February 2021 Newsletter – Moving Trend Indicator Cuts the Lag

Capture the Early Moves

Traders often turn to moving averages to eliminate noise in data. The problem with moving averages is they lag too much to give you the trading signals in time to capture the early part of the move. The result is missed profits.

We went back to a Traders’ Tip from a January 2003 article by William Rafter in Technical Analysis of STOCKS & COMMODITIES magazine to find an indicator called The Moving Trend that remedies the lag problem.

The indicator uses a linear regression of the last five periods of data. The resulting value is the current value for the trend of the last five periods. Move the linear regression ahead 1 period and compute another linear regression. According to Rafter, this indicator “smooths out random fluctuations, but quickly adjusts to more serious market moves.”

He calls the Moving Trend a forecast, not lagged data, which he uses as a surrogate market.

What Does This Mean?
Rafter suggests that you can use the Moving Trend as the basis of indicators, or to create a surrogate bar chart.

Create Some Synergy with NeuroShell Trader
We decided to combine the power of the Moving Trend indicator with the Prediction Wizard in NeuroShell Trader. The example chart shows an equity curve that doubles that of the original prediction.

We built a standard prediction with inputs of Relative Strength Index (RSI), Stochastic %K, and On Balance Volume indicators calculated using the close.

For the second prediction we used the same indicators but substituted the Moving Trend indicator for the close when calculating the above indicators and included the Moving Trend as a separate input.

The bottom graph shows a green equity curve for the original prediction and a blue equity curve for the Moving Trend model.

Click here to download the chart. Once you download the chart, the Moving Trend indicator will be saved as a Custom Indicator that you can use in your charts.


Do You Have the Latest Version of NeuroShell Trader?

Some customers who are setting up their trading systems for 2021 have reported problems when trying to load existing charts or creating new charts that include data for 2021.

On January 2, we posted a revised version of NeuroShell Trader on www.ward.net that fixes this data problem.

Current owners of NeuroShell Trader versions 6 or 7 can download the revised version for free. The link can be found in the Downloads, Release News and Upgrade Information section of www.ward.net.  You need your NeuroShell Trader serial number and password to access the web site.

Users who have older versions of the Trader need to update to the current release.

Click here to update your software.


When is the last time you visited nstsupport.wardsystemsgroup.com ?

If you have not visited our technical support website lately, you are missing a chance to see the latest example charts from both the Technical Analysis of STOCKS & COMMODITIES magazine and our monthly newsletters. Many of these charts include new indicators. Once you download and open an example chart, the new indicators are automatically saved in the Trader’s custom indicator category for use in your new charts.

This is also the spot to learn the answers to current technical support questions.

Want to get into a discussion with fellow NeuroShell Trader users? Visit the Community Forum.

Information is free and you do not have to own NeuroShell Trader to visit.


Having a problem downloading our example charts?

Some browsers have added more security features which makes it difficult to download files. In Google Chrome, for example, you can fix the problem by right clicking on the download link and choose “Open in new tab”. You can then download the file.

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