing some money. What could be the reason?  In this case the trader had little or no knowledge about the share that he has traded. He had traded without any knowledge of the share s support and resistance levels.

The fear factor which comes next is another thing which takes away the capital of many traders. When a share is bought the price of the share starts to declines. When it is sold the price begins to climb high. This is a very common occurrence in share market with which many day traders are familiar. Why should a trader gets exited and buys or sells and still realize loss of money? 

Most of the traders especially the day traders take advantage of exposures or margins as popularly known, provided by the share brokers. Share brokers usually allow 10 times exposure of the cash deposited by the traders. ( in Forex market the margins allowed are several times higher) The traders take these exposures as an advantage and take full benefit out of this. The result is when there is a price rise, good profits may come in but if the correction sets in, the trader loses a lot of money. Fearing the erosion of the capital, the traders take quick decisions to close the positions they hold. So here we understand the power of fear. Margins offered by brokers can be utilized only with proper knowledge of the price movement of share the trader is trading. If not it will only be beneficial to the share brokers in the form of brokerage charges.

Lack of knowledge is one of the most important factors which could be widely observed. In our day to day life we meet many professionals. They have become professionals after proper education in the fields they have chosen. Similarly the traders too must devote considerable time and energy to study the share markets. There are some must learn subjects like Dow Theory, Gann Theory and Elliot wave Theory. Knowledge in one or more of these theories can maximize the winning percentage of trades. 

Market news is something that a trader should be always be aware of. Changes in policy decisions, news related to share markets, and also international happenings can increase the volatility of share market. To be on the right side of the market the trader should make it a point to pay attention to all share market news.

Risk is a word associated with any type of business. The share market too carries a great amount of risk.  Risk management is a very special talent that requires the full concentration of the trader. Proper risk management helps the trader to cut loss early and preserve capital. 

Another important factor is Money Management. The trader should have a trading plan. He should not put all his eggs in one basket. He should learn to diversify. There is a rule that requires only 10 % of the capital be invested in one share . The trader is also required to have some money as reserve. He should only deploy the surplus money set aside for investing. No borrowed money should be used for trading. Trading with very strict discipline can help a trader in the long run.
Can trading be a full time business? There is no definite answer to this question. Trading can be profitable and a full time business only for those who can mobilize large money and reserve capital. For others it cannot be a full time business. There are good reasons for this statement. The main reason is the share market has its own ups and downs. The downtrends can last for months leaving little or no room for a small time trader to make money. Therefore unless he has another source of income he may face difficulties to manage his living.

Trading in share market can be interesting if a person acquires the necessary qualities to be a share trader. Trading can be highly rewarding if carried out in the way it is supposed to be done.

Friday, 3 January 2014

Elliot Wave Theory - Amibroker AFL

The Elliot wave theory was presented to the trading community by Ralph Nelson Elliot in the years 1968 and 1969. In this remarkable work he has emphasized that the market movement is based on a pattern of five impulsive upward waves and three corrective downward waves. the stock market is largely driven by investor sentiments and related news. The stock price reflects the investor behavior. Stock price may witness newer highs and steep corrections. All these are part of share trading. Elliot has taken into consideration almost all the actions of the trading activity before formulating his theory.  He strongly believed that by studying the wave pattern one can anticipate the next price movement.