In just 3 days I start talking about my indicator and the way certain securities that I mentioned yesterday are affected. The reason it will take 3 more days has to do with the way my indicator is calculated. I need at least 30 trading days worth of data till I start subtracting the results of data 31 days ago and divide that figure by fifteen to come up with my final result that is plotted on a chart.

I will not go into anymore detail than this as to how my indicator is calculated. This is both to protect the proprietary nature of my indicator and to not bore readers of this blog silly. I think it makes sense to describe the chart on which my indicator is plotted. I plot it on graph paper. I draw a line down the center of the graph paper lengthwise and I draw another line down the far left side of the graph paper from top to bottom, leaving only about 3 rows of blocks to the right of the line. Going from the center line of my graph up using the up/down line I mark each new block increment with a positive multiple of .2. The series goes from .2 to .4 to .6 to .8 to a whole number starting at 1 and going up to 3 positive.

The same proceedure is done from the center line down using negative decimals and integers that are multiples of .2-. So the entire chart goes from a positive 3 at the highest to a negative 3 at the lowest. When a security plots above the centerline the security should be moving in an upward trend. When a security plots below the centerline it should be generally going down. When an indicator line through my plotpoints crosses the centerline from below to above or from above to below this could constitute a signal. When I talk about a plot point I will say something like this. The security CBG plots at .47 above the centerline.

When a security plots with especially heavy volume I will say something like the securityh AMD with .8 with a positive asterisk. Securities that move down on heavy volume will be said to do so with a negative asterisk. The asterisk in this case is below the plot point as opposed to above. This is all very boring stuff. What isn’t boring is the potential to make money using this indicator. When I talk about this indicator giving a signal I will discuss the strategy for using that signal to make money taking into account what ones potential stop loss should be and where one should seek to enter a position taking maximum advantage of the signal. Tomorrow I will further discuss this indicator and the beginnings of my own personal trading that will take shape using this signal.

EC Morris