## RE: [TOS_thinkscript] Coding the "Derivative Oscillator" in thinkScript

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• I ll leave it to you to verify that this is doing what you expect and to spruce it up. declare lower; input rsi_slow_len = 14; input rsi_fast_len = 3; input
Message 1 of 10 , Nov 23 5:35 AM
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I'll leave it to you to verify that this is doing what you expect and to spruce it up.

declare lower;

input rsi_slow_len = 14;
input rsi_fast_len = 3;
input momentum_len = 9;

def RSIDelta = Momentum( momentum_len, RSIWilder( length = rsi_slow_len, price = close ).RSI ).Momentum;
def RSIsma = Average( RSIWilder( length = rsi_fast_len, price = close ), rsi_fast_len );

plot CompositeIndex = RSIDelta + RSIsma;

plot Plot2 = Average( CompositeIndex, 13 );
plot Plot3 = Average( Plot2, 33 );

From: TOS_thinkscript@yahoogroups.com [mailto:TOS_thinkscript@yahoogroups.com] On Behalf Of Joe Agrusa
Sent: Tuesday, November 23, 2010 6:46 AM
To: TOS_thinkscript@yahoogroups.com
Subject: [TOS_thinkscript] Coding the "Derivative Oscillator" in thinkScript

Constance Brown has developed the "Derivative Oscillator" that I stumbled upon as a built-in indicator at FreeStockCharts.com and have not observed anywhere else.

Here is what she says about it "...
It was the start of a final formula called the Composite Indicator. Please read Breakthroughs in Technical Analysis… editor David Keller. My chapter is 5 and gives the formula."

The Formula in that chapter is as follows (it appears to be for TradeStation easyLanguage)...

Pages 80-81...

Using the Composite Index to Detect RSI Divergence Failures
In Figure 5.6 (a chart that she inserted for demonstration), the two Fs over the RSI momentum extremes highlight one of the weaknesses of RSI. The indicator is prone to fail to develop divergence to the price data at key market reversals. The cause of this failure is in the normalization of the indicator formula. A solution is to couple an indicator with the RSI that has not been normalized. The Composite Index is a formula I developed to identify divergence failures within the RSI. The formula is protected by copyright by the Library of Congress, but the time has come to release the formula because it has unique properties that traders value. The formula warns when RSI is failing to detect market reversals so that the trader is not caught by the change in trend. It has been used in all financial markets and time horizons for more than twelve years. (emphasis mine)

The Composite Index was developed to solve the divergence failure problem in the RSI, but its ability to provide specific horizontal levels of support within the indicator adds to its value. The Composite Index takes the normalized formula of RSI and removes the normalization range restrictions. In Figure 5.7, the divergence to RSI in the Composite Index is seen at points N and P. The formula for the Composite Index uses an embedded momentum calculation with a short-term RSI smoothed. The concept of embedding a momentum study can be used within MACD (moving average convergence/divergence), but
stochastics should not use this concept in fast formulas. If slow %D is used, this concept can be applied, but extensive testing is recommended, as this is not how I used the formula to gain confidence under fire in all financial markets in a real-time environment.

THE COMPOSITE INDEX

Create two functions in Easy language first:

The first is a 9 period momentum study of RSI.

RSIDelta=MOMENTUM(RSI(CLOSE,14),9)

Then a smoothed short period RSI is created,

RSIsma=AVERAGE(RSI(CLOSE,3),3)

The indicator can then be created:

INDICATOR: COMPOSITE INDEX

Plot1(RSIdelta+RSIsma,”Plot1”);
Plot2(average((plot1),13)”Plot2”);
Plot3(average((plot1,33,”Plot3”);

Is anyone able to convert the code above into a useable thinkScript?

Joe

• WOW...thank you Richard! I will apply and report back...although possible not today... Thanks again! Joe ________________________________ From: Richard Houser
Message 2 of 10 , Nov 23 5:40 AM
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WOW...thank you Richard!

I will apply and report back...although possible not today...

Thanks again!

Joe

From: Richard Houser <rhouser@...>
To: TOS_thinkscript@yahoogroups.com
Sent: Tue, November 23, 2010 8:35:21 AM
Subject: RE: [TOS_thinkscript] Coding the "Derivative Oscillator" in thinkScript

I'll leave it to you to verify that this is doing what you expect and to spruce it up.

declare lower;

input rsi_slow_len = 14;
input rsi_fast_len = 3;
input momentum_len = 9;

def RSIDelta = Momentum( momentum_len, RSIWilder( length = rsi_slow_len, price = close ).RSI ).Momentum;
def RSIsma = Average( RSIWilder( length = rsi_fast_len, price = close ), rsi_fast_len );

plot CompositeIndex = RSIDelta + RSIsma;

plot Plot2 = Average( CompositeIndex, 13 );
plot Plot3 = Average( Plot2, 33 );

From: TOS_thinkscript@yahoogroups.com [mailto:TOS_thinkscript@yahoogroups.com] On Behalf Of Joe Agrusa
Sent: Tuesday, November 23, 2010 6:46 AM
To: TOS_thinkscript@yahoogroups.com
Subject: [TOS_thinkscript] Coding the "Derivative Oscillator" in thinkScript

Constance Brown has developed the "Derivative Oscillator" that I stumbled upon as a built-in indicator at FreeStockCharts.com and have not observed anywhere else.

Here is what she says about it "...
It was the start of a final formula called the Composite Indicator. Please read Breakthroughs in Technical Analysisâ€¦ editor David Keller. My chapter is 5 and gives the formula."

The Formula in that chapter is as follows (it appears to be for TradeStation easyLanguage)...

Pages 80-81...

Using the Composite Index to Detect RSI Divergence Failures
In Figure 5.6 (a chart that she inserted for demonstration), the two Fs over the RSI momentum extremes highlight one of the weaknesses of RSI. The indicator is prone to fail to develop divergence to the price data at key market reversals. The cause of this failure is in the normalization of the indicator formula. A solution is to couple an indicator with the RSI that has not been normalized. The Composite Index is a formula I developed to identify divergence failures within the RSI. The formula is protected by copyright by the Library of Congress, but the time has come to release the formula because it has unique properties that traders value. The formula warns when RSI is failing to detect market reversals so that the trader is not caught by the change in trend. It has been used in all financial markets and time horizons for more than twelve years. (emphasis mine)

The Composite Index was developed to solve the divergence failure problem in the RSI, but its ability to provide specific horizontal levels of support within the indicator adds to its value. The Composite Index takes the normalized formula of RSI and removes the normalization range restrictions. In Figure 5.7, the divergence to RSI in the Composite Index is seen at points N and P. The formula for the Composite Index uses an embedded momentum calculation with a short-term RSI smoothed. The concept of embedding a momentum study can be used within MACD (moving average convergence/divergence), but
stochastics should not use this concept in fast formulas. If slow %D is used, this concept can be applied, but extensive testing is recommended, as this is not how I used the formula to gain confidence under fire in all financial markets in a real-time environment.

THE COMPOSITE INDEX

Create two functions in Easy language first:

The first is a 9 period momentum study of RSI.

RSIDelta=MOMENTUM(RSI(CLOSE,14),9)

Then a smoothed short period RSI is created,

RSIsma=AVERAGE(RSI(CLOSE,3),3)

The indicator can then be created:

INDICATOR: COMPOSITE INDEX

Plot1(RSIdelta+RSIsma,â€�Plot1â€�);
Plot2(average((plot1),13)â€�Plot2â€�);
Plot3(average((plot1,33,â€�Plot3â€�);

Is anyone able to convert the code above into a useable thinkScript?

Joe

• Thanks for this, Richard, very much appreciated! Been looking for this script for a while! -Thomson
Message 3 of 10 , Feb 5, 2014
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Thanks for this, Richard, very much appreciated! Been looking for this script for a while!

-Thomson

• Richard, Could you post the Derivative Oscillator in thinkScript please? Thank you for your incredible contributions. Best, Jeff from Maine
Message 4 of 10 , Feb 6, 2014
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Richard,

Could you post the "Derivative Oscillator" in thinkScript please?

Thank you for your incredible contributions.

Best,

Jeff from Maine

• Jeff: See post # 59898 for RH s code post.
Message 5 of 10 , Feb 6, 2014
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Jeff: See post # 59898 for RH's code post.

• Correction # 5989
Message 6 of 10 , Feb 6, 2014
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Correction # 5989
• Thank you!!
Message 7 of 10 , Feb 6, 2014
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Thank you!!

On Thu, Feb 6, 2014 at 4:40 PM, wrote:

Correction # 5989

• Wow that was digging deep into the archives, I posted that on 11/23/2010! I didn t realize that you were referring to me until I did a search on Derivative
Message 8 of 10 , Feb 7, 2014
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Wow that was digging deep into the archives, I posted that on 11/23/2010! I didn't realize that you were referring to me until I did a search on "Derivative Oscillator". Hope you found what you were looking for.

Rich Houser

From: TOS_thinkscript@yahoogroups.com [mailto:TOS_thinkscript@yahoogroups.com] On Behalf Of j.gillman tds.net
Sent: Thursday, February 06, 2014 4:18 PM
To: TOS_thinkscript@yahoogroups.com
Subject: Re: [TOS_thinkscript] Coding the "Derivative Oscillator" in thinkScript

Thank you!!

On Thu, Feb 6, 2014 at 4:40 PM, <nohandle75@...> wrote:

Correction # 5989

• Yes, thank you.
Message 9 of 10 , Feb 8, 2014
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Yes, thank you.

On Sat, Feb 8, 2014 at 12:23 AM, Richard Houser wrote:

Wow that was digging deep into the archives, I posted that on 11/23/2010! I didn't realize that you were referring to me until I did a search on "Derivative Oscillator". Hope you found what you were looking for.

Rich Houser

From: TOS_thinkscript@yahoogroups.com [mailto:TOS_thinkscript@yahoogroups.com] On Behalf Of j.gillman tds.net
Sent: Thursday, February 06, 2014 4:18 PM
To: TOS_thinkscript@yahoogroups.com
Subject: Re: [TOS_thinkscript] Coding the "Derivative Oscillator" in thinkScript

Thank you!!

On Thu, Feb 6, 2014 at 4:40 PM, <nohandle75@...> wrote:

Correction # 5989

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