Power assisted Trend Following

AignerA

New member
Hello Everyone,

I am new to this forum, i stumbled upon it since a link to my website was posted here. I don't have an account with TD but
i am thinking if anyone is interested they could try out the indicator that i developed. It is pretty simple and borrows
the calculation of 'power' from digital signal processing. It is using Wilder's ATR to give you an indication of how strong a trend is
and whether it will be profitable. I have also combined it with Graham's Growth calculation based on fundamentals together
with a basic trend following strategy yielding Sharpe Ratios in excess of 2.

The article to this can be found here.
There is also another article "The Power of Growth Stocks" getting published in the "Technical Analysis of Stocks & Commodities" magazine July 2020 issue,
so keep an eye out for that also.

Let me know if you have any questions. Thanks!

A.
 

TrueDepth

Member
VIP
"J. Welles Wilder Jr. After 10 years of losing money he was broke so
he needed to make money fast and wrote this book in the space of 6 months"

How could someone as brilliant as Welles Wilder who created RSI, ADX, pSARand ATR, lose money for 10 years on the stock market!!??? His indicators are very good, obviously. If he couldn't make money....
 

AignerA

New member
"J. Welles Wilder Jr. After 10 years of losing money he was broke so
he needed to make money fast and wrote this book in the space of 6 months"

How could someone as brilliant as Welles Wilder who created RSI, ADX, pSARand ATR, lose money for 10 years on the stock market!!??? His indicators are very good, obviously. If he couldn't make money....

He was broke „before“ he wrote this book. He has self published it and makes money on it to this day. Besides he has this company now
https://www.deltasociety.com/So I think he is not doing badly. I think his trend following is really good and quite natural in fact provided you can measure the strength or the trend and determine if it’s a good idea to follow or not.
 

TrueDepth

Member
VIP
I KNOW, that is the point. He made money from writing the book. Before that he couldn't make money from the stock market to save his life. Now he is selling delta software you say?

If you have an indicator that can actually tell when a market is trending, or going sideways that would be extremely useful. All the ones I have tried from Fractal Energy to ADX with ADX being the best, are terrible compared to eyeballing it.

Do you want someone from this forum to convert your formula into an indicator for ThinkorSwim and see if it works?
 

AignerA

New member
I KNOW, that is the point. He made money from writing the book. Before that he couldn't make money from the stock market to save his life. Now he is selling delta software you say?

If you have an indicator that can actually tell when a market is trending, or going sideways that would be extremely useful. All the ones I have tried from Fractal Energy to ADX with ADX being the best, are terrible compared to eyeballing it.

Do you want someone from this forum to convert your formula into an indicator for ThinkorSwim and see if it works?

i also verified his ADX and other indicators for the strength of a trend but found no satisfactory relation. The Noise was just too big to be meaningful but maybe it worked on futures back then who knows ...

If someone wants to try it out and write a script here and let me know what they think yes! I don’t have an account with TD.
I have tested it using about 2300 names over the last 100 days and results look very promising.
 

TrueDepth

Member
VIP
I think ADX works, not great, but ok. Can you make your indicator simple to understand, like the ADX screenshot below.
If ADX is rising then the stock is moving. If ADX is coming down, then the stock is going sideways/low volatility.

Does your PowerRatioSignal spiking up, predict a big move coming?

JhRf2I.png
 

mashume

Well-known member
VIP
Lifetime
@AignerA

I looked at your paper, and while it looks interesting, there are a few things that aren't clear to me at least.

1. Equation 7 is incorrect. As printed, it is always equal to 1. The textual description is Noise over Threshold, but the equation is printed as the square root of Noise over Noise.
2. I'm unclear as to your actual definition of power -- at least instantaneous power (P sub j). Is it simply 4 * the ATR Stop Loss, or some combination of ATR Stop Loss and current price?

I like the mathematical idea of taking the energy inherent in a move in stock price and trying to see whether the price action is adding more energy or using up energy to maintain a price level, but I'm not sure here. I tried coding it up, and had worked backward through the code until I realised that there was no definition of the instantaneous power given clearly.

If you have code that worked in another platform, R, Python, Matlab even, you're welcome to post it (if it doesn't violate rules) and let us all take a look. There are many good coders around here.

happy trading,
Mashume
 

Similar threads

The Market Trading Game Changer

Join 2,500+ subscribers inside the useThinkScript VIP Membership Club
  • Exclusive indicators
  • Proven strategies & setups
  • Private Discord community
  • ‘Buy The Dip’ signal alerts
  • Exclusive members-only content
  • Add-ons and resources
  • 1 full year of unlimited support

Frequently Asked Questions

What is useThinkScript?

useThinkScript is the #1 community of stock market investors using indicators and other tools to power their trading strategies. Traders of all skill levels use our forums to learn about scripting and indicators, help each other, and discover new ways to gain an edge in the markets.

How do I get started?

We get it. Our forum can be intimidating, if not overwhelming. With thousands of topics, tens of thousands of posts, our community has created an incredibly deep knowledge base for stock traders. No one can ever exhaust every resource provided on our site.

If you are new, or just looking for guidance, here are some helpful links to get you started.

What are the benefits of VIP Membership?
VIP members get exclusive access to these proven and tested premium indicators: Buy the Dip, Advanced Market Moves 2.0, Take Profit, and Volatility Trading Range. In addition, VIP members get access to over 50 VIP-only custom indicators, add-ons, and strategies, private VIP-only forums, private Discord channel to discuss trades and strategies in real-time, customer support, trade alerts, and much more. Learn all about VIP membership here.
How can I access the premium indicators?
To access the premium indicators, which are plug and play ready, sign up for VIP membership here.
Top