The Trough function allows you to refer to troughs (i.e.
distinct lows) in any selected `data array'. Technically speaking, a trough is
the lowest point reached between a short term down trend and a short term up
trend. The way this function identifies a trough is based on the selected data
array moving up a set percentage from a low. This percentage is set by the user.
Similarly to the peak function, by using the Trough function, not only can you
refer to the most recent trough but also to any trough before that.
SYNTAX Trough(Nth, Data Array, %Minimum Change)
Nth _ The number of the trough you wish to refer to. For
example, N = 1 would return the value of the most recent trough in the data
array, and N = 2 would return the value of the trough before that one.
Data Array _ The data array searched to identify where the
trough occurred; this is normally the closing price.
% Minimum Change _ The minimum percentage required for a data
array to move away from a low before it is classed as a trough.
EXAMPLE
The following formula returns the value of the closing price
at the most recent point where the closing price has risen 4% from a low.
Trough(1,C,4)
In the formula above:
Nth = 1
Data Array = C
% Minimum Change = 4
APPLICATION
A more useful application of this example could be:
C<Trough(1,C,4)
This formula specifies that the closing price must be less
than the value of the closing price on the most recent occasion that it moved up
4% from the low. This formula can be part of a useful entry signal for trading
short since it identifies those stocks showing signs of commencing or continuing
a medium term down trend.
Another useful application is to use the trough function to
identify those securities achieving higher peaks and higher troughs. This could
be coded using the following formula:
Trough(1,C,4)>Trough(2,C,4)
Looking at Figure 3.20, we can see this example applied to
the chart as an indicator
Figure 3.20 _ Trough
EXERCISES
Construct formulas for the following:
1. The second most recent trough in the closing price where
there was a 4% change in price:
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article is a snippet from the
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