The indicator that Mr. Singer describes as the basis of his fund switching strategy is reproduced in a custom buy indicator built for the NeuroShell Trader. A sell indicator was also created as an extension of Mr. Singer’s research. Users of NeuroShell Trader can go to the STOCKS & COMMODITIES section of the NeuroShell Trader free technical support Website to download the two indicators, source code, and an example chart.
The NeuroShell Trader Professional allows users to build even complicated indicators in standard languages such as C and Basic. We have programmed Jack Singer’s indicator in Power Basic so that it becomes an integral part of the NeuroShell Trader. Users can modify the source code, and optimize parameters such as the 104 week lookback period in the Trader’s genetic algorithm optimizer. The source code has also become a new example of using Power Basic with the NeuroShell Trader.
In the first example, Retrace Buy, the indicator finds the highest value of the input time series during the period specified by the parameter period. Then it finds the lowest value of the series after that high. It then computes the percent change from that low. The theory is that if the percent change is greater than, say, 10%, we are in a buy situation.
In the second example, Retrace Sell, the logic is reversed. We look for the lowest value in the window (Period) and starting from there we seek the high. We then compute the percent change (which is zero or negative) from that high.
Use the optimizer in the Trader Professional to find optimal values of the window size and the retracement threshold (i.e., put both indicators in a trading strategy, one for buy and one for sell). Jack Singer suggests using this indicator on weekly mutual fund data with a window size of 104 weeks.
After downloading the custom indicators, you can insert them into your chart (Figure 1), Prediction, or Trading Strategy by using the Indicator Wizard and selecting the Retrace Indicators Category (Figure 2).
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