Pivot points can be a useful tool when trading the forex enabling the trader to see where the price is in relation to the previous market movements.
It is useful to have a map and be able to see where the price is relative to previous market action. This way we can see how is the sentiment of traders and investors at any given moment, it also gives us a general idea of where the market is heading during the day. This information can help us decide which way to trade.
Pivot points, a technique developed by floor traders, help us see where the price is relative to previous market action.
As a definition, a pivot point is a turning point or condition. The same applies to the Forex market, the pivot point is a level in which the...
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Articles
The author looks at the Vix indicator and its use in predicting the market turn of 2002.
In the last 2 weeks, I have seen the "VIX" on both CNBC and Bloomberg TV talked about as if it was something new. Well, for all you OTA Grads, you know we have been using it for years. For the rest, let's review and see how this "new" indicator can help us.
Let's look back at the turn in the markets in 2002.
The VIX is provided by the Chicago Board of Options Exchange (CBOE) and, basically, measures the volatility in the options markets, which of course, are directly related to the underlying security in the stock market. VIX (generally, you can see this with the VIX symbol, but your platform may require a prefix or suffix such as $vix, /vix...
A detailed step by step guide of how to trade a falling wedge has been illustrated in a free video, to view it please click on the following link
http://www.4x4u.net/review/51/51.html
Key aspects of a falling wedge are summarised as follows;
A Wedge formation is similar to a triangle in appearance in that they have converging trendlines. A falling wedge is generally a bullish chart pattern that begins wide at the top and contracts as the prices move lower. This pattern has a series of lower highs and lower lows.
The following chart on EURGBP (Nov2006) illustrates a good example of a falling wedge, and this was covered live at one of my live Webinar enabling traders to pull the trigger, thus far it has been a very good profitable...
A study by Alan Saunders of ShareHunter.com on the successful share selection techniques promulgated by Stan Weinstein in his best selling book "Secrets for Profiting in Bull and Bear Markets"
Most trading systems that I come across are given to using too much jargon or gobbledegook and are complicated - unnecessarily so in my opinion. And that is why I appreciated - and now benefit from - the brilliant simplicity of Weinstein's "Stage Analysis" approach to the buying and selling of shares.
'STAGE ANALYSIS' is straightforward, simplified, technical analysis.
There is nothing new in using technical analysis (TA) to identify shares for investment yet the truth is that TA is considered by many private investors as akin to black magic...
This brief video clip is one of a growing library of over-the-shoulder videos I have made to help people learn tape reading by seeing examples for themselves. They are not structured teaching videos as such, more commentary.
As they were created live at the time I was able to point out some of the features as different participants including market makers and ECNs moved in and out of the bid and ask sides and other factors as well, such as the trades printing off on Time and Sales and so on. Because they are live it simply isn't possible to mention every single factor influencing the moves in the time frame of the action, so they are worth watching several times to spot all the influences.
In this particular video you will see my...
What are the significant factors that need to be considered when looking to create a trading system. In this article we look at how to start creating your own system.
Its long been understood by most and proven by experience that trading is a hard trade to ply, and those who decide to tread on this path have to take their bearings on a variegated sea of information, diverse and, oftentimes, controversial. A tyro trader is flabbergasted by the panoply of approaches, trading means, and celebrated personalities as soon as he opens his first trading magazine. Poised for choice, he kicks off browsing Internet forums, turns for dubious advice to his slightly more versed acquaintances or joins one of the guru-lead sects that dispense...
The author looks at ways of profiting from trends by using Moving Averages.
Identifying and profiting from trends can be at times divergent topics and this dissociation can easily translate to losing trades. While trend analysis, as defined by trend and channel lines, ratio and extension analysis is vital, traders should also go beyond pattern recognition and employ quantitative methods of analysis. One of the most popular tools is moving averages.
What Is a Moving Average?
A moving average smoothes market swings, as some traders prefer to keep the statistical noise at a low level. To calculate a simple average, simply determine the arithmetic mean. To make an average move, just add the last price of the period of you choice, while...
Simple Moving Averages are a subset of FIR Filters. Exponential Moving Averages are a subset of IIR filters. Traders are not necessarily limited to the selection of one or the other. This article describes how you can make hybrid filters and realized the best characteristics of both.
Many traders have come to me, asking me to make their indicators act just one day sooner. They are convinced that this is just the edge they need to make a zillion dollars. While their profit expectation may not be realized, it is true that lag is the downfall of many trading systems. If you want to shorten the lag of your indicators, or if you want to get more smoothing from your filters, the techniques in this article may be just what you have been...
A look at the key features to be considered when day-trading forex.
Until recent years, the opportunity to put on a trade was governed by the cycle of day and night. But a unique characteristic of Forex trading is its round the clock sequence of trading. Starting Sunday when the sun rises in Asia, until Friday late afternoon, when the New York markets close, Forex trading is available. So the question arises, what is a Day trade in Forex, if technically Forex is a continuous week of trading? To answer that question we do not need to delve into the nature of human circadian biorhythms. One has to be arbitrary. We can effectively define a Forex day trade as a trade that is completed during the waking hours of a trader. A day trade might...
There is more to smoothing an RSI than just taking a moving average after the RSI is computed. By applying some advanced filters in the process of computing the RSI you can not only get better smoothing but also enhance the turning points of this proven indicator.
Smoothing indicators usually means making a tradeoff between the amount of smoothing you desire and the amount of lag you can stand. It turns out that the RSI can be smoothed and enhanced with minimum lag penalty. The thesis of this article is to show you how this is done.
Welles Wilder defined the RSI as
RS is shorthand for Relative Strength. That is, CU is the sum of the difference in closing prices over the observation period where that difference is positive...
In this article we look at the current market correction with an eye on price and volume and observe how this has marked changes in market sentiment in the past.
The financial papers do not have a problem creating plausible stories that attempt to explain the recent market downturn. Although many fundamental factors have contributed to this recent blowout, as technicians, we take a completely different perspective. Besides looking for clues that might give us insight into the causes of this correction, we are looking for symptoms of a reliable recovery as well.
In the past 37 trading days, the cues (NASDAQ-100: QQQQ) went from an intraday trading high of $40 to a $36.62 close on 7/25/06. Most technicians will automatically inspect...
A look at what is happening in the markets at the moment and if this is just a correction or the start of a longer term down-trend.
As I was about to write my alert, I happened to see the above quote and figured it was just too good not to put in the letter. In many ways, it explains the serious problems we are currently facing. Our illustrious leaders in the U.S. government (and I direct this squarely at both parties) have failed us in the biggest way. They have depreciated our currency; created incredible debt; run up mind boggling deficits; created a derivatives time bomb; got us into two wars that we can't possibly win (but they cost us dearly in money we can't afford to pay and precious lives); succeeded in making us the world's...
In the first part of this article Return of the Bear - Part One we looked at secular patterns the stock markets move in and the current state of the Bull Market.
The Monetary Background
I've always believed that the "rate-of-change" (ROC) of interest rates is more important than the actual level of interest rates. If levels are so important, how can one explain the extreme economic weakness in the 1930s when rates were in the basement compared to relative prosperity in the 1970s and 1980s when rates were in the stratosphere?
caption: Chart 8. Vertical lines show when ROC crosses above +30, stocks become more risky.
To prove this point, Chart 8 compares the annual change in the level of the Discount Rate to the S&P Composite. The...
Introduction -
There are occurrences in the business cycle when the consensus of my proprietary primary trend indicators find themselves within the confines of the bearish camp. Unfortunately, now seems to be one of those occasions. The last time the technical, economic, and monetary indicators aligned themselves in such a negative way was the turn of the millennium. Then, as now, for the benefit of my subscribers, and their valued clients and investments, I feel duty-bound to publish a Special Report setting out the arguments for the impending scene about to unfold.
In early 2000 it like the market was at, or close to, a secular or very long-term peak (albeit if not in absolute price terms, certainly in inflation-adjusted ones)...
Candlestick charts are widely used by traders around the world, as superficial demarcations between East and West are thankfully fading away. While bar charts are still more popular because of sheer inertia, there is little doubt that candles provide much more information, even though both types of charts are based on the same prices. Let's take a look at the advantages of using candles when gauging the validity of intersections.
Traders make a big deal about prices breaking support and resistance lines, trendlines, moving averages and retracement or extension levels. However, intersecting these lines on an intraday basis and closing outside them are two very different ball games.
Benefits for Using Candlesticks
Let's quickly...
In this streaming video, Bo looks at breakout's from support and resistance levels.
In this example, he demonstrates a simple break-out strategy on IBM pair using a 30 minute chart.
Click here to view the video (will appear in new window).
As a Short-term trader do you ever look at longer term time frames? If not, then this article will explain why the longer term time frames can influence the shorter intraday ones.
Most independent Short-term Traders tend to ignore the Long-Term technical condition of the Market because they believe it is not important in their trading. Few things are further from the truth, that is, if you want to survive the market over a long period of time, and still be trading years, even decades from now.
In the same manner that the tides can raise or sink all ships, the larger trends, behavior and technical design of the markets greatly affects ALL independent traders, regardless of trading style. You can have an independent short-term trader...
The author of A Complete Guide to Technical Trading Tactics: How to Profit Using Pivot Points, Candlesticks & Other Indicators, looks at a candlestick formation that can indicate reversal points when used with pivot points and support/resistance levels.
There are many trading methods one can employ to actively trade including various mechanical trading systems and manual trading tactics. The constant changing of market conditions can require system traders to adapt and update the parameters for the trading decisions. I often prefer the hands on visual approach which is more of a manual method while employing mechanical risk management techniques. The visual approach is aided by the use of candle charts. The draw back is one must have a...
Jerry gives us another of his humourous, educated article on chart patterns using the CCI.
We as traders have been looking for the "Holy Grail" for a lifetime. I doubt there is one folks. But all thru my 65 years on this planet I certainly have tried every known indicator, oscillator, etc to get to that Holy Grail. Well I can tell you all I think I found the Holy part of that statement in the momentum indicator the Commodity Channel Index, CCI for short.
Many traders swear by the Macd, Stoch, Rsi, Obv and on and on. The CCI with a 20 moving average (20) is the best leading momentum indicator I have ever used in my trading life. I will include a series of charts depicting the way I use CCI in the exciting world of daytrading which I do...
The pattern provides traders with a tool to identify short-term reversal points and assess their potential. It is based on the Market Facilitation Index (MFI), which is the ratio range/volume. This indicator allows you to determine the efficiency with which prices change and the market's ability to move prices. Bill Williams presented the indicator in his book Trading Chaos. The indicator is built comparing changes of the previous bar's value of this index to changes in volume. Using this indicator, it is possible to determine the interest that the market has in the current price trend. You can assess the public involvement in the price action and its influence on price movement.
To assess potential reversal points, the most...
Breakouts of long bases on strong volume are frequent harbingers of continued price appreciation. Another harbinger, after the initial up-leg, is a low-volume, orderly pullback towards support.
Kendle International (KNDL)
An analysis of Kendle International's chart illustrates this strategy. As the daily chart indicates, Kendle in February 2005 broke out of a base pattern that extended back almost two years. Some traders, who missed entering early, may have given up on the stock when it doubled by late June, but a closer look at the chart shows why it had more room to move.
Kendle's pullbacks were orderly, coming on lower volume and holding near its moving averages, a key sign of more upside to come. Only once did its pullback break...
[Editor's note: This article was originally written on the 30th Dec, 2005]
Okay, so make your own title up!
In Part 1 I set out the basic ideas of P&F charting. For anyone who would like to read more on the subject there’s an absolute plethora of material out there – one book I’d thoroughly recommend is ‘Point & Figure Charting - The Complete Guide’ by Dr Carroll D Aby Jr. This book doesn’t waffle, which many do, and it’s the only one I’ve found that highlights variations in the methodology – depending on who you read and where you’ll find some target calculations can be performed several different ways for example.... I consider it a mark of thoroughness that this book considers some alternatives to the ‘tools’ of P&F. I’d add this...
The Average True Range (ATR) indicator is one which falls in the general category of volatility-based technical analysis tools. It is so because like Bollinger Bands, another volatility-based study, it does not focus on direction in any way, but rather how much raw movement there is in price. To understand this a little better, it is worth taking a look at how the indicator is calculated.
ATR Calculation
The ATR calculation starts with determining the True Range (TR). The TR for a given period is defined as being the largest of:
Current Period High minus Current Period Low
Current Period High minus Previous Period Close
Previous Period Close minus Current Period Low
ATR is the average of the True Range (TR) over the past n...
We can spend hours searching for the perfect pattern but fail miserably when its time to turn opportunity into profit. As it turns out, most traders do a poor job managing positions, regardless of experience level.
I've received hundreds of questions about this subject over the years and have complied them into a Q&A to help you make the right choices during the trading day.
Q - What time-frame charts do you use in real-time?
A - I track daily, hourly, and 15-minute charts for all my setups and positions. I don't look any other time frames, except for an occasional glance at the weekly charts. This arrangement doesn't change with liquidity, sector or any other variable. I watch these charts simultaneously on three screens, so I don't...
Breakouts out of trading ranges are of the most respected price movements by technical analysts. Trend followers adore them and short term swing traders who base their decisions upon overbought-oversold situations get anxious at their appearance. Technical analysis textbooks have a special section devoted to range breakouts and almost all trading methodologies incorporate a strategy for them.
In this article I will briefly review the classic breakout strategy and discuss the Habit Force which is hidden behind the false breakouts. In the sequence I will discuss the CWTW and CounterAttack tactics.
Trading Ranges - Review and Classic Tactics
In figure 1 you may see how a classic trading range looks. As its name implies, a trading range...
Bollinger Bands are among the most commonly found technical indicators these days. Even the most basic of charting applications include them among the available offerings. There are many ways the Bands can be incorporated in to one's market analysis and trading methods (see Bollinger Bands - The Basic Rules for a discussion). This article focuses on how they can be used to find markets in the early stages of significant directional moves.
The process of trend identification using Bollinger Bands starts with evaluating the width of the Bands. This is done using the Band Width Indicator (BWI), which is calculated as follows:
BWI = ( UB - LB ) / MB
Where UB is the Upper Band, LB is the Lower Band, and MB is the Middle Band.
Using...
Limitations in usefulness of conventional standard deviation bands as overbought/oversold benchmarks
One of the popular ways of detecting a trend in financial market time series corrupted by random fluctuations (noise) is moving average smoothing. Actual prices fluctuate around the moving average. To measure an average distance of price values from the moving average the standard deviation (SD) can be used. The so-called in statistics "range rule of thumb" determines the range of price variability around the moving average as approximately 4SD, providing confidence limit of about 95.5 %. According to the rule, the upper boundary of the range will be about 2SD above the moving average and the lower boundary of the range will be about...
Looking at all of the glossy ads promoting analysis software, educational courses, seminars, workshops, newsletters, past gurus, new gurus, astrologers etc. you could be forgiven for thinking that taking profits out of markets is simply about something called 'forecasting'...
All you need to do, apparently, is pay your money and you too can forecast with such amazing accuracy that you'll be able to trade on the hoof for just an hour a day as you travel from beach resort to, er...beach resort. Yes, it's really you on the lounger by the pool in that promo!
Strangely enough, trading is not like that. Professional traders have nothing but disdain for the hype and misinformation peddled largely by those catering to the masses of private...
Open interest is without a doubt the least used bit of market data by chart watchers. Conventional wisdom; prices up on increasing O.I. being bullish, is just as often found to be bearish.
What I want to show here is the relationship of O.I. and the buying patterns of the Commercials for the Commitment of Traders (COT) report.
I'll begin by showing a chart of gold with an indicator I'm sure you have never seen before, a 13 week stochastics of just Open Interest. Yes, this index is simply an oscillator of O.I. What we see is that, generally speaking, low levels in this index are found at market bottoms.
Thinking about it makes sense as what it is telling us is there is little interest, open or not, in the market we are studying. I...
Candlestick Charting
Candlestick charting originates from Japan, where it was used from the 17th century to examine patterns in the price of rice. Candlestick charting has come a long way since then and is now part of the mainstream technical analysis toolkit. Reading candlesticks is an attempt to understand the collective emotions that drive the financial markets every day.
Candlesticks are formed using the open, high, low and close of a stock or other security. If the close is above the open, then a hollow candlestick (an up day) is drawn. If the close is below the open, then a filled candlestick (a down day) is drawn.
The hollow or filled portion of the candlestick is called the body (also referred to as the "real body"). The...