Price Indicator terms are terms that define a trading indicator, such as a Relative Strength Index (RSI), Moving Average Convergence-Divergence (MACD), Bollinger Bands, etc. These functions process the evaluated share’s price-series in some manner to indicate some aspect of the market.

To create a Price Indicator term, simply select ‘price indicator’ as the term’s type then choose from one of the indicators described below. After selecting the type of indicator you want, you will then be asked to enter further parameters required to complete the definition of the indicators. The DEfT Wizard provides context-sensitive help text to guide you through the process.

Many of these indicators produce multiple values. These will be listed in parentheses after the name you have given to the term, when you access the term. For example, if you define a MACD term with the name ‘My MACD’ then, when you use the ‘named value term’ option to get the MACD’s values (e.g. while creating another definition), then you will be offered ‘My MACD (main)’ and ‘My MACD (signal)’. Pick one of these to get the value for the MACD indicator’s ‘main‘ line or ‘signal‘ line, respectively. These subsidiary values are indicated in bold below.

• Moving Average: defines a moving average on the evaluated security’s price over a defined period. You can create a simple, exponential, weighted, triangular, variable (VHF), variable (CMO), or VIDyA average. Explanations of these different average types are given in ShareScope’s Help function.
• Moving Average + Envelope: this allows you to define a simple, exponential or weighted average with envelope boundaries offset on both sides of the average by some percentage of the average value, or by some absolute offset (in the evaluated share’s minor price units). When you reference such a term, you will be offered 3 sub-values (in parentheses after the term’s name), which are: average, upper bound, lower bound
• Bollinger Bands: Volatility bands placed above and below a moving average. Volatility is based on the standard deviation, so these expand and contract as volatility increases and decreases. Supposedly, they can be used to signal trend changes by looking at where reversals occur in relation to the bands. The sub-values offered with this type of indicator are: average, upper bound, lower bound
• Donchian Channels: Consist of two boundary lines: the upper line tracks the highest price over a defined period, while the lower line tracks the lowest price over the same period. A middle line tracks the average of the upper and lower boundaries. They are used to identify breakout price points, which may signal the start or end of a trend. Three sub-values are available: highest high, middle price, lowest low
• STARC Bands: Stoller Average Range Channel bands are drawn around a simple moving average, with the offset from the average to each boundary being the ATR (Average True Range) for the period, or some multiple of it. Three sub-values are available: average, upper bound, lower bound
• Linear Regression Trend: This is a ‘best fit’ trend line for the evaluated security’s prices, over a specified period. Six sub-values are available:  gradient, daily % growth, monthly % growth, yearly % growth, [trend] end value, standard deviation [vs the trend]
• Highest High/Middle/Lowest Low Price: Tracks the highest high, middle and lowest low prices over a period, so offers 3 sub-values: highest high, middle price, lowest low
• Average Direction Indicator (ADI): The Average Directional Index (ADI) measures trend strength without regard to trend direction, while the Minus Directional Indicator (-indicator) and Plus Directional Indicator (+indicator) determine trend direction. According to Welles Wilder, who designed it, a trend is strong if the ADI > 25 and weak if ADI < 20. There are four sub-values: +indicator, -indicator, ADI, ADI rating. The latter rating value is a measure of the ADI‘s momentum and is defined as (ADI_today + ADI_{N days ago})/2
• Average True Range (ATR): The ATR measures the likely size of a share’s daily price movement. The True Range is calculated as being the greatest of: current high – current low, or current high – previous close, or previous close – current low. The selected value each day is averaged over a defined number of days to give the ATR
• Chande Trend Index: Developed by Tushar Chande, this index attempts to differentiate between price movements that are the result of random noise and those that may mark the beginning of a trend. A strong trend is supposedly indicated if its value is greater than 1. Further information can be found in ShareScope Help.
• Moving Average Convergence-Divergence (MACD): The MACD is a trend following momentum indicator with two sub-values. The main value is the difference between two exponential moving averages of different periods. The shorter average will tend to move above the slower average in rising markets (so the main value will be positive), and fall below it in falling markets (negative value). The signal value is the exponential average of the main value taken over a third time period, so moves more slowly than the main value. Again, the main value rises above the signal value in rising markets and falls below it in falling markets.
• On Balance Volume Indicator: This is a simple indicator that adds a single period’s volume when the price goes up during the period and subtracts the period’s volume when the price goes down. A cumulative total of the volume additions and subtractions forms the On Balance Volume line. This line can then be compared with the price chart of the underlying security to look for divergences or confirmations.
• Relative Strength Index (RSI): Attempts to measure the size and consistency of price trends by using the exponential average gain of up periods (close higher than previous close) during a specified period, divided by the exponential average loss of down periods (close lower than previous close) during the same period. This is then adjusted to produce a number between 0 and 100, where values > 70 are reputed to signal that the market has been overbought, while values < 30 indicate it is oversold.
• Stochastic Oscillator: A momentum indicator that shows the location of the close relative to the high-low range over a set number of periods. It attempts to predict price turns based on the idea that the momentum of the price will change before its direction does. It offers 2 sub-values: main, signal
• Tops and Bottoms: Is RuleTrader’s proprietary indicator for detecting recent tops and bottoms in the evaluated securities price-series. This is determined by calculating a best-fit trend line for the series over a period, which ends some days in the past, then extrapolating it forward so it can be compared with the series value today. If the series is no longer continuing in the direction of the previous trend then the difference between today’s value and the extrapolated value will be much larger than if it had continued the trend. This difference is measured in terms of the standard deviation of the series relative to the trend, so it’s implicitly adjusted for natural variability. Comparing this difference to a threshold determines if a top or bottom (i.e. a change in direction of the value series) occurred at the previous end of the trend. The diagram below makes this clearer:

The indicator also requires a minimum standard deviation to be specified, expressed as a percentage of the latest value in the price-series. The purpose of this is to counteract situations where the trend’s prices are trending in a nearly straight line (i.e. they are all on, or nearly on, the trend-line), which may occur e.g. following a breakout. Such prices have a near zero standard deviation vs the trend-line, which makes the detector unduly sensitive, as even the smallest deviation from the trend would then trigger the detector. If this is not what you require, then you can counteract this situation by setting the minimum standard deviation to be a percentage of the final price. The detector will then not trigger until the price has moved at least this percentage from the trend-line.