StockFetcher Forums · Filter Exchange · On Balance True Range (OBTR)<< >>Post Follow-up
trendscanner
265 posts
msg #86598
Ignore trendscanner
1/19/2010 8:14:34 PM

Found this indicator and info about it in an article on a website that someone recently posted a link to. The creator of the indicator makes a case that it's better than OBV. I don't know that I agree with that completely but I agree that it does handle gaps better than OBV and A-D.

"On Balance True Range (OBTR) – created by Thomas A. Bierovic

The first component of the OBTR momentum indicator is called True Range. True Range. True Range, as defined by J. Welles Wilder is:

True Range (TR) which is defined as the greatest of the following:

The current High less the current Low.
The absolute value of the current High less the previous Close.
The absolute value of the current Low less the previous Close.

If the current high-low range is large, chances are it will be used as the True Range. If the current high-low range is small, it is likely that one of the other two methods would be used to calculate the True Range. The last two possibilities usually arise when the previous close is greater than the current high (signaling a potential gap down or limit move) or the previous close is lower than the current low (signaling a potential gap up or limit move). To ensure positive numbers, absolute values were applied to differences.

As you can see, true range is a measure of price movement, and, as stated before, is highly related to volume. Mr. Bierovic simply replaced the Volume component of OBV with True Range, to create On Balance True Range.

OBTR addresses the two weaknesses in OBV. First, OBTR is always up to date, and second, gaps are handled properly in this indicator.

OBTR can be combined with a 9 day moving average (EMA) to create buy and sell signals. A bullish signal occurs when OBTR crosses above the EMA, and a bearish signal is generated when OBTR crosses below the EMA.

Combining OBTR with MACD

Combining OBTR with a dual MACD system can be a very powerful set of indicators for determining price entries (when to buy stock), and exits (when to sell stock).

A 12,26,9 MACD is combined with OBTR for buy signals. Look for bullish divergence between price and the OBTR, and bullish cross overs in both the MACD and OBTR for entry points.

A 19,39,9 MACD is combined with OBTR for sell signals. Wait for the MACD to display a bearish cross, or cross below the 0 line, and confirm this signal utilizing OBTR bearish divergence or crosses."


I searched the forum but didn’t see any reference to this indicator. Here’s my interpretation of OBTR. Don’t know yet how useful it is but plan to play with it and see what it does.

Fetcher[
Set{var1, high – low}
Set{var2, abs(high – close 1 day ago)}
Set{max1, max(var1, var2)}
Set{var3, abs(low – close 1 day ago)}
Set{OBTR, max(max1, var3)}
Set{OBTRA, cema(OBTR, 9)}
Draw OBTR
Draw OBTRA on plot OBTR
]

For some reason, my filters aren't clickable anymore. :(

chetron
2,817 posts
msg #86603
Ignore chetron
1/19/2010 9:24:05 PM

LEARN THE KEYS....


Fetcher[
Set{var1, high - low}
Set{var2, abs(high - close 1 day ago)}
Set{max1, max(var1, var2)}
Set{var3, abs(low - close 1 day ago)}
Set{OBTR, max(max1, var3)}
Set{OBTRA, cema(OBTR, 9)}
Draw OBTR
Draw OBTRA on plot OBTR
]



trendscanner
265 posts
msg #86606
Ignore trendscanner
1/19/2010 9:56:43 PM

I know the keys...

Fetcher[

]



just doesn't seem to work sometimes

chetron
2,817 posts
msg #86610
Ignore chetron
modified
1/19/2010 10:00:38 PM

you weren't using the minus sign in you code. IT DIDN'T WORK FOR ME, EITHER, UNTIL I CHANGED THEM.


hth

trendscanner
265 posts
msg #86611
Ignore trendscanner
1/19/2010 10:05:52 PM

yes, thanks

medowz
59 posts
msg #86748
Ignore medowz
1/21/2010 4:40:19 PM

FYI. This script doesn't work for regular subscribers. Good explanation of the concept though. Thanks.

StockFetcher Forums · Filter Exchange · On Balance True Range (OBTR)<< >>Post Follow-up

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