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Traders' Tips  |  JUL 2007

Traders’ Tips by Technical Analysis, Inc.

Traders’ Tips by Technical Analysis, Inc. r TRADESTATION: VOLUME PRICE CONFIRMATION INDICATOR (VPCI) Buff Dormeier’s article in this issue, “Between Price And Volume,” describes calculation of the volume price confirmation indicator (VPCI) and suggests a strategy for trading with it. The strategy consists of a moving average convergencedivergence (MACD) signal, which is confirmed based on readings of the VPCI. The article then compares the VPCI’s value as a confirming indicator with on-balance volume (OBV) and average directional index (ADX). To perform this test, a strategy was created in EasyLanguage with “on-off” input switches, allowing the trader to select the desired confirming indicator. Code for a VPCI indicator and strategy are given here. The indicator plots the raw and smoothed VPCI. The strategy uses MACD to generate trading signals, but it trades only if the selected confirming indicator agrees. To download the code, go to the Support Center at TradeStation.com and search for the file “VPCI.ELD.” TradeStation does not endorse or recommend any particular strategy.

by Technical Analysis, Inc.

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