Jan
13

Formula 201 – #9 Using the FML Indicator

The FML indicator is one of the most useful and handy indicator in NeoTicker. Whenever you need to get some customized calculation done in a chart, it is the first tool to try out.

What is FML Indicator?

The full name of FML indicator is Formula indicator. This name can be very confusing by itself as we often refer to indicators written in the formula language as formula indicator. If we can choose a new name for this indicator, it should be named as Formula Evaluation indicator, which clearly explain what this particular indicator does.

Since most users like to call this indicator by its short name, FML, I will use this name whenever I am talking about this indicator.

Using FML Indicator in a Chart

When you add the FML indicator to a chart, you will find that it has only one single parameter. This parameter is simply called Plot1. What this parameter can do though, is way more than just providing values to show in plot1 of the indicator.

You can effectively throw in any indicator formulas and it will work fine within this single parameter. You can use any indicators, you can use multiple statements including CompressSeries, and you can ever use local variables and recursions.

Example 1 – Counting the Number of Times Emini S&P Gap Up more than 2 Points

The title of this section says it all, you can simply add the FML indicator into a chart and use it as a tool to count the number of times the emini S&P is gapping up for more than 2 points.

First, create the chart with emini S&P data using daily data or 390-minute bar data. I have set the chart to load exactly 250 trading days so that I can tell easily how frequent a setup happens when I use the FML indicator doing the statistics.

Then, add the FML indicator with the following parameter,

formula201 part9 indicator setup1

The formula we used is actually the cumulation indicator in combination with our boolean expression. Thus the cumulation indicator is adding 1 whenever our condition holds true, and doing nothing when the condition is false (which evaluated to 0).

Here is how the chart looks like.

formula201 part9 chart1

From the chart, we can see that about one third of the time, the e-mini S&P gaps up 2 points or more.

Example 2 – How Likely are We Taking Out the Opening Price?

Following the first example, we now tries to see if we can figure out a condition based on the gap up condition defined in the previous example that has a very high probably for us to use in real-time.

Lets add another FML indicator onto the same chart with a twist to the condition.

formula201 part9 indicator setup2

What we are measuring is the number of times that after a gap up of more than 2 points, the emini S&P will follow through with at least 2 points.

Here is the chart with both statistics.

formula201 part9 chart2

It is interesting to know that most of the time (greater than 80%) that the market will follow through with at least 2 more points whenever gap up of 2 points has happened.

To further the investigation, intraday chart is needed to see if the follow through of 2 points actually happen right at the open. Or, something happen much later, say, after a significant down swing first. We can leave that discussion in a separate article.

Using FML in Your Own Indicators

I have already shown a good example using the FML indicator in the article Dynamic Support Resistance Band Indicator. If you are interested to utilize FML in your own indicator, then take sometime to read this article.

Summary

When you want to get something done fast, use the FML indicator.

Exercise

1. Use the FML indicator to figure out the odds that after the market gap down by 2 points or more, how likely the market is going to make a high, higher than the previous close.

Answers For Previous Exercise

Constructing your own triple time frame composite moving average is not hard, all you have to do is modify the multi time frame slowk.

The 2 parameters of slowk MTF can be modified to the moving average indicator type parameter and period parameter.

makeindicator (myAvg, mov, data1, param1, param2);

compressseries (myWeekly, data1, ppWeekly, 1);
makeindicator (myWeeklyAvg, mov, myWeekly, param1, param2);

compressseries (myMonthly, data1, ppMonthly, 1);
makeindicator (myMonthlyAvg, mov, myMonthly, param1, param2);

plot1 := (myAvg + myWeeklyAvg + myMonthlyAvg) / 3;

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