YangZhiJiang Force Index Update

I received several requests for an update on force index indicator for YangZhiJiang Ship Building. This is just an update based on closing price on 11 Feb 2008.



The force index is now at -229,454. The condition for short position is not there yet. The 22 day EMA of the closing price is still showing a downtrend.

For those traders that want to short this stock, it is probably safer to wait for the force index to go above the zero line.

You can refer to my earlier post for description and performance of force index on this stock.

Force Index Oscillator Case Study - YangZhiJiang

Force Index Oscillator

The market has moved down tremendously since the beginning of 2008. Investors that are keen to profit from down moves can make use of options, warrants or CFD to profit from any downward movement in prices.

Today I will introduce to you an interesting indicator developed by Dr Alexander Elder. This is the Force Index Oscillator.

By definition,

Force Index Oscillator = (Close[today] – Close[yesterday]) * Volume[today]

I have applied the following rules:

Enter Short Position :

1. Price must be lower than 22 day exponential moving average of the daily closing price today.



2. The 22 day exponential moving average of the daily closing price must be decreasing for the past 2 days.



3. The 13 day exponential average of the force index oscillator crosses the zero line today



4. If condition 1 to 3 is true, open a short position at the market open on the next day.

Exit Short Position :

1. If position is showing a loss of 10%, close the trade or


2. If the 13 day exponential average of the force index oscillator is less than zero, close the trade
   

Let’s do a case study. I have chosen YangZhiJiang, a ship building company listed in Singapore Stock Exchange http://sg.finance.yahoo.com/q?s=BS6.SI&d=t

The system identified 6 trading opportunity and 5 of them were profitable.

All trades have been closed.

For more information on Force Index Oscillator, please read the book Come Into My Trading Room: A Complete Guide to Trading