Thermometer

Last modified 09:33, 27 Jun 2013

sitmicon34.gifThis content is provided in support of the Safety in the Market (SITM) module for Your SOFTWARE and may not be applicable to your package. For more information, go to the Modules topic of this help.

Thermometer

The thermometer can be uses as an early-warning device for a change in the trend. It will provide an indication of the mode (or momentum) of the market.

Maximum readings in either direction indicates momentum in that direction. Higher readings, i.e. closer to +5 or –5 indicate that the current trend, is strengthening and will probably continue. Lower readings indicate that the trend is losing momentum, or is weakening, and may reverse.

By comparing the thermometer's reading to the actual movement of the market you can develop a “feel” for how the temperature is changing, hence the name Thermometer.

Calculation and Display

The Thermometer considers a number of price differences between the previous and current day and calculates a value between +5 and –5. The values are plotted on either side of the zero line, generally using a histogram.

The following three price comparisons are made, values assigned to the results and the results totaled and plotted for each interval:

Current Close to Previous Close

The Current Closing price for the current interval (CC) is compared to the Previous Closing price for the previous interval (PC).

The following table is used to determine how much weighting should be added to the Thermometer for this component of the calculation:

If

CC

is greater than

PC

then add

+ 2

If

CC

is less than

PC

then add

- 2

If

CC

is same as

PC

then add

0

Current Close to Current Open

The Current Closing price for the current interval (CC) is compared to the Current Opening price for the current interval (CO).

The following table is used to determine how much weighting should be added to the Thermometer for this component of the calculation:

If

CC

is greater than

CO

then add

+ 2

If

CC

is less than

CO

then add

- 2

If

CC

is same as

CO

then add

0

Current Range to Previous Close

The Current Range (Current High (CH) - Current Low (CL)) is compared to the Previous Closing price for the previous interval (PC).

The following table is used to determine how much weighting should be added to the Thermometer for this component of the calculation:

If

 

Current Range

(ie. PC is less than CL)

is entirely above the

 

PC

 

then add

 

+ 1

 

If

 

Current Range

(ie. PC is greater than CH)

is entirely below the

 

PC

 

then add

 

- 1

 

If

 

Current Range

(ie. PC is in between CH and CL)

includes in its range the

 

PC

 

then add

 

0

 

Calculate and Plot

The values for the three conditions are added together and plotted.

The resulting graph is always between +5 and –5.

The values are plotted on either side of the zero line, generally using a histogram:

thermomtr.gif

Thermometer Properties

Double left mouse-click on the thermometer graph or label to open the Thermometer Properties dialog box.

Plots tabbed page

The graph's style can be selected on the Plots tabbed page. Select from Histogram, Step or a variety of line styles (Solid, Dashes, Dots, Points). Color and Weighting can also be adjusted.

Scale Settings and Scale Appearance tabbed pages

The appearance and location of the +5 to –5 scale can be adjusted on these tabbed pages.

 

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