Stocks & Commodities V. 24:1 (18-26): Developing Your Own Indicators by Lee Leibfarth
Does the thought of developing custom indicators
intimidate you? It doesnít have to. Hereís a stepby-
step look at the process.
Custom indicators can give you a perspective on market conditions that you canít get yet by simply reading a price chart. Custom indicators allow you to quickly check the validity of trading ideas specifically in the way you want to, and they can be an important visual tool to assist in everyday trading. Developing custom indicators doesnít have to be rocket
science, even for traders unfamiliar with programming.
I will discuss the development of three different technical indicators along with some of their potential
uses. Although the examples will be illustrated using TradeStation EasyLanguage, the concepts can be easily applied to almost any charting platform that allows the programming of custom indicators such as eSignal, MetaStock, Wealth-Lab, and others.
Before we jump into the indicator developer arena,
we must understand the concepts behind some of the
more popular indicators. For the sake of this article,
only stand-alone indicators will be discussed: those
that are displayed in their own charts, usually just
below a price chart.