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Making The Most Of A Trend With The Disparity Index

In his article ďMaking The Most Of A Trend With The Disparity IndexĒ, Dan Valcu has analyzed volatile markets where the formation of peaks and troughs is difficult to forecast. The disparity index is an indicator that should help to squeeze the best out of a trend whether you are trading equities, futures, or Forex.

Using Function Builder, one needs to create the Disparity function:

Disparity function:

function (Price:Numeric=Close, N:Numeric=10, 
Method:Numeric = E):Numeric;
Var
 Disparity:=0;
End_var

Disparity:= 100*(Price -  MOV(Price,N,Method))/Price;

return Disparity;

Also, one needs to create the Disparity indicator using Tradecisionís Indicator Builder:

Disparity indicator:

input
 Price:"Enter the price:", Close;
 Length:"Enter the Length:", 20;
 Method:"Enter the Moving Average Method:", E;
end_input

return Disparity(Price,Length,Method);

In NeatScan market scanner, one needs to create the DIX scan with the following code:

return true;


Then one needs to add three custom columns to the scan to display the indicator reading for three different average smoothing lengths:

Column DIX(20):

var
 nper1 := 20;
 dix20:= 0;
End_var

dix20:=100*(C-EMA(C,nper1))/C;

return dix20;

Column DIX(50):

var
 nper1 := 50;
 dix50:= 0;
End_var

dix50:=100*(C-EMA(C,nper1))/C;

return dix50;

Column DIX(200):

var
 nper1 := 200;
 dix200:= 0;
End_var

dix200:=100*(C-EMA(C,nper1))/C;

return dix200;



Download to import into Tradecision.

How to use this indicator in Tradecision:
  1. Click Download.
  2. Save this indicator in a safe location on your hard drive.
  3. Open Tradecision and in the Tools menu click Indicator Builder.
  4. In the Indicator Builder dialog, click Import, locate the saved file and then click OK.
The indicator will be added to the Custom Indicators list.
 
Making The Most Of A Trend With The Disparity Index
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