Kllinger Volume Oscillatoer

DEFINITION of 'Klinger Oscillator' A technical indicator developed by Stephen Klinger that is used to determine long‐term trends of money flow while remaining sensitive enough to short‐term fluctuations to enable a trader to predict short‐term reversals. This indicator compares the volume flowing in and out of a security to price movement, and it is then turned into an oscillator.

BREAKING DOWN 'Klinger Oscillator' A signal line (13‐period moving average) is used to trigger transaction decisions. This technique is very similar to signals that are created with other indicators such as the 'moving average convergence divergence'. The Klinger Oscillator also uses divergence to identify when price and volume are not confirming the direction of the move. It is considered to be a bullish sign when the value of the indicator is heading upward while the price of the security continues to fall. Traders will use other tools such as trendlines, moving averages and other indicators to confirm the reversal.

TAI ‐ Klinger Volume Oscillator
Name, Sometimes Called: Klinger Volume Oscillator Also known as Klinger Oscillator Sometimes abbreviated KVO or KO Klinger is sometimes misspelled as Klingler.
Brief Description: The Klinger Oscillator is a volume‐ and price‐based oscillator intended to measure both short‐ and long‐term money flows into and out of a security.
Definitions, Formulas: Developed by Stephen J. Klinger to help in both short‐ and long‐term analysis, the Klinger Volume Oscillator measures trends of money flows based on volume. The KVO is derived from three types of data: the high‐low price range, volume, and accumulation /distribution. Determining KVO begins with calculating the so‐called "typical" price (TP) for today and yesterday: TPTODAY = (HTODAY + LTODAY + CTODAY) / 3 TPYESTERDAY = (HYESTERDAY + LYESTERDAY + CYESTERDAY) / 3 where H = High, L = Low, and C = Close, respectively Based on the TP values, assign a signed value (SV) to today's volume (V): If TPTODAY > TPYESTERDAY, then SV = +V If TPTODAY < TPYESTERDAY, then SV = ‐V In our research, we found no statement as to how to treat the case TPTODAY = TPYESTERDAY So for equal TP values, SV=+V. That is, we treat this case as positive. Klinger refers to the signed volume value SV as the "volume force." A positive volume force indicates accumulation, while a negative volume force indicates distribution. Next, calculate two EMAs of the signed volume value and their difference: KVO = EMA(34)(SV) ‐ EMA(55)(SV) Finally, calculate a 13‐period EMA of the KVO, used as a trigger line for the KVO: EMA(13)(KVO) Note that the KVO TAI can also be used during divergence from price trends. If KVO is rising and price is declining, this is a bullish divergence. When KVO crosses over zero, expect a price increase. If KVO is declining and price is rising, this is a bearish divergence. When KVO crosses under zero, expect a price decline. For our purposes, we use only using the crossover form, not the divergence form, of KVO. Positive Development Calculation: For this TAI, a new positive development (NPD) occurs when the KVO crosses above the 13‐period EMA of KVO (the trigger line). That is, KVO x+ EMA(13)(KVO). This TAI is no longer positive when the KVO crosses under the 13‐period EMA of KVO (the trigger line) That is, KVO x‐ EMA(13)(KVO).If this TAI is still positive tomorrow, it will no longer be new, but will be a cumulative positive development (CPD). If this TAI was a new positive development (NPD) yesterday, and is still positive today, then it becomes a cumulative positive development (CPD). History: Developed by Stephen I. Klinger, the KVO appeared in an article in (Technical Analysis of) Stocks and Commodities magazine (December 1997). An excerpt from the article appears at http://www.traders.com/Documentation/FEEDbk_docs/Archive/1297/ Abstracts_new/Klinger9712/Kinger.html The full article is available for purchase here: http://store.yahoo.com/traderscom/‐v15‐c12‐identif‐pdf.html Profiting from earlier research on volume by such well‐known technicians as Joseph Granville, Larry Williams, and Marc Chaikin, Klinger set out to develop a volume‐based indicator to aid both short‐ and long‐term analyses. The KVO was developed with two apparently opposing goals in mind: to be sensitive enough to signal short‐term tops and bottoms, yet accurate enough to reflect the long‐term flow of money into and out of a security. The values 13, 34, and 55 (the periods of the three EMAs used in the KVO) are numbers from the Fibonacci sequence where each number is the sum of the previous two numbers: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144... As to why those specific values were chosen, we leave that explanation to Mr. Klinger. The chart below shows the Klinger Oscillator indicator in action. Notice the volatility of the signals and the potential for damaging whipsaws. Shown are three times between February and June 2005 where KVO predicted a price rise. Notice the whipsaw in May 2005.

Created By sumana.m
NinjaTrader Version 7
File Size 7.1 KB
Create Date 09/15/2015
# of Downloads 677

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