StockFetcher Forums · Filter Exchange · Multicollinearity<< >>Post Follow-up
joseph
15 posts
msg #37110
Ignore joseph
7/27/2005 4:12:42 PM

This is simply using the multiple counting of the same information. Example using RSI with Williams %R or Lane,s Stochastics where the same information is used more than once,whereby collinear indicators can trap your thinking.The best traders only use a few arsenals for trading and mix and match according to there trading style.I have read many filters on the board,scalping to money management which is fine,but have not thus far come across the issue stated above,which would be the successful intergration of a few non-collinear indicators.Any one open to discuss the same,please do.


TheRumpledOne
6,362 posts
msg #37111
Ignore TheRumpledOne
7/27/2005 4:41:39 PM

Joseph, lol... TRICK QUESTION?

All indicators use price and/or volume so by definition almost any grouping would be collinear!

MAY ALL YOUR FILLS BE COMPLETE.


joseph
15 posts
msg #37113
Ignore joseph
7/27/2005 5:12:51 PM

Bollinger states using 2 or more indicators derived from price to confirm one another is a prime example of a multiple collinear trap.The trick answer is to use one indicator for trend,one indicator for momemtum,and one indicator for volume. RSI, Williams%R a good friend of mine and Stochastics are from the same poplulation. Price and volume are separate and distinct groups according to technical pro's . A response is warmly welcomed.


TheRumpledOne
6,362 posts
msg #37118
Ignore TheRumpledOne
7/27/2005 8:13:47 PM

"...Bollinger states using 2 or more indicators derived from price to confirm one another is a prime example of a multiple collinear trap.The trick answer is to use one indicator for trend,one indicator for momemtum,and one indicator for volume. RSI, Williams%R a good friend of mine and Stochastics are from the same poplulation. Price and volume are separate and distinct groups according to technical pro's . A response is warmly welcomed...."

momentum indicator
Technical analysis indicator which seeks to predict future market trends based on recent price and volume data. It compares the current price of a security to the price a selected number of periods ago. This number represents the rate of change of the security's price over that given time period. It allows the analyst to see where the current price stands in relation to historical trends, and determine his/her strategy based on this analysis."

Momentum has price. Volume doesn't have price. So there's the two.

Trend has price, whooops!
"


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