Wednesday, September 06, 2006
Ensign Beta: Equi-Volume
This must be an exciting development to have lured me out of my bunker!
Ensign Software Beta, which is quite close to production release, adds a few new features that are absolutely delightful. I am going to focus on Howard Arrington's implementation of "Equi-Volume" as this one feature alone should knock any whining "what software should I use" fence sitting trader on their feet running to get this charting software. Oh, did I mention it is $39.99 a month, and no increase with all the new features, and that you can even use Interactive Broker's FREE data feed? Anyway, let's talk Equi-Volume.
The Equivolume concept was developed by Richard Arms, who for many years has provided a
Trading with Equivolume free PDF book on his armsinsider.com website. This little book is well worth your time if you are not yet familiar with this charting technique.
Put in its most simple terms, a box is drawn with the high and low as top and bottom. The width of the box is determined by the volume inside that range: a skinny box is light volume, a chubby box is heavier volume. From Mr. Arm's book
Volume Cycles in the Stock Market:
Ensign has implemented the width part in only the "body" part of the candle, so that the tails are still visible. I quite like this as the tails provide additional sentiment information. Addtionally, in the Dick Arms implementation, the "time axis" is irregular, narrowed or widened by the volume of the boxes. A very clever feature in Mr. Arrington's implementation is that the centers of the candles are keep at equal distance, allowing classic indicators and draw tools to be accurately implemented as the X-axis is uniform. This is done by letting candles "overlap". In this way, the wider bars can still be drawn while not compromising the x-axis.
By the way, even though I am referring to candles, Ensign's implementation also draws Equi-Volume bars, which many traders prefer to candles. It even makes Line-on-Close thicker and thinner. Here is a case of having your cake and eating it too!
Another new feature is "3D" candles, which are simply beautiful and complement Equi-Volume very nicely. Shown below is a quick mark up of today's 3-minute Russell futures chart. I call heavy volume candles "Fat Boys" and light volume candles "Olive Oyls". I have overlaid an
Alan Box on it as well as the basic
X-Swing averages with a set of RSI's for simple divergence and over-sold/over-bot type aide (click to enlarge).
Ensign Software: Try it, you'll like it!
Labels: ensign, volume
