| HAARMANN Indicator
Type: Oscillator
Custom indicators show a determining disadvantage - they often consider only one single stock parameter. They consider either stock quotes or its volume. However, stock price movements often are dependent of the traded volume and should not be considered isolated. The higher the demand (the traded volume) the higher the stock price often is. We needed an indicator which unites both parametrers in a way that a raised demand (raised volume with rising stock price) can be determined. The HAARMANN indicator removes this discrepancy in the available technical indicator market. It considers stock price changes AND volume changes and it is still simple to compute. We will see at a later time (see article "about the quality and the comparison of stock indicators"), how beneficial this indicator is and how it leaves other indicators behind in the profit yield by far!
Before we make ourselves familiar with the calculation of the indicator - we devote ourselves first to its principle. The basic principle of the indicator is based on the fact that we are interested in stocks that where a buying interest exists (bull's market) - because these one have high probability to further rise (the increased interest in stocks often has a reason - e.g., good annual balances, new products released etc.) The following table describes the principle of the indicator.
Quote-
Change | Volume-Change | Indicator-Reaction | Interpretation | | + | + | rises
| Price rises with rising Volume (Bullish) | | - | + | | Prices falls with rising Volume (Bearish) | | + | - | | | | - | - | falls | | Table 1: Principle of the Indicator
As already mentioned, the Haarmann indicator considers stock price fluctuations and volume fluctuations. It uses a standard deviation to calculate the volatility. For both terms (stock price and stock volume) the volatility is calculated seperately. Calculation: Haarmann(i) = Price_Therm(i) * VOL_Therm(i) with
Price_Therm (i) = Price_Volatility_Factor * Change_Price_PCT (i - Haarmann_Period)
VOL_Therm (i) = (1 / VOL_Volatility_Factor) * Change_VOL_PCT (i - Haarmann_Period)
The stock price volatility and volume-volatility factor can be computed for the considered period (typically 14 days). However, self adapting (dynamic) factors can be used as well. For an easier interpretation the Haarmann indicator is averaged (smoothed).
The Haarmann trigger is a smoothed Haarmann indicator and is calculated by a (binominal) weighted averaging of the last 4 trading days.
 | Interpretation: The indicator is suited for conservative speculators just as for aggressive Trader.
An exact evaluation follows. Remark: The indicator can deliver false signals in shortened trading days (because on these days is less traded - what doesn't result, however, from a disinterest of buyers). On these days (e.g., between 23.12 and 3.1 of every year) special care is offered (however, this fact is also valid for all the other indicators).
Preferences:
Period: 14 or 20 days
|
| 
