# EMA Channel
# Author: moolala.org
# Date: 2008/04/23

input price = close;
input period = 22;
input offset = 0.01;

plot midline = ExpAverage(data = price, length = period);
midline.setDefaultColor(Color.Gray);

plot lowerBand = midline - (midline * offset);
lowerBand.setDefaultColor(Color.Blue);

plot UpperBand = midline + (midline * offset);
UpperBand.setDefaultColor(Color.Blue); 

As for input settings, the period is the number of bars back that is used to calculate the EMA. Offset is the multiple or percentage of the calculated EMA away from the center EMA to draw your channel lines. Here are my settings for my three favorite time frames:

Weekly

Period: 26, Offset: 0.2

Daily

Period: 22, Offset: 0.1

5 Minute

Period: 12, Offset: 0.006

The offset will vary depending on the EMA value. So stocks with here prices will differ from stocks with lower prices. I personally don’t tweak the offset all that often. Close is good enough for me. The goal is to have the EMA channel encapsulate about 95% of all the visible bars.

If both the EMA and MACD-H is trending up, the Impulse will be a green point above the price bar. If both the EMA and MACD-H is trending down, then the Impulse will be a red point below the price bar. If the EMA is trending up and the MACD-H is trending down, the Impulse will be a blue point above the price bar. And if the EMA is trending down and the MACD-H is trending up, the Impulse will be a blue point below the price bar.

I prefer to have the price bars reflect the impulse colors; however, thinkScript does not have that capability (or I haven’t found it yet). Here’s the script:

# Impuse Indicator
# Author: moolala.org
# Date: 2008/04/23

input offset = 0.25;
input emaPeriod = 13;

def ema = ExpAverage(data = close, length = emaPeriod);
def hist = reference MACDHistogram.Diff;

plot impulse =
    if (ema > ema[1] && hist > hist[1]) then
        high + offset
    else if (ema < ema[1] && hist < hist[1]) then
        low - offset
    else if (ema > ema[1] && hist < hist[1]) then
        high + offset
    else
        low - offset;

impulse.SetPaintingStrategy(PaintingStrategy.POINTS);
impulse.assignValueColor(
    if ema > ema[1] && hist > hist[1] then
     Color.UPTICK
    else if ema < ema[1] && hist < hist[1] then
     Color.DOWNTICK
    else if ema > ema[1] && hist < hist[1] then
     Color.BLUE
    else
     Color.BLUE); 

Come Into My Trading Room: A Complete Guide to Trading by Alexander Elder Read more about this book…

From the couple days I’ve had it, I am very impressed with all the tools and data you have accessed to. When I first saw what TOS offered in their desktop software, I was blown away. I currently only have trading accounts with Zecco and Interactive Brokers, so that may have something to do with my reaction. (If you are familiar with either, you can probably tell that I was looking for the cheapest of the cheap when I signed up for those two. And you do get what you pay for in those two cases.) 

With TOS, I have two kinds of charting modules: Charts and Prophet.net. I have company news that are quickly retrieved. I have CNBC video updates throughout the day. And on top of that, their data feed seems to be real time for the charts. I don’t know if this is an “accident” or a first 30 day trial kind of thing, but whatever it is, I am happy to finally get real time intra-day charts. I can finally apply my Elder indicators (or studies as TOS calls them) via thinkScript. Speaking of which, it turns out that I only needed to write the impulse indicators. The Force Index and Elder ray studies were already available.

Now I do have several gripes about thinkorswim. They are not major gripes, but they are roadblocks during my first hours of use. One, you can’t customize the charts colors too much, such as the background and the price bar colors. I prefer to have my price bars reflect what the Impulse indicator: green, blue, and red. (Green when EMA and MACD-H are both trending up, blue for opposing directions, and red when both are trending down.) This is what I have in NinjaTrader (which by the way is another free but good charting software).

The other issue I had was that I couldn’t even find documentation about thinkScript or any reference to it at all. I googled with several different key phrases, but couldn’t find any reference to it. Either I was not versed enough with the different terminologies or TOS just doesn’t market this feature enough.

Lastly, I am very impressed with the other options you have as far as trading interfaces go. Aside from the desktop, you have thinkAnywhere for PDAs, thinkMobile for phones, and a web interface. I greatly appreciate the thinkAnywhere because that allows me to check quotes without using a web application. (I hate refreshing the browser on my phone.)

That’s it for now. I plan on setting up my IRA with thinkorswim once I can meet the minimum $3,000 balance. In the meantime, I will paper trade and use the intra-day charts on TOS.

In analyzing my failed attempts to be a blogger, I believe I have found two main reasons why I don’t succeed at blogging. One, I hate to write. Well, to be more exact, I have the fear of not writing well. I have this strange inner feeling that someone is always critiquing me and that makes me want to write perfect blog posts. And whenever you have perfection as the ultimate, each keystroke comes further and further apart. In fact, I probably use the backspace and delete keys more often than any other key. Sad, but true.

The second reason I failed at maintaining a blog is that I didn’t agree with the web user interfaces to input my thoughts. I hate the idea of not being able to save a draft, do spell checks, do undo and redo, and many other features that you have in a desktop application such as Word or Outlook. As a matter of fact, I compare my experiences with web-based blogging interfaces to these two previously mentioned Office applications because that is where I type the most (aside from Visual Studio), if I had to type them that is. I will say that newer versions of these blogging engines and web sites do have better UIs than when I looked into blogging (thanks to Ajax); however, I still prefer a good desktop application over a great web app any day.

Well, long story short, it is going to take a while before I overcome reason one and my fear of not being perfect. English is my main language, but my second language nonetheless. So I just have to come to grips with that fact.

As for reason number two, I think I may have found the answer with Windows Live Writer.

As I am typing, I find myself looking forward to blogging. I now have a desktop app that I can fire right up and start typing. I don’t have open up a web browser and log into some web site. I don’t even need an Internet connection to write my drafts. I also get all the other features I listed as missing previously, mainly the ability to save drafts. I also get a few other expected features of a document producing application: formatting, multiple views, attaching objects, state-related preferences and options.

Since this is my first post via Windows Live Writer, I won’t give a full recommendation; however, so far so good. I am also looking forward to using Windows Live Writer SDKs to integrate with the Trading Manager that I am writing.