Continue reading...The Proof is in the Trading

In my recent TASC article, ?The Hunt for Superior Signals ? Two Moving Function Hybrids? (September 2005), I recommended that the Moving Slope Rate of Change (?MSROC?) be a part of every trader and researcher?s toolbox. A quick look at this indicator demonstrates its value:

As you can see, the moving slope rate of change is remarkably smooth. Instead of using just a change in price to calculate slope (as with rate of change or ?ROC?), we use the slope of a least-squares line to calculate MSROC. [Instructions for MSROC calculation are at the end of the article.] Least-squares lines are notoriously smooth. This smoothness is a major asset, as it minimizes the need for further qualification or subjective input, giving fewer ?false signals?. For example, from 1993 to early 2005, you would have observed the...

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