ContiStat
- Indicators
- Matous Bartl
- Version: 1.60
- Updated: 29 December 2021
- Activations: 5
Brief description
The ContiStat indicator calculate statistic frequency of green (up) and red (down) movement in the chart and determine movement dynamics (silver curve). There are two key parameters to understand the ContiStat principle: Block height and Block count. The ContiStat engine convert instrument price chart move to Blocks of constant height (price) regardles of how much time it take.
Example 1: Block height is set to 50. DE30 index price make move from 15230 to 15443 in an hour. 4 green Blocks are generated.
Example 2: Block height is set to 50. DE30 index price make move from 15145 to 15169 and then to 15088 in a day. Only one red Block will be generated since green Block price height condition wasn't met (15145 - 15195).
Block count determine how many consequent Blocks will be considered as statistic sample. Statistic frequency of green and red blocks in the sample is generated then. The movement dynamics is calculated as inverted value of average number of Rates (Candles) in one Block for statistic sample.
Benefit
In constrast with time based methods to determine trend direction (Moving Averages, RSI, OVB etc.), the ContiStat is time-independent. Despite of market volatility, even in seemingly rangin market it can still show what's the chance to get another up or down movement of selected height.
Parameters
- Block height: Block height in the instrument price dimension. Range is <0, instrument price>. Good starting value is 0.2% to 0.7% of instrument price or whatever movement is interesting for you. See screenshots for improper parameter setting. See Brief description for parameter meaning description.
- Number of Blocks for statistics: Block count for statistic calculation. Range is <0, 1000>. Good starting value is 30. See screenshots for improper parameter setting. See Brief description for parameter meaning description.
How to use
Set the parameters properly: Chose your time frame and choose the price movement that is interesting for you. When parameters set properly, dynamics curve will not stick to 0 nor overshoot 1. When setting Number of Blocks for statistics, keep in mind the indicator will tend to oscilate and show coarse output if value too low and will be "lazy" and lagging significantly, when parameter too high.
When parameters set properly:
- If the Green output curve significantly ( >= 0.65-0.7) higher then the Red output curve and not descending steeply, speculate for Uptrend continuation, look for Long trades, avoid Short trades at all.
- If the Red output curve significantly ( >= 0.65-0.7) higher then the Green output curve and not descending steeply, speculate for Downtrend continuation, look for Short trades, avoid Long trades at all.
- If the Green and the Red output curve in narrow band (0.5 +/- 0.05-0.1), don't trade, or speculate carefully for trade reversals on price chart local extremes.
- If the Dynamics (Silver curve) is too low (<= 0.2), leave the market. Ther's no interesting move (but the situation may change quickly and unexpectedly).
- If the Dynamics (Silver curve) is too high (>= 0.8) or rising steeple, you're either in trade, having good times, or not and then don't enter, wait for market to calm a little.
Since the ContiStat isn't trade entry point detector, it's good idea to combine with another indicator, for example MACD. Example is shown on screenshot
