June 2007 Commentary

This month's commentary is about a new indicator that we will introduce with our next release. Many times traders ask how we know the best sensitivity to be used with a particular security. As a rule we use Fibonacci numbers because their progression in value establishes a natural relationship between the nesting waves. Yet there are times when we could use a start value to either match a volatility that is out of phase from our normal progression or only to adapt to a specific investing time frame. Our new indicator steps in nicely as it will display the percentage of price retracement between peaks and troughs of a chosen sensitivity. It tells us what percentage was attained most often in between the peaks and troughs. That percentage can then be used to capture impulses that will span the time we choose.

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Another benefit from our indicator comes from the history it compiles over the whole chart. From that we can see unusual changes in volatility for specific period of times. It enables us to improve our understanding of the security's behaviour. To establish the correct swing percentage is probably the most difficult task and even if we do, there is no certainty that it will remain like that. So make good use of the tool when it's released, remember the strong and the weak points of the indicators you use.