Category: Advanced Indicator Set 2

Input parameters

Calculations

Swing Index = 50*((C2-C1+0.5*(C2-O2)+0.25*(C1-O1))/R)*(K/LimitMove),

where:

K = Max(Abs(H2-C1), Abs(L2-C1)).

To calculate R, first find which of the following three terms is the largest:

(1) Abs(H2-C1)

(2) Abs(L2-C1)

(3) Abs(H2-L2)

Then R is:

If (1) is the largest Then R=Abs(H2-C1)-0.5*Abs(L2-C1)+0.25*Abs(C1-O1)

If (2) is the largest Then R=Abs(L2-C1)-0.5*Abs(H2-C1)+0.25*Abs(C1-O1)

If (3) is the largest Then R=Abs(H2-L2)+0.25*Abs(C1-O1)

Here O1, H1, L1, and C1 are yesterday’s Open, High, Low, Close. O2, H2, L2, and C2 are today’s Open, High, Low, Close.

Discussion

The rather hard to comprehend formula of Welles Wilder’s Swing Index is deemed to reveal a “real” price of the market. It is doing so by combining today’s and yesterday’s Open, High, Low, and Close prices into one data stream. On the chart the Swing Index looks like an erratic curve. It becomes more meaningful when it is being accumulated over time. The result is the Accumulation Swing Index.

Reference

J. Welles Wilder Jr., “New Concepts in Technical Trading Systems”, Section VIII. Printed by Hunter Publishing Company, Winston-Salem, NC. 1978. ISBN 0-89459-027-8.