Charting and Studies User Guide - CQG.com

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interpret divergence by isolating a change in direction of the Stochastic %K or effectively the
moving average of Stochastic %K, which is by default the Stochastic %D. At that moment the
value of the study itself and the default value of the bar is recorded. Divergence is qualified
when they move in opposite directions on a certain number of consecutive occasions. A positive
divergence is revealed by a red line recording a value of one and a blue line a negative signal.
This highlights how the raw code is primarily of use as an exit tool to existing trend following
trades. However, the building of code within the formula tool box enables traders to increase
the accuracy of divergence qualification by focusing on the absolute value of the Studies or |bar
values and creating more exact threshold parameters.
For more information about Trading Time, go to http://www.cqg.com/AdditionalInfo/About-
CQG/Trading-Time.aspx.
Additional study information is here: http://www.cqg.com/Docs/Trading_Time.pdf.
Shaun has also created a helpful video about quantifying divergence. Please go to
http://www.cqg.com/Docs/HelpFlash.swf.
StDiv Parameters
Name Default Definition
N 1 Number of divergence patterns that are needed to produce a
signal. Most only need 1 and will not produce signals if
increased.
Period 5 Qualifies a propriety area within which signals do not have to
be symmetrical.
MA Period 1 This second period refers to the variable of the moving average
and therefore what is normally regarded as the Stochastic %d
value . Setting it to a number beyond 1 means that the
average is being used as the divergence tool and not the
original indicator.
Lookback 25 Qualifies the lookback period for when divergence can occur
within. Increasing the number will normally increase the
number of divergence signals and for slow moving indicators
should be raised from the default.
ob 70 These reflect the fact that the study has a limit of scale, so the
use of setting an overbought and oversold threshold acts as
reset point where the current divergence process ends. Setting
at 100 and 0 means no reset can occur.
os 30 These reflect the fact that the study has a limit of scale, so the
use of setting an overbought and oversold threshold acts as
reset point where the current divergence process ends. Setting
at 100 and 0 means no reset can occur.
MA Type Sim Qualifies the type of moving average to be used. Note this
should be set to smoothed if trying to be unformed with the
Stochastic %K.
StDivDn High Qualifies the relationship within the change in direction of the
indicator and the subsequent bar value to be recorded at that
point.
Third-Party Studies