ERSA Calculations

ERSA computes the rate of change of each security over the number of periods specified, and then compares each security to every other security, to come up with a percentile rank, from 0  to 99.

The ERSA dialog has the following options:

Time Periods in Relative Strength Calculation – Enter the number of time periods to use in the Relative Strength calculation. The default value is a 250-day ERS, which approximates one year.

Time Periods to Load – Enter the number of time periods to load. If you enter, say, 500 time periods to load and 250 time periods in the ERS calculation, you will get 250 days worth of ERS values to import into MetaStock.  Any stocks that don't have the requested number of time periods to load won't be used in the calculation.

Last Date to Load – Enter the ending date for loading and calculating values. Note that if the security doesn’t have data from the Last Date to Load back through the number of periods specified in Time Periods to Load, ERSA will exclude it from the calculations.

Weights – The number of time periods in the ERS calculation is broken into 4 equal-sized pieces so you can assign different weights to different parts of the data (for example, you might want to put more weight on recent data).  The calculation that you see in the newspapers usually puts more weight on the recent data.  A good approximation would be 40%-20%-20%-20%.

 

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The weighting calculation divides the number of time periods you specified by 4, then takes the dollar change in each quarter, multiplies by the weight specified, adds the four weighted changes together, and then converts back to a percentage.

MetaStock folders containing your “universe” of securities – Folder list which contains your “universe” of securities.  All of the securities in all of the folders specified are considered as one universe in the calculation.  A typical universe might look like this:
    C:\MetaStock Data\US Stocks\A - B
    C:\MetaStock Data\US Stocks\C - D
    C:\MetaStock Data\US Stocks\E - H
    C:\MetaStock Data\US Stocks\I - L
    C:\MetaStock Data\US Stocks\M - N
    C:\MetaStock Data\US Stocks\O - Q
    C:\MetaStock Data\US Stocks\R - S
    C:\MetaStock Data\US Stocks\T - Z

If you are doing an external relative strength of, say, all of your S&P industry groups that are in one folder, your universe might look like:
    C:\MetaStock Data\S&P Indices

Add – Adds new MetaStock folders to the folder list.

Remove – Removes the highlighted folder from the folder list.

Calculate – Performs the Relative Strength calculation on all of the folders in the folder list. This may take a while since it has to load up every security, calculate a rate of change for every security, and then compare the rate of change for every security on every day and rank by percentile. Once this is done, go to MetaStock and plot the “DeBry.com ERSA External Relative Strength” custom formula to see the values.

Close – Closes the dialog box. Any changes you have made are saved.

Help – Provides help.

Tip: To easily compare the performance of industry groups, simply create a folder in The DownLoader with the S&P industry groups using Symbol Lookup, run ERSA, and run the Explorer in MetaStock, and then run the ERSA exploration.

 

 

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