Oct

8

Thoughts on the Kase Dev-stop

By Teresa | Filed Under Trading Ideas | Leave a Comment

Robert wrote:

Thanks for the time and effort you put into your website. It is of great encouragement to me that I am heading in the right direction. . . .Recently I concluded that I needed to develop and maintain a list of high price-high range stocks to trade and backtest. So your latest articles are of great interest to me. I am considering your PowerTools for eSignal and am curious to know does it use volatility outliers to initiate entry signals? I assume it uses something similar to Kase’s dev stop to reverse. Are you familiar with her work and what is your opinion of it? Keep up the good work.

I attempt to answer every question that comes my way, and once in a while, it takes a great deal of effort to hunt down the answer. And this is going to be a long one.

First of all, I am only familiar with technical indicators in terms of how they can be represented graphically; that is, I plot the information as lines, dots, histograms and color bars in ways that make intuitive sense. A familiar look and feel makes the tools easy to use. And that is where the similarities end.

What goes into the calculations is another matter. You might be surprised, but I actually know very little about technical indicators. Why? Because most of the work would not pass muster due to conceptual and procedural flaws. If you want to kill a quant with laughter, just show him a bunch of canned equations from a charting program.
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