AiM.HRP
This indicator study for TradeStation categorizes market conditions into four distinct states. It combines trend and volatility measures to provide a comprehensive view of market dynamics, helping traders identify potential long-term trend shifts and market regime changes.
Key Features
- HRP stands for Historical Risk Profile.
- Specifically designed for monthly chart analysis
- Combines trend following and volatility metrics
- Ranks current market conditions against historical data
- Categorizes market state into four quarters based on trend and volatility
How to Apply
The HRP value is a ranking against previous values. The output will be different if we load 10 bars vs 100 bars vs 1,000 bars. For monthly charts, load as much data as possible. The equivalent weekly data works out to be 4.3 times more bars, so to save on computer resources, a start date of 2007-01-01 is enough.
- Open a weekly or monthly chart for your desired ticker symbol in TradeStation or apply to RadarScreen.
- From the EasyLanguage shortcut bar, select "Indicators" and choose AiM.HRPw for weekly, and AiM.HRP for monthly.
- Apply the study to your chart.
RadarScreen poses a greater challenge due to the notorious Loading Additional Data for Accumulative Calculations problem. We highly recommend using the default settings below for both weekly (AiM.HRPw) and monthly (AiM.HRP) versions.
Interpreting the Results
The indicator plots a single line representing the "Zone" or market state:
- Zone 1: Low volatility, uptrend, roughly equivalent to Weinstein Stage 1
- Zone 2: High volatility, uptrend, roughly equivalent to Weinstein Stage 2: some stock bubbles crash UPwards near the end of their time in Zone 2
- Zone 3: High volatility, downtrend, roughly equivalent to Weinstein Stage 3
- Zone 4: Low volatility, downtrend, roughtly equivalent to Weinstein Stage 4
- Transitions between zones may indicate potential changes in market regime or trading opportunities.
- The indicator considers both the current trend and volatility relative to historical patterns.
Note: On our weekly stock ranking workbook, stocks in Zone 1 are colored green, Zone 2-yellow, Zone 3-red, Zone 4-blue.
Additional Information
- The indicator stores and analyzes up to 2000 data points for historical comparison.
- Consider using this indicator in conjunction with other technical and fundamental analysis tools for a comprehensive market view.
- As this is a long-term indicator, it's particularly suitable for position traders and investors focusing on extended market cycles.
Note: This study is designed for educational and informational purposes only. It should not be considered financial advice. Always conduct your own research and consider consulting with a financial advisor before making investment decisions.