Stocks & Commodities V. 28:6 (8-9): Letters To S&C by Technical Analysis, Inc.

Letters To S&C by Technical Analysis, Inc.

SCHAFF TREND CYCLE INDICATOR

Editor,

In his interesting article in the April 2010 S&C (At The Close: “The Schaff Trend Cycle”), Brian Twomey looked at the Schaff trend cycle indicator (Stc), which applies market cycles to the Macd, resulting in an efficient banded indicator.

While I’ve used Stc since Doug Schaff released the code in 2008, a simple change seems to increase the reliability of the indicator. If the Macd signal line is replaced by the Trix (triple exponential smoothing oscillator), while the indicator looks similar, it signals trends earlier and sticks with a trend longer. To distinguish between the two, I call this indicator the Trix trend cycle (Ttc).

To retain the rest of the TradeStation code from page 96 of the April issue (sidebar, “Schaff trend cycle EasyLanguage code”), the change is to replace the lines:

{Calculate a MACD Line} XMAC=MACD(c,MA1,MA2);

with:

{Calculate Trix} XMAC=Trix((h+l+c)/3, MA1);

MA2 is not used. Note also the suggested use of the typical price rather than the close, since, other than on weekly and longer charts, the close of a bar has no real significance in forex.

David Gianelly Victoria, Australia