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RMO Shape & Size Doesn't Matter? Why Not?

Last post 06-07-2007, 3:28 by amory. 32 replies.
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  •  03-01-2007, 19:13 23153

    RMO Shape & Size Doesn't Matter? Why Not?

    according to the RMO training, the size and shape of the RMO doesn't matter?  why use an histogram if all you need to know is if the RMO is above or below zero?  you'd think the RMO value would be useful in determining whether a security is gaining or losing strength; it's hard to believe a RMO value of 15 is just as strong as a value of 1.  any input would be appreciated!

  •  03-02-2007, 7:10 23154 in reply to 23153

    Re: RMO Shape & Size Doesn't Matter? Why Not?

    hey black dog..... got your email.....  the size and shape of the RMO doesn't matter..... my interpretation is , rahul is reminding us not to predict but to follow.....

    you mentioned in the email about why not just a < or  > 0 rather than the histogram.... rahul's  histogram, actually 2 histograms overlayed with differring colors, is probably just for appeal to the eye..... flashy things have flair where plain binary waves do not..... the weak link in histograms is we so often we read to much into them...... when they are falling we assume its time to sell, or rising its time to buy.....   divergenges wreak havoc at times.....

    rahul is using the histogram to measure the difference between 2 moving averages, or similar plots, and the true buy or sell is not until the actual cross.....

    rahul is just suggesting keep it simple..... todays size and shape of the RMO  has no direct bearing on tommorrows price..... 

     

    something else on histograms.... often times the 0 line is actually the long term moving average, just 0'ed,  and the histogram moving above/below it is just a shorter term moving average intertwining with it.... that might seem odd till you think on it abit...... histograms can be a horizontal way to view moving average crosses...... h

  •  03-02-2007, 7:33 23157 in reply to 23154

    Re: RMO Shape & Size Doesn't Matter? Why Not?

    h and All,

    I have been doing some thinking and playing with the RMO and would like to share something about HOW the oscillator works - - BUT its a little late for me to do this tonight, but I will post my findings tomorrow (Saturday 03).  I was amused by my own findings about the "system taking traders by storm!"


    wabbit Big Smile [:D]



    MS: 6.52 EOD, 7.x EOD, 8.0 PRO, 9.2 PRO w/QC, 10 PRO w/QC & MDK
    For custom MetaStock programming : http://www.wabbit.com.au
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  •  03-02-2007, 11:35 23162 in reply to 23154

    Re: RMO Shape & Size Doesn't Matter? Why Not?

    hayseed -- thanks for reply!  i get what you're saying up to a point, but if that's the case then why do the RMO explorations even bother with providing a value?  i mean, a plus or minus one would suffice.  since this is a black box i don't really know what the RMO is, but it still seems intuitive to think a higher RMO represents more strength than a lower one.  in other words, if a RMO is 15 or 20 it would take steeper declines in a stock price for the RMO to go negative than a another security with a RMO barely above one.  if the RMO is akin to a moving average then that would be true.  am i totally wrong here? 

    i don't know about the marketing of the RMO.  it's true, if you google it you really don't find much beyond the equis sales pitch.  but i have to say that after using the template for a couple weeks now (EOD) the RMO seems to do a very good job when there are whipsaws.  i use a few power/trade oracle systems which work fairly well.  but they often reverse back and forth in a tight, oscillating market.  the RMO really smooths out those signals.  if you look at the big declines from a couple days back, across the board, other systems would have exited and shorted.  but the RMO, in conjunction with the swing indicators, stayed long and that seems to be correct (for now).

    so back to my original question.  this RMO strength issue is important to me because i'd like to use it to see money rotation among sectors and to see general strength and weakness.  sorry if i'm banging my head -- maybe i can't use the RMO for this purpose.  anyway, i think the RMO is pretty good, especially if you follow RM's rules.  it would be nice if equis was more forthright and would not have made it a black box, or at the very least created a system (based on all the rules) that you could back-test with...

    thanks for any comments and input!

     

  •  03-02-2007, 13:20 23163 in reply to 23162

    Re: RMO Shape & Size Doesn't Matter? Why Not?

    hey black dog.....  rmo deals well with whipsaws due to the base ma being a long term one.... the histogram we see is the shorter term ma orbiting the longer ma......

    the specific rmo value might show some extreme temporary strength/weakness that can be traded on the retrace, if any..... but other than that , i believe your correct a simple +/- 1 would suffice..... explorations probably would shed more light if we scan only for new buys/sells and ignore the rmo true value otherwise...... those new buys/sells are somewhat rare.....

    if you take a look at the rmo thinkalike indicator below, you'll see the similarities....  it's nothing more than the 5 ma crossing the 80 ma..... crosses such as that often point to a change in trend.....

     not sure if the rmo  can be used for strength indication without some recoding..... thats an interesting idea, i'll give it some more thought......h

     

    plot the indicator, click on the line below 0 and change to red histogram style..... click on the line above 0 and change to green histogram style.....

     rmo think alike

    -------------------------------

    pds1:=Input("slow periods ",1,200,80);
    pds2:=Input("fast periods ",1,200,5);
    a:= Mov(C,pds2,S)-Mov(C,pds1,S);
    If(a>0,a,0);
    aa:=Mov(C,pds2,S)-Mov(C,pds1,S);
    If(aa<0,aa,0);

    ------------------------------

  •  03-03-2007, 0:50 23169 in reply to 23162

    Re: RMO Shape & Size Doesn't Matter? Why Not?

    Hi black_dog:

    I agree with you that RMO keeps one out of whipsaws. I've been using  it  in last week's meltdown market and found to be very reliable if i follow 1. the rules 2. trade only in market direction  and 3. have reliable data feed. I have used 5min. bars for intraday trading. I thinks its great for entries but not very good at exits for active traders.
  •  03-03-2007, 2:54 23170 in reply to 23169

    How does the RMO work?

    We know the formula for the RMO Oscillator is EXACTLY the same as the Rainbow Oscillator that was first introduced tot he world in 1997 (see http://www.traders.com/Documentation/FEEDbk_docs/Archive/0897/TradersTips/Tips9708.html#anchor203073)

    Since then another has taken upon himself to exploit the exisitng code and re-badge it as his own (I am suspicious that he came up with it himself as the way it is presented in the TASC article and they way he has written the code is, line by line, identical - - coincidence? Personally, I don't believe so).

    OK.  So what is the Rainbow Oscillator or the RMO?

    Lets look at the code first:

    Code:

    100 *
    (CLOSE - ((Mov(C,2,S) +
    Mov(Mov(C,2,S),2,S) +
    Mov(Mov(Mov(C,2,S),2,S),2,S) +
    Mov(Mov(Mov(Mov(C,2,S),2,S),2,S),2,S) +
    Mov(Mov(Mov(Mov(Mov(C,2,S),2,S),2,S),2,S),2,S) +
    Mov(Mov(Mov(Mov(Mov(Mov(C,2,S),2,S),2,S),2,S),2,S),2,S) +
    Mov(Mov(Mov(Mov(Mov(Mov(Mov(C,2,S),2,S),2,S),2,S),2,S),2,S),2,S) +
    Mov(Mov(Mov(Mov(Mov(Mov(Mov(Mov(C,2,S),2,S),2,S),2,S),2,S),2,S),2,S),2,S) +
    Mov(Mov(Mov(Mov(Mov(Mov(Mov(Mov(Mov(C,2,S),2,S),2,S),2,S),2,S),2,S),2,S),2,S),2,S) +
    Mov(Mov(Mov(Mov(Mov(Mov(Mov(Mov(Mov(Mov(C,2,S),2,S),2,S),2,S),2,S),2,S),2,S),2,S),2,S),2,S)) / 10)) /
    (HHV(C,10) - LLV(C,10))


    Now it looks a little scary to some people when written like this so lets take the guts out of the program and store this in a variable and then see what the program looks like:

    Code:

    MovingAverageExpression:=
    Mov(C,2,S)+
    Mov(Mov(C,2,S),2,S)+
    Mov(Mov(Mov(C,2,S),2,S),2,S)+
    Mov(Mov(Mov(Mov(C,2,S),2,S),2,S),2,S)+
    Mov(Mov(Mov(Mov(Mov(C,2,S),2,S),2,S),2,S),2,S)+
    Mov(Mov(Mov(Mov(Mov(Mov(C,2,S),2,S),2,S),2,S),2,S),2,S)+
    Mov(Mov(Mov(Mov(Mov(Mov(Mov(C,2,S),2,S),2,S),2,S),2,S),2,S),2,S)+
    Mov(Mov(Mov(Mov(Mov(Mov(Mov(Mov(C,2,S),2,S),2,S),2,S),2,S),2,S),2,S),2,S)+
    Mov(Mov(Mov(Mov(Mov(Mov(Mov(Mov(Mov(C,2,S),2,S),2,S),2,S),2,S),2,S),2,S),2,S),2,S)+
    Mov(Mov(Mov(Mov(Mov(Mov(Mov(Mov(Mov(Mov(C,2,S),2,S),2,S),2,S),2,S),2,S),2,S),2,S),2,S),2,S);

    100 * (CLOSE - (MovingAverageExpresson/10)) / (HHV(C,10) - LLV(C,10))


    So now what do we have?

    If you plot each 'element' of the MovingAverageExpression i.e. plot Mov(C,2,S) and Mov(Mov(c,2,S),2,S) and... etc you get series of short term moving averages, each is a moving average of a moving average (except the first).  You will get ten lines on the plot, if you coloured each line a different colour you might get a rainbow effect, hence the original name of the oscillator.  When you take a moving average you smooth out the data and introduce a slight lag, taking the moving average of a moving average smooths the curve of the first moving average and introduces another lag.  By taking the MA of a MA of a MA (ten times) you have filtered a lot of the raw price action out and have are now lagging quite a bit behind the price action.

    What the code does then, is to take the numerical average of all the moving average elements (sum the ten MAs then divides by ten).  If you were to plot this average as well as the 'rainbow' of MAs you will see the average line nestled in amongst the other MAs, nearly always centered in the plots.  With this information, we could re-write the code again to reveal more about what is going on:

    Code:

    MovingAverageExpression:=
    Mov(C,2,S)+
    Mov(Mov(C,2,S),2,S)+
    Mov(Mov(Mov(C,2,S),2,S),2,S)+
    Mov(Mov(Mov(Mov(C,2,S),2,S),2,S),2,S)+
    Mov(Mov(Mov(Mov(Mov(C,2,S),2,S),2,S),2,S),2,S)+
    Mov(Mov(Mov(Mov(Mov(Mov(C,2,S),2,S),2,S),2,S),2,S),2,S)+
    Mov(Mov(Mov(Mov(Mov(Mov(Mov(C,2,S),2,S),2,S),2,S),2,S),2,S),2,S)+
    Mov(Mov(Mov(Mov(Mov(Mov(Mov(Mov(C,2,S),2,S),2,S),2,S),2,S),2,S),2,S),2,S)+
    Mov(Mov(Mov(Mov(Mov(Mov(Mov(Mov(Mov(C,2,S),2,S),2,S),2,S),2,S),2,S),2,S),2,S),2,S)+
    Mov(Mov(Mov(Mov(Mov(Mov(Mov(Mov(Mov(Mov(C,2,S),2,S),2,S),2,S),2,S),2,S),2,S),2,S),2,S),2,S);

    AverageOfMovingAverages:=MovingAverageExpression/10;

    100 * (CLOSE - AverageOfMovingAverages) / (HHV(C,10) - LLV(C,10))


    Focussing on the scalar multiplier of 100, we see all it does is to "stretch" the plot vertically (above and below zero).  It is a commonly used method when trying to convert ratios into percentages.  It adds little to the features of the plot, so for the moment, let's ignore it.

    Let's turn our attention to the numerator expression (HHV(C,10) - LLV(C,10))  This is measure of volatility.  The result of this expression is ALWAYS greater than or equal to zero, the low is always less than or equal to the high so the expression will always be greater to or equal to zero.

    I guess the purpose of this expression is to make the resultant of the total expression larger when the volatility is low, and the resultant small when the volatiliy is higher.  Bollinger bands have a similar principal, they encourage traders to buy when the volatility (measured using standard deviations) is small.  This has never sat well with me.  I have never seen a rule listed in any Exchange that says if the volatility of a particular stock is small then traders must do something about this and drive the price up to increase the volatility.  This sort of logic is like saying it is not raining today so it must rain tomorrow!  Anyway, all the numerator expression is doing here is to vertically stretch the resultant expression when the volatility is low; the resultant is stretched above and below zero.

    Incidentally, a real programmer or a mechanical trader would have handled the instances when the HHV(C,10) and LLV(C,10) were the same value (i.e the volatility is zero (the stock closed at the same price for ten consecutive bars))  This again makes me wonder whether the 'author' did re-create the function because the divide-by-zero error potential was never fixed from the original Rainbow Oscillator.

    So what are we left with?

    Code:

    CLOSE - AverageOfMovingAverages


    In the employment of this section of the expression, we are looking to find whether the expression is greater than or less than zero.  If the resultant is greater than zero, it means the CLOSE is greater than the AverageOfMovingAverages, if the resultant is negative it means the AverageOfMovingAverages is greater then the CLOSE.  All the expression is doing is monitoring which value is greatest.  Another way to write this is:
    CLOSE > AverageOfMovingAverages

    At this point in time, it might be interesting to note that the AverageOfMovingAverages (the mathematical average of the ten 2 bar SMAs) is ALMOST the same as a much more simple expression, Mov(C,6,S).  If you compare the PRECISE VALUES of the AverageOfMovingAverages and the Mov(C,6,S) there is always a small difference, but, if you compare the instances when the CLOSE crosses the AverageOfMovingAverages and the instances when the CLOSE crosses the Mov(C,6,S) they are the same, with about 3-4% error.  If you apply one bar latitude in either direction, the two expressions are the same within 1%.  Thefore, for testing when the CLOSE crosses the AverageOfMovingAverages the trader could easily substitute Mov(C,6,S) for the more complicated expression.

    In summary, if you are going to ignore the "height" of the Rainbow Oscillator or the RMO and only deal with the instances when it crosses the zero line, you might as well use Cross(C, Mov(C,6,S)) instead!

    A summary of my summary, the RMO is nothing but a MA crossover system.

    Now that we know a little more about how the Rainbow Oscillator works, we can consider a little more about the height of the oscillator?  (Simply, the height of the oscillator is the distance between the CLOSE and the MA, divided by the volatility).  Do with this information what you need to!


    Hope this helps.

    wabbit Big Smile [:D]

    MS: 6.52 EOD, 7.x EOD, 8.0 PRO, 9.2 PRO w/QC, 10 PRO w/QC & MDK
    For custom MetaStock programming : http://www.wabbit.com.au
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  •  03-03-2007, 12:49 23172 in reply to 23170

    Re: How does the RMO work?

    Wabbit, if the RMO has taken the market by storm, your early-morning rant has just downgraded it to a tropical depression. :)

    The RMO is looking more and more like a storm in a teacup...


    jose '-)
    MetaStockTools.com
  •  03-03-2007, 16:28 23177 in reply to 23172

    Re: How does the RMO work?

    even a tropical depression makes waves..... grab your boogie board..... surfs up in the tea cup.....h

  •  03-03-2007, 16:47 23179 in reply to 23170

    Re: How does the RMO work?

    wabbit -- thanks for the explanation and reply.  you know a lot more about MS coding than i do, so kudos!  i think i get what you're saying and the multiple moving averages makes sense; it also appears that the rainbow oscillator and RMO are similar, though i would not say identical (hayseed's chart looks close, but the one i created actually doesn't).  now back to my original question.  based on what you say it seems that the RMO value can in fact be used to measure strength or weakness.  in other words, the RMO is the divergence between moving averages (to make it simple).  how much faith you can put into this i'm not sure yet...

    ultimately, however, i don't care if RM based his own oscillator on the rainbow.  all that matters to me is if i can make money with the RMO.  afterall, the RMO is more than just that one oscillator.  if you follow his rules and apply the other indicators he provides, the RMO provides legitimate value, in my opinion.  other have sold far less elegant and useful ideas for far more.  and in the limited time i've been using the RMO it helps avoid the whipsaws i encounter with strictly mechanical systems. 

    the jury is still out in how the RMO handled last weeks big downdraft.  the RMO is still bullish on the dow though it appears close to a reversal.  the dow chart with the RMO template is interesting to look at.  there is a red arrow before the drop and now three red bars following.  yet if you follow RM's rules there is still no outright sell signal.  the RMO is still positive and the low bar has not been violated on the close yet (tho it has been intraday).  also, take a look at GES and COH.  retail has been ridiculously strong for six months and conventional wisdom, along with most systems, would have advised in exiting positions.  but the RMO was correct in staying long and not exiting at recent lows.  all i'm saying is that the RMO, even if it's just a moving average variation, still does a pretty good job.  unless you guys have better indicators/systems or think the RMO is a zig-zag cheater, i wouldn't be too harsh.  okay, so let me ask what systems/indicators you actually use with your money?

    thanks again for your comments and input!  equis is pretty lazy so i appreciate the people in this forum! 

     

  •  03-03-2007, 17:02 23181 in reply to 23169

    Re: RMO Shape & Size Doesn't Matter? Why Not?

    sudhir -- i use EOD to take the intraday noise out and look for longer trends.  i know you can make money trading intraday, but the longer trends are juicy enough for me.  i would agree that the exit is a bit poorly defined.  in fact, i was very surprised that RM in his training didn't address the exit swing indicator!  it seems that i need to risk adverse overnight gaps and not trade with intraday stops.  often stocks violate intraday stops only to close at much higher levels.  maybe i need to trade forex to avoid this issue!   
  •  03-03-2007, 20:57 23184 in reply to 23179

    Re: How does the RMO work?

    black_dog:
    it also appears that the rainbow oscillator and RMO are similar, though i would not say identical (hayseed's chart looks close, but the one i created actually doesn't).

    The RMO is the Rainbow Oscillator.  If you plot both, they should be exactly the same.  If they aren't, then the mistake is probably (as Jose says) between the keyboard and the chair!

    black_dog:
    it seems that the RMO value can in fact be used to measure strength or weakness.  in other words, the RMO is the divergence between moving averages (to make it simple).  how much faith you can put into this i'm not sure yet...

    I have a (mathematical) issue with the way the RMO seems to be employed, or wanted to be employed by some to measure strength of a stock.

    Let's start with a hypothetical stock that has zero volatility, the  CLOSE is the same for the entire period and we simplify the model by saying there is no OPEN, HIGH or LOW price, only a CLOSE price.  If we plot a movng average (of any length) it will be the same as the CLOSE price.  If the price moves away from the price it has been previously, the moving average will lag behind the price action; the price and the MA will diverge.  We can use this information to gauge the 'volatility' of the stock, the further the price from the MA the more volatile the stock over the period of the MA.  Of course, if the stock price settles down and remains constant for a period of time, the MA will eventually converge with the price.  (For simple moving averages, this will happen relatively quickly compared with an exponential moving average.)  There have been many, many papers written on using MAs to gauge the volatility and to predict the future movement of a stock.  For a recent discussion on the matter, see :http://lightning.he.net/cgi-bin/suid/~reefcap/ultimatebb.cgi?ubb=get_topic;f=1;t=001595

    Going back to consider the situation when the stock price was steady for a prolonged period, but has now changed:  Let's use the another method to measure the volatility, let's compare the HHV(price, period) with the LLV(price, period).  This is a reasonable measure of volatility too.  The larger the difference the larger the voloatility, if there is no change in the price over the period the volatility will be zero.  (Note: if computing this volatlity as a standalone indicator, we should reference the difference to the price of the stock; a $10 stock with a HHV-LLV voloatility of 10 cents may not be significant, but a 10 cent stock with 10 cents volatility is certainly significant).

    So in the RMO usage, we have a measure of volatility in the numerator (the distance between the price and the MA) and a measure of volatility in the denominator (the HHV-LLV computation).  What do we get when we divide one volatility measure by another?

    black_dog:
    if you follow his rules and apply the other indicators he provides, the RMO provides legitimate value, in my opinion.

    I have many, many systems that seem to work in particular markets, so their authors flog their product as the "next big thing"  In this case, Equis have been doing the flogging about this product.  It might work in today's market, but then again it might not, and no-one knows how it is going to work in tomorrow's market.

    When the original Rainbow Oscillator was published in 1997, just about every trader known to man would have run-it-through-the-mill to get it to work in their market.  They would have tried taking different MAs of the indicator, looked the peak/trough ratios, measured this, tweaked that etc...  and yet it never survived as a viable system. There was a decent website some time ago that used to discuss trading systems, one such discussion was on how the Rainbow Oscillator failed to perform in tentative markets or during periods of market-wide uncertainty.  (Unfortunately, that web-discussion board no longer exists and the mirror server has been taken down.  sigh.  The original StockCentral was an awesome place!)

    If you do not fully understand how a system works, then you will never be able to understand the limitations of the that system and in what markets to apply them.  I have always been sceptical of any trading method 'sold' by its author.  If it's soooo good and foolproof, then why would they need to sell the product?

    black_dog:
    in the limited time i've been using the RMO it helps avoid the whipsaws i encounter with strictly mechanical systems

    as would any other MA based system?

    black_dog:
    the jury is still out in how the RMO handled last weeks big downdraft.  the RMO is still bullish on the dow though it appears close to a reversal.

    This is because the RMO, like all MA based systems has a lag associated with it.  For the RMO to adjust for last week's down, the RMO will need at least ten new bars of information - - the 6 bar SMA system will begin moving almost immediately.

    black_dog:
    equis is pretty lazy so i appreciate the people in this forum!

    ... and yet they are the ones who sold you the system!


    wabbit Big Smile [:D]

    MS: 6.52 EOD, 7.x EOD, 8.0 PRO, 9.2 PRO w/QC, 10 PRO w/QC & MDK
    For custom MetaStock programming : http://www.wabbit.com.au
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  •  03-03-2007, 21:20 23185 in reply to 23184

    Re: How does the RMO work?

    Wabbit,

    Thks for your incisive dissection of the issue clinically than Loud Chanting.

    Asish

  •  03-03-2007, 22:10 23186 in reply to 23185

    Re: How does the RMO work?

    Thanks Asish,

    Even if people don't agree with my analysis, I think everyine should learn HOW to analyse a system, indicator, code, etc  I have several other examples on the Equis Forum, so hopefully the other members will have a few more analysis tools now.

    I forget who said it, but I like this quote, "The key to getting it right, is understanding where it goes wrong."


    wabbit Big Smile [:D]

    MS: 6.52 EOD, 7.x EOD, 8.0 PRO, 9.2 PRO w/QC, 10 PRO w/QC & MDK
    For custom MetaStock programming : http://www.wabbit.com.au
    My SkyPE status : wabbit.com.au SkyPE online status
    My SkyPE account : wabbit.com.au

  •  03-03-2007, 23:15 23189 in reply to 23186

    Re: How does the RMO work?

    wabbit:
    "The key to getting it right, is understanding where it goes wrong."
    The trouble is, sometimes it's not clear whether it's the key or the lock that's gone wrong. :)


    jose '-)
    MetaStockTools.com
  •  03-03-2007, 23:22 23190 in reply to 23186

    Re: How does the RMO work?

    Wabbit,
    "Let's turn our attention to the numerator expression (HHV(C,10) - LLV(C,10))"
    It is a typo mistake,it is actually denominator.
    In your another post


    "(For simple moving averages, this will happen relatively quickly compared with an exponential moving average.)" 


    As EMA give more weightage on front data than SMA ,actually how SMA
    snaps more quickly to data than EMA ?


    Asish

  •  03-04-2007, 3:06 23191 in reply to 23190

    Re: How does the RMO work?

    uasish:
    It is a typo mistake,it is actually denominator.

    Yes, it is a typo, thanks for pointing it out.  I think I got right everywhere else?  This is why one should never check their own work; get someone else to do it!

    uasish:
    As EMA give more weightage on front data than SMA ,actually how SMA
    snaps more quickly to data than EMA ?

    An EMA will initially converge towards a price movement more quickly than an SMA but will take longer to find equality with the price, whereas, a SMA although slower to respond initially will find its equality with a contant price after n-periods where n is the number of periods in the MA.

    e.g

    Price    10 period SMA    10 period EMA
    1    1    1
    1    1    1
    1    1    1
    1    1    1
    1    1    1
    1    1    1
    1    1    1
    1    1    1
    1    1    1
    1    1    1
    2    1.1    1.181818182
    2    1.2    1.330578512
    2    1.3    1.45229151
    2    1.4    1.551874872
    2    1.5    1.633352168
    2    1.6    1.70001541
    2    1.7    1.754558063
    2    1.8    1.79918387
    2    1.9    1.835695893
    2    2    1.865569367
    2    2    1.8900113
    2    2    1.910009246
    2    2    1.926371201
    2    2    1.939758255
    2    2    1.9507113
    2    2    1.959672882
    2    2    1.967005085
    2    2    1.973004161
    2    2    1.977912495
    2    2    1.981928405
    2    2    1.98521415
    2    2    1.987902486
    2    2    1.990102034
    2    2    1.991901664
    2    2    1.993374089
    2    2    1.9945788
    2    2    1.995564473
    2    2    1.996370932
    2    2    1.997030763
    2    2    1.997570624
    2    2    1.998012329
    2    2    1.998373724
    2    2    1.99866941
    2    2    1.998911336
    2    2    1.999109275
    2    2    1.999271225
    2    2    1.999403729
    2    2    1.999512142
    2    2    1.999600844

    See how quickly the SMA 'snaps' to the price whilst the EMA is still trailing?  Notice also, the EMA is faster to respond initially, but never quite reaches the new equilibrium price.


    Hope this helps.

    wabbit Big Smile [:D]



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  •  03-04-2007, 5:28 23193 in reply to 23191

    Re: How does the RMO work?

    Wabbit,

    Yes SMA will coverge faster LATTER on if & only if price remains CONSTANT for n period of time, that is an absolute hypothetical situation than in actual mkt enviourment,however mathametically you are right.

    Asish

  •  03-04-2007, 5:37 23194 in reply to 23193

    Re: How does the RMO work?

    Wabbit,

    Price being constant for a 9 period after 8th day the SMA of price & price is the same & in EMA adding on infinitely 90% of 90% can never be 100.

    Asish

  •  03-04-2007, 7:28 23195 in reply to 23194

    Re: How does the RMO work?

    seems like black dogs question has taken the forum by storm......

     

    most all indicators lag.... but then lag is an important part of successful trading.... otherwise we'd all be watching tick charts ......  and most of us would be flat broke from trying to trade those lagless charts.....

    most all indicators were concieved in days gone by.....  but then so are many songs that are rerecorded  today, word for word, and make millions......

    rmo was somewhat free.... and if it is the rainbow osc, personally i haven't looked that close, it is completely free....

     

    if we focus just on the dollar and sense, most often the inclusion of 

    and  Fml( "Rahul Mohindar Osc (RMO)") >0  in the buy and buy to cover rules ,  

    and 

     Fml( "Rahul Mohindar Osc (RMO)") <0  in the sell  and sell short rules,

    far more often than not it should improve overall results while drastically lowering the number of trades.....  it's hard to see  a negative there.....  at the very  least  we might owe rahul a thanks for dusting off an old song and rerecording it......h

     

  •  03-04-2007, 10:36 23198 in reply to 23195

    Re: How does the RMO work?

    okay, maybe i'm a jackass but when i plot the rainbow oscillator it looks nothing like the RMO (on the other hand, hayseed's "rmo think alike" is damn close).  i checked the code and it looks identical to what wabbit posted.  besides, my MS 10 shipped with the rainbow and the code matches again. obviously i'm missing something so, wabbit, please tell me where i went astray...

  •  03-04-2007, 17:29 23222 in reply to 23198