The Z-Score Indicator described in Veronique Valcu’s article is already one of the standard indicators in NeuroShell Trader’s library of over 800 indicators. You can easily insert the Z-Score indicator into a chart as follows:
1. Select ‘New Indicator …’ from the ‘Insert’ menu.
2. Select the ‘Statistical’indicator category.
3. Select the ‘Standard Normal: Z-Score’ indicator.
4. Change time series and periods parameters as desired.
5. Press the Finish button.
You can insert the Bollinger Band indicators as follows:
1. Select ‘New Indicator …’ from the ‘Insert’ menu
2. Select the ‘Time Series’ indicator category.
3. Select both the ‘Bollinger Band High’ and ‘Bollinger Band Low’ indicators.
4. Change the period parameters to 20.
5. Press the Finish button.
To create the Trading Strategy described by Valcu, you first need to create two moving averages of the Z-Score.
1. Select ‘New Indicator …’ from the ‘Insert’ menu.
2. Select the ‘Simple Moving Average’ category.
3. Select the ‘Simple Moving Average’ indicator.
4. Change the Time Series to the Z-Score indicator.
5. Change the period parameter to 3.
6. Press the Finish button.
Right mouse click on the indicator you created, select the rename option, and call the indicator 3 Day Mvg Avg.
Next, create another Simple Moving Average and this time change the Time Series to the 3 Day Mvg Avg and change the period parameter to 5. Again, rename this indicator to 5 Day Mvg Avg.
Next, select ‘New Trading Strategy …’ from the ‘Insert’ menu and enter the following long and short entry conditions in the appropriate locations in the Trading Strategy Wizard:
Generate a Buy Long order if the following is true:
A > B 3 Day Mvg Avg > 5 Day Mvg Avg
Generate a Sell Short order if the following is true:
A < B 3 Day Mvg Avg < 5 Day Mvg Avg
If you own the NeuroShell Trader Professional or NeuroShell DayTrader Professional, you can use the Optimizer to find the best parameters for these trading rules.
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