ATR Stocastic Oversold with ATR BUY setup

How Do I Create the 3/10 Oscillator?
One of the most popular questions I get on the blog refers to the “3/10 Oscillator.” I thought I’d take a moment and share how it’s constructed and some basics about the Oscillator.

The following chart shows the theory behind the construction of the Oscillator

-------------
http://www.kirkreport.com/09/rom_11_7_09.gif - ROM
asr: it shows big boss must have traded good with this ATR support line
These day Mr. K strategy seems
1) first fundamental reserach sector performance, stock with in sector
2) finding OB/OS with stochastic with No-ATR violation and observing length of NO ATR violation ( McClellan oscillator T2 ...)
3) looking market sentiment data
------------

asr: note: Here worden is wrong all these short calls on this page
http://peterworden.blocks.com/Category/Short%20Candidates

Worden BUY calls also wrong, but red/green chats show good down/uptrend, notice the parameters used for TSV, MS, etc. all same for all symbols ( so there is consistency ). since Mr. K advice many times so there is some value
http://peterworden.blocks.com/Category/Exchange%20Traded%20Funds

Worden education
asr: it seems buying these videos can help master "money stream" and 'TSV' of Worden. It is worth the price , they have 1 year refund warrenty.

http://www.worden.com/legacy/Products/BooksAndVideos/?

Mr. K again advised these telecharts here -- IMPPPPPPPPPPP!!!!!!!!!!!!!!!!
http://www.kirkreport.com/membersonly/2009/10/21/member-mailbag-14/

----
Time Segmented Volume TSV and Money Stream MS indicators , see chat this is the one used by Kirk (his fav. ).
seems TSV and MS are good indicators only available in Telecharts see url below , it is very nice compact charting
http://www.worden.com/legacy/TeleChartHelp/TeleChart.htm#Indicators/Time_Segmented_Volume.htm?
-----

asr: see this post ,dated JUN-2008
http://www.kirkreport.com/membersonly/2008/06/13/kirks-mailbag-2/

Essentially, my goal is to develop a mechanical trading system that basically identifies 10 stocks from my stock screens with the most upside potential for a one week hold time. I’ve begun initial testing and tracking of this strategy and I’m excited about its potential (so far my results have been positive with an average 7% weekly return with minimal drawdowns of no more than -2%). But, it needs more time and testing especially over different market conditions before I can put it into action. The basis of this mechanical system is so different from what I’ve done in the past and I wouldn’t have found it if I hadn’t been dedicating so much more time to my research and trading this year.
------------

Starting next year I will no longer provide access to trading portfolio. This was an extremely difficult decision to make and I assure you that it was not made in haste. I’ve been debating about doing this for well over two years now and I think ultimately it must be done.

The main reasons for removing the trading portfolio feature from the website include the following:

1) Far too many members are still using my trading portfolio as a way to copycat trades I make even though I do everything I can to prevent that from happening
-------------

A lot of people want to know more about how I spend my time and when I make statements that stock screening takes me hours, I can understand the utter confusion and disbelief. As you say, under your approach, it is as simple as running a screen and downloading the results and off you go!

My stock screening process is fairly complex because I’m undertaking a significant, and what I think will ultimately be, very important research into the creation and design of an advanced screening system. Using what I’ve learned about stock screening in the past along with continued research and development, this project has become a very big part of my professional life. As might imagine, this research process requires a lot of performance testing and tweaking of criteria as well as tracking the screens over various time periods.

Currently, I’m actively working on a little over 300 different screens using the same tools I’ve detailed on my tools of the trade section. My goal with this research is to come as close as I possible can to the so-called holy grail of stock screening.

-----------
http://www.kirkreport.com/membersonly/2008/02/08/mailbag-4/

5) Filter your screens by technical parameters. Using filters that look for oversold/overbought stochastics, relative strength, money flow, on balance volume, etc. will help you trim down your screen’s selections.
-----
Q: hot to find Reversals
http://www.kirkreport.com/membersonly/2008/11/04/mailbag-18/

Using Teresa Lo’s InVivo Universal Stops or SmartStops may also help you with determining those levels. Beyond that, I often find subtle clues on what to watch for by looking at how the stock performed in the past when it pulled back to its 50 day moving average, etc. similar to the current setup.
---------------------------

InVivo STOPS better than Parabolic SAR ( seems K uses along with ATR ... )

http://www.kirkreport.com/membersonly/2008/06/06/kirks-mailbag/

CYTX is in full breakout momentum mode. The only thing to do here is to buy the dips and pull the plug at the first sign of distribution (or when the trailing stop has been hit). I’ve used InVivo Stops in the chart above to help provide a general sense of how to accomplish that. Again, this is a speculative momentum trade only.



in the chart in the above URL both ' parabolic SAR' and 'InViVO' indicators are sown
a) while dots with BUY/SELL text is parabolic SAR
b) pink/Green dot lines and the bottom accumulate/distribute histogram is part of InVivo indicator. even thought it is PINK line in APRirl with InVivo you do not buy till end of APRIL because bottom histogram is DISTRIBUTION , you wait till zero line or positive.
c) so with those 2 , it is hard to enter at $5 in april with parabolic SAR

--
http://www.kirkreport.com/membersonly/2008/06/05/chart-requests-amx-cytx-cme/

, I might point out that the colors used (along with the corresponding histogram) are very helpful to see the change from distribution to accumulation. I suppose you could do that same with the Par Sar but for my dollar I prefer to use InVivo Stops. Like all indicators of this nature, my recommendation for you is to build and track strategies that use both and just let the performance numbers speak for themselves.
---

http://www.kirkreport.com/membersonly/2008/10/03/mailbag-questions/
I also like the RMI indicator (bottom window) which helps detect a major trend change (green to red) which is not possible through SmartStops. Notice, for example, in the chart of Potash that a key character change occurred which would have been something you had to take notice of if you were long the stock. I also appreciate that I can adjust the InVivo indicator as well as use it in conjunction with other technical analysis studies at the same time which gives me more flexibility and confidence
---

http://www.kirkreport.com/membersonly/2008/11/12/mailbag-19/
Could you share the technical set up for Gilead Sciences (GILD)? The stock shows favorably in two of your screen.
asr: another good Innovi accumulate/distribute RMI indicator at bottom who gives good signal when bars changed from red to green ( still sold BLUE dots) but giving sinal to get ready for BUY ( purple dot change ).
---------

http://www.kirkreport.com/membersonly/2008/11/12/mailbag-19/
The Relative Strength Index (RSI) quite helpful. But, what time frame to you prefer to use and why?

A: It really depends mostly on the time objective of the trade and overall market conditions. As a default, I generally use a 5-period RSI, but if I’m trading in shorter time frames like now it isn’t unusual for me to use a 2-period RSI instead.

------
http://www.kirkreport.com/membersonly/2008/10/27/monday-mailbag/
if I’m actively trading I’ll be monitoring the following throughout the trading day:

*

I have multiple time frame charts – intraday, daily, 5 day, 10 day, & monthly – of the Dow, S&P 500, Nasdaq, Russell 2000
*

Intraday indicators like the Equity Only Put/Call Ratio, NYSE Breadth, NYSE TICK, NYSE Up & Down Volume, TRIN, & VIX
*

Trade-Ideas (various criteria) that scours my watchlist in real-time for potential trading setups & unusual moves
*

Real-time watchlists (based on percentage gain & loss) for both my watchlists and the market itself
*

Real-time charting of current positions and stocks at the top of my watchlist
*

Real-time screening (moving average crossovers, breakouts, high-volume surges, etc

----
The longer the ATR buy signal without whipsaws, the more impressive the chart.
http://www.kirkreport.com/09/inin_10_14_09.gif
-- asr : how to screen those ?? probably using Tradesation SCANAR with ATR code ..
-- in TS combine ATR and Invivo stops indicators for scanning ....


------------
asr: here is example of REAL setup , we call talk about setups , now I know a good setup and how to back test it.

Stoc Oversold with ATR BUY setup
Q:I want you to explain what you meant by the following on twitter “$VICL offers a timely example of why I like to buy oversold pullbacks (see mid-August) that don’t violate their ATR.”

A: Remember my golden rule – I only trade situations where I think the risk/reward is tilted heavily in my favor. What that will require many times is simply to wait for oversold situations in technical pullbacks. I pointed this out in Vical (VICL) today not because I successfully traded this position, but that looking at the chart this morning it is easy to see where I would have been interested in it if Vical had been on my radar last month.

A buy setup would have occurred here on that August pullback where the stochastics turned oversold (i.e. below 20) yet the stock held above its ATR stop line (see this chart). In essence, I’m always looking for pullbacks that fit this type of setup because they often (but not always) present a good risk/reward trade especially if the setup occurs within a stock I’m already tracking within my stock screens (this was not the case in Vical as it does not appear within my screens). Remember, if the stock later violates the ATR on a closing basis, we have a clear sign that the trade is wrong so we can move on. Sure, there are times we’ll see violent whipsaws and you’ll get stopped out in stocks that reverse hard and move to new highs even with an ATR violation, but I know from backtesting oversold conditions with a close test of an ATR stop in an uptrending market tends to provide attractive risk/reward trading setups.

asr: wow so K back tested it , how to back test in TS code , let me try
- test if there is any ATR violation last N days ( get ATR N day MIN value and CLOSE(N) Min value
- if no ATR BUY signal violation in last N days and STOCastic is oversold ( <20)
- ATR current is close to LOW of the day ( LOW testing for ATR violation i.e. close )
- then BUY and close the BUY after Ndays or some other criteria (profit %) or price close to ATR etc..
---------

TRADESTATION: Average True Range Trailing Stops

Sylvain Vervoort’s article in this issue, “Average True Range Trailing Stops,” describes a technique for generating trading signals with average true range calculations. Once the initial entry is made, any number of reversals may follow. The strategy’s first trade date and first trade direction are established by user inputs.

Strategy: Vervoort ATR_Trail

{ Modified ATR Trailing Stop }
inputs:
TrailType ( 1 ), { enter 1 for modified version, any
other number for unmodified version }
ATR_Period( 5 ),
ATR_Factor( 3.5 ),
Quantity( 100 ),
InitialMonth( 1 ),
InitialDay( 1 ),
InitialYear( 2009 ),
FirstTrade( 1 ) ; { enter 1 for long, any other
number for short }

variables:
Loss( 0 ),
HiLo( 0 ),
HRef( 0 ),
LRef( 0 ),
HiLoHRefMax( 0 ),
HiLoHRefMaxLRefMax( 0 ),
ATRMod( 0 ),
WaitingForEntry( true ),
Trail( 0 ),
LineNum( 0 ),
ReturnVal( 0 ) ;

if TrailType <> 1 then
Loss = ATR_Factor * AvgTrueRange( ATR_Period )
else
begin
HiLo = iff( High - Low < 1.5 * Average( High - Low,
ATR_Period ), High - Low, 1.5 * Average( High -
Low, ATR_Period ) ) ;
HRef = iff( Low <= High[1], High - Close[1],( High -
Close[1] ) - 0.5 * ( Low - High[1] ) ) ;
LRef = iff( High >= Low[1], Close[1] - Low,
( Close[1] - Low ) - 0.5 * ( Low[1] - High ) ) ;
HiLoHRefMax = Maxlist( HiLo, HRef ) ;
HiLoHRefMaxLRefMax = Maxlist( HiLoHRefMax, LRef ) ;
ATRMod = XAverage( HiLoHRefMaxLRefMax, 2 *
ATR_Period - 1 ) ;
Loss = ATR_Factor * ATRMod ;
end ;

if WaitingForEntry
and Year( Date ) + 1900 >= InitialYear
and Month( Date ) >= InitialMonth
and DayOfMonth( Date ) >= InitialDay
then
begin
if FirstTrade = 1 then
begin
Buy Quantity shares this bar Close ;
WaitingForEntry = false ;
Trail = Close - Loss ;
end
else
begin
Sell short Quantity shares this bar at Close ;
WaitingForEntry = false ;
Trail = Close + Loss ;
end ;
end
else if WaitingForEntry[1] = false then
begin
if Close > Trail[1] and Close[1] > Trail[2] then
{ continued long }
Trail = MaxList( Trail[1], Close - Loss )
else if Close < Trail[1] and Close[1] < Trail[2]
then
{ continued short }
Trail = MinList( Trail[1], Close + Loss )
else if Close > Trail[1] then
{ close is above trail }
Trail = Close - Loss
else
Trail = Close + Loss ;

if MarketPosition = -1 and Close > Trail and
Trail > 0 then
begin
Buy Quantity shares this bar Close ;
LineNum = TL_New( Date[1], Time[1], Trail[1],
Date, Time, Trail[1] ) ;
ReturnVal = TL_SetColor( LineNum, Cyan ) ;
end
else if MarketPosition = 1 and Close < Trail then
begin
Sell short Quantity shares this bar at Close ;
LineNum = TL_New( Date[1], Time[1], Trail[1],
Date, Time, Trail[1] ) ;
ReturnVal = TL_SetColor( LineNum, Magenta ) ;
end
else if Trail[1] > 0 then
begin
LineNum = TL_New( Date[1], Time[1], Trail[1],
Date, Time, Trail ) ;
if Close > Trail then
ReturnVal = TL_SetColor( LineNum, Magenta )
else
ReturnVal = TL_SetColor( LineNum, Cyan ) ;
end ;
end ;