OmniTrader Professional Forum : OmniLanguage Discussion : Divergence from an index

You are currently browsing as a guest.
You should logon to access more features

A Self-Moderated Community - ALL MEMBERS, PLEASE READ!
Vote for Members who contribute the most to your trading, and help us moderate content within the Forums.

Current location		Thread information
OmniTrader Professional Forum OmniLanguage Discussion Divergence from an index		Last Activity 10/5/2024 12:51 AM 2 replies, 2132 viewings

Jump to page : 1
Now viewing page 1 [25 messages per page]

< Previous Thread :: Next Thread >

Printer friendly version

^ Top

CPTX81

New User

Posts: 1

Joined: 1/5/2015

User Profile

Subject : Divergence from an index
Posted : 1/5/2015 1:02 PM
Post #23274

Hello everyone!

I am looking for help, creating a system/strategy that will base entry and exit points off divergence- particularly in reference to the indexes.

For example, I am trying to make a "buy signal" happen when the S&P index ($SPX) breaks away from the price movement that a symbol is doing, like the ETF for the iShares Russell 2000 - IWM.

The attached chart (using the "Typical Price Indicator" overlaying "$SPX"....) with this post, has 1 example of this. Beginning early June 2014, both the IWM and $SPX began very similar price movement. Once the price movement changed about a week into the month, the $SPX began to decline in value- yet IWM went up.

If I can use these large "breaks" or departure in price as an entry condition/filter, it could help me out a great deal.

Thank you so much for your help!!!

Best Regards,

CP

Attached file : IWMExampleDivergence.png (45KB - 375 downloads)

^ Top

Jim Dean

Sage

Posts: 3433

Joined: 3/13/2006
Location: L'ville, GA

User Profile

Subject : RE: Divergence from an index
Posted : 1/5/2015 1:27 PM
Post #23275 - In reply to #23274

Unfortunately that divergence is an "optical illusion". The scale of the candles is auto-adjusted based in the time period in view, and the scale of the orange line is also auto-adjusted, independently of the candle scale.

To see this, I suspect that if you adjust the view (using the sliders not by dragging the edges of the chart with the mouse) so that Oct is on the far right, and May is on the far left (ie panned right and zoomed), then the Orange line will appear to shift upwards and accordion out vertically, relative to the candles.

That is, OT determines the highest and lowest values of the candles within the desired date view range, then sets the price axis to just barely contain that high low range. It does the same thing independently for the Orange line (without showing the Orange line scale).

So, the relative positioning of the candles vs the line will vary depending on the date range selected. What you are seeing is an effect of auto-scaling.

[Edited by Jim Dean on 1/5/2015 1:29 PM]

^ Top

Jim Dean

Sage

Posts: 3433

Joined: 3/13/2006
Location: L'ville, GA

User Profile

Subject : RE: Divergence from an index
Posted : 1/5/2015 1:33 PM
Post #23276 - In reply to #23275

However, it's possible to mathematically determine when the candles are moving faster or slower than the line, in a given direction, relative to historical values for those two independent data streams. This can be done in several different ways.

But - it won't match what you've shown in your snapshot (except by coincidence).

Jump to page : 1
Now viewing page 1 [25 messages per page]

< Previous Thread :: Next Thread >

Legend			Action		Notification
Administrator Forum Moderator	Registered User Unregistered User		E-Mail this thread to a friend		Toggle e-mail notification

For any problems or issues please contact our Webmaster at webmaster@nirvsys.com.