This is a trading item or a component that was created using QuantShare by one of our members.
This item can be downloaded and used by QuantShare Trading Software.
Trading items are of different types. There are data downloaders, trading indicators, trading systems, watchlists, composites/indices...
You can use this item and hundreds of others for free by downloading QuantShare.
Top Reasons Why You Should Use QuantShare:
Works with US and international markets (stock, forex, options, futures, ETF...)
Offers you the tools that will help you become a profitable trader
Allows you to implement any trading ideas
Exchange items and ideas with other QuantShare users
Our support team is very responsive and will answer any of your questions
We will implement any features you suggest
Very low price and much more features than the majority of other trading software
This is certainly a unique indicator/composite index. It combines the data of two popular and commonly used technical analysis patterns to create an index that tells whether the bullish pattern or the bearish pattern is dominating the market.
These technical analysis patterns are the Head and Shoulders and the Head and Shoulders Inverse. Signals for these patterns are necessary and are the only data used by this index and thus you should first get the Head and Shoulders Pattern object to download the signals data. Once done, download the current composite item and plot its data or use it in analysis or backtesting.
The composite item name is '_Head_Shoulders' and its data is limited to the historical data of signals generated using the Head and Shoulders Pattern downloader. You should note that this downloader gets only the current Head and Shoulders signals. Consequently, in order to use this composite, you need to use the downloader several times, each day, to build an historical database of these signals.
This Head and Shoulders composite calculates for each trading day, the number of Head and Shoulders patterns that occur for US stocks and then subtracts this value with the number of Head and Shoulders Inverse patterns. The resulting values are generally low and this is the main weakness of this indicator or index.
In fact, because this pattern is considered to be rare (As an example, today there are only 43 patterns detected and 4 inverse patterns), the low values generated by this index have little or no effect on the overall market since only few stocks are considered. Nevertheless, a proper testing and analysis should be performed in order to draw a conclusion. I have not found time to get these tests done, but if someone plans to do the tests, please let us know in the comments.
Trading financial instruments, including foreign exchange on margin, carries a high level of risk and is not suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in financial instruments or foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
