Product Review: MetaSwing 4 by Dennis Peterson
MetaSwing is available as a set of TradeStation EasyLanguage and workspace files or as a MetaStock plug-in. MetaSwing uses historical price volatility as the basis for building indicators. The previous review of MetaSwing was for version 3.5, while this review covers version 4.
On the surface of it, not much has changed. Out of sight are the calculations used to create two mechanical trading systems. An attempt has been made to codify trading — that is, create a piece of software reflecting the choices you make as a trader when using MetaSwing indicators. The beauty of doing this is that you can now trade this system over various time frames, then collect and analyze the outcome.
Before we examine the results, let us first look at some of the MetaSwing indicators.
METASWING TEMPLATES AND INDICATORS
Using the Msw4Daily template in MetaStock, you get a number of indicators on the price chart and four more in subcharts (Figure 1). Three additional templates have been added for MetaSwing 4, bringing the total up to eight. What is new on the price portion of this chart are the words “buy” and “sell.” They are generated by one of the two mechanical trading systems telling you it is time to enter and exit a trade. What is also new are revised and improved trend calculations used for the green and red trend bands shown below the price band.
MetaSwing, as the name implies, is about swings and following a trend. But of course what you want is an entry point at the beginning of the swing or trend. The approach followed by MetaSwing is to use historical price volatility to find high and low price extremes. The precedents for this approach can be found in option pricing, and for equities, the ability of Bollinger bands to predict price change.