Color Based System (July S &C) for Amibroker (AFL)

In “A Color-Based System For Short-Term Trading” in this issue, author Edgar Kraut presents a simple system based on the 10-day momentum of price and volume. The relationship between price and volume now and 10 days ago is used to assign colors to volume bars.

The color-coded volume chart, color-coded spreadsheet, and trading system can be easily implemented using AmiBroker Formula Language (Afl). A ready-to-use formula is shown here. To use it, enter the formula in the Afl Editor and then press “Insert Indicator,” or go to the Tools→Exploration menu to get a color-coded spreadsheet, or the Tools→Backtest menu if you want to test the system.

It is worth noting that the high percentage of profitability in this system could be because a one-bar delay was not applied to the trailing stop. Once the more realistic one-bar delay is applied, the profitability drops significantly.