101 Stock Market Picks Generating Tools
1. ACCELERATION
BANDS (ABANDS)
DESCRIPTION
The Acceleration Bands (ABANDS) created by
Price Headley plots upper and lower envelope bands around a simple
moving average. The width of the bands is based on the formula below.
FORMULA
Upper Band = Simple Moving Average (High
* ( 1 + 4 * (High - Low) / (High + Low)))
Middle Band = Simple Moving Average
Lower Band = Simple Moving Average (Low *
(1 - 4 * (High - Low)/ (High + Low)))
EXAMPLE
2. ACCUMULATION/DISTRIBUTION (AD)
DESCRIPTION
The Accumulation/Distribution (AD) study
attempts to quantify the amount of volume flowing into or out of
an instrument by identifying the position of the close of the period
in relation to that period’s high/low range. The volume for the
period is then allocated accordingly to a running continuous total.
FORMULA
AD = cumulative ((((Close - Low) - (High
- Close)) / (High - Low)) * Volume))
EXAMPLE
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3. AVERAGE
DIRECTIONAL MOVEMENT (ADX)
DESCRIPTION
The Average Directional Movement Index (ADX)
is designed to quantify trend strength by measuring the amount of
price movement in a single direction. The ADX is part of the Directional Movement
system published by J. Welles Wilder, and is the average resulting
from the Directional Movement indicators.
FORMULA
Directional Movement (DM) is defined as the
largest part of the current period’s price range that lies outside
the previous period’s price range. For each period calculate:
+DM
= positive or plus DM = High - Previous High
-DM = negative or minus DM = Previous
Low - Low
The smaller of the two values is reset to
zero, i.e., if +DM > -DM, then -DM = 0. On an inside bar (a lower
high and higher low), both +DM and -DM are negative values, so both
get reset to zero as there was no directional movement for that
period.
The True Range (TR) is calculated for each
period, where:
TR
= Max of ( High - Low ), ( High -PreviousClose ), ( PreviousClose
- Low )
The +DM, -DM and TR are each accumulated
and smoothed using a custom smoothing method proposed by Wilder.
For an n period smoothing, 1/n of each period’s value is added to
the total each period, similar to an exponential smoothing:
+DMt
= (+DMt-1 - (+DMt-1 / n)) + (+DMt)
-DMt
= (-DMt-1 - (-DMt-1 / n)) + (-DMt)
TRt
= (TRt-1 - (TRt-1 / n)) + (TRt)
Compute the positive/negative Directional
Indexes, +DI and -DI, as a percentage of the True Range:
+DI
= ( +DM / TR ) * 100
-DI = (
-DM / TR ) * 100
Compute the Directional Difference as the
absolute value of the differences: DIdiff = | ((+DI) - (-DI))
|
Sum the directional indicator values: DIsum
= ((+DI) + (-DI)) .
Calculate the Directional Movement index:
DX = ( DIdiff / DIsum ) * 100 . The DX is always between 0 and
100.
Finally, apply Wilder’s smoothing technique
to produce the final ADX value:
ADXt
= ( ( ADXt-1 * ( n - 1) ) + DXt ) / n
EXAMPLE
4. ADAPTIVE
MOVING AVERAGE (AMA)
DESCRIPTION
This indicator is either quick, or slow,
to signal a market entry depending on the efficiency of the move
in the market.
FORMULA
AMA = AMA(1) + α * (Close - AMA(1))
Where:
- α = [(VI * (FC - SC)) + SC] ²
- VI = Users defined measure of volatility or trend strength.
- SC = 2 / (SN + 1)
- FC = 2 / (FN + 1)
- FN = Slow moving average < SN
EXAMPLE
5. ABSOLUTE
PRICE OSCILLATOR (APO)
DESCRIPTION
The Absolute Price Oscillator (APO) is based
on the absolute differences between two moving averages of different
lengths, a ‘Fast’ and a ‘Slow’ moving average.
FORMULA
APO = Fast Exponential Moving Average - Slow
Exponential Moving Average
EXAMPLE
6. AROON
(AR)
DESCRIPTION
The Aroon (AR) indicator developed by Tushar
Chande attempts to determine whether an instrument is trending and
how strong is the trend. AroonUp and AroonDown lines make up the
indicator with their formulas below.
FORMULA
AroonUp = ((Number of periods - Number of
periods since highest high) /Number of periods) *100
AroonDown = ((Number of periods - Number
of periods since lowest low) /Number of periods) *100
EXAMPLE
7. AROON OSCILLATOR (ARO)
DESCRIPTION
The Aroon Oscillator (ARO) developed by Tushar
Chande is calculated by subtracting AroonDown from AroonUp.The Aroon
Oscillator ranges from -100 to 100.
FORMULA
AROSC = AroonUp - AroonDown
EXAMPLE
8. AVERAGE TRUE RANGE (ATR)
DESCRIPTION
The Average True Range (ATR) study measures
the size of the period’s range, and takes into account any gap from
the close of the previous period.
FORMULA
ATR = Average ( True Range, n )
Where:
- True Range = Max of ( High - Low ), ( High -PreviousClose ), ( PreviousClose - Low )
- Average = Simple, Exponential, Weighted, and Triangular
- n = Time period
EXAMPLE
9. VOLUME ON THE ASK (AVOL)
DESCRIPTION
The Ask Volume (AVOL) study displays the
total amount of transactions occurring on the Ask in a given interval.
FORMULA
Ask Volume = Number of contracts traded at
the Ask
EXAMPLE
10. VOLUME
ON THE BID AND ASK (BAVOL)
DESCRIPTION
The Bid/Ask Volume (BAVOL) study displays
the total amount of transactions occurring on both the Bid and the
Ask in a given interval.
FORMULA
Bid/Ask Volume = Number of contracts traded
at the Bid and the Ask
EXAMPLE
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