Elder SafeZone Stop Short

Modified on 2015/11/13 12:45 by Eugene — Categorized as: Community Indicators

ElderSafeStopShort: Indicator Documentation

Syntax


public static ElderSafeStopShort(Bars bars, int period, int lookback, double coefficient)
public ElderSafeStopShort(Bars bars, int period, int lookback, double coefficient, string description)

Parameter Description

bars	A Bars object
period	The EMA period defines the trend
lookback	The lookback period
coefficient	This factor is typically ranging between 2 and 3

Description

SafeZone is a method for determining stop placement outside of the level of market noise as defined by the current volatility. It can be found in Dr. Alexander Elder's book "Come Into My Trading Room". According to Dr. Elder, noise in a downtrend is the portion of the current bar extending above the previous bar's high, hence going against the prevailing trend. For short trades, the average noise level, multiplied by a trader-selected coefficient, is added to the current high. The stop value is calculated by multiplying the SafeZone factor (typically ranging from 2 to 3 and which ultimately depends on the security and trader's preference) by the noise level. Stops are moved only in the direction of the trade, never against.

See also: Elder SafeZone Stop Long.

Example

This example illustrates creating and visualizing the Safe Zone stop series:


using System;
using System.Collections.Generic;
using System.Text;
using System.Drawing;
using WealthLab;
using WealthLab.Indicators;
using Community.Indicators;

namespace WealthLab.Strategies
{
	public class SafeZoneDemo : WealthScript
	{
		protected override void Execute()
		{
			ElderSafeStopLong SafeLong = ElderSafeStopLong.Series( Bars, 22, 10, 2.0 );
			ElderSafeStopShort SafeShort = ElderSafeStopShort.Series( Bars, 22, 10, 2.0 );
			PlotSeries( PricePane, SafeLong, Color.Blue, LineStyle.Dots, 4 );
			PlotSeries( PricePane, SafeShort, Color.Red, LineStyle.Dots, 4 );
		}
	}
}