STRSQZ -- Stretch and Squeeze (w auto calibrate)

This indicator displays the premium/discount between a future contract and its cash index
A popular display pair is YM and INDU

Basic Concept:
When the market is going up, the future leads the cash with premium.
When the market is going down, the future leads the cash with discount*.
(* or less premium)

The key is to look for excessive premium/discount at points of change.
(eg. at channel boundaries, price extremes, etc.,)

Note that this is not a Buy/Sell type of indicator
You will need to understand the workings of the market to exploit these signals.

Instructions:
set up 3 symbols in the chart:
data1: INDU index (1 minute)
data2: YM current month future contract (1 minute)
data3: YM current month future contract (5 minutes)

Set the first 2 symbols to invisible...
the 3rd symbol is your trading chart
(you can substitute the 3rd symbol with other instruments, eg. ES, NQ)

Note:
1. The indicator uses a moving average to surpress the noise. The first few bars of the day is not displayed
2. The indicator will stop plotting when the cash is closed
3. The histogram color threshold is user adjustable

[Tams]

Originally Posted by Trader333 »

Hmm, curious as my IB feed into TS does not show this at the same time.
Paul

bear in mind this is a real time indicator...
the chart will look different if you call it up afterward.

[aaa]

nice..........

when do I start receiving the royalty cheques?

When I'll get master graded with the Tams golden Prize from T.A.M.S University* (specialization = Trendliner), I will fill up the tank of your Testarossa Ferrari full life long !

*T.A.M.S = Trade And Make Silver

[Trader333]

Yes I agree, however it should look the same from an historical view for both of us using the same data feed.


Paul

[aaa]

When I'll get master graded with the Tams golden Prize from T.A.M.S University* (specialization = Trendliner), I will fill up the tank of your Testarossa Ferrari full life long !

*T.A.M.S = Trade And Make Silver

But actually my level is just enough to fill up... a lighter

[Tams]

Originally Posted by aaa »

But actually my level is just enough to fill up... a lighter

You should be able to fill up my SR22 with ease. It only takes 348 litres. ;-)

[aaa]

Which one is the leader ?

The spread is switched and the paintbar added on the Cash graphic

Spread = close data1 - close data2 ;

The plotBars shows when the cash is leading

Sometimes The cash says :

"OK Mister Future, I've moved too far, I will reverse and follow you because you are the leader !"

Some other times it says :

"I'm fed up, Mister Future, I will follow my way and from now I'm the leader !"

[Trader333]

Tams,

In your above examples of how this may be used you show three charts. The last one has the examples where price is above and below the MA. Is this the MA of the indicator or another MA ?

Thanks


Paul

[BlowFish]

I guess as this 'calibrates' itself you could use it on any correlated pair of instruments like I dunno DAX and ESTX?