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Exponential Moving Average (EMA)

Understanding the Renko Bricks (Educational Article)Today we are going to study a chart which is called a Renko chart. Renko chart is a chart which is typically used to study price movement. I use Renko chart many times to determine supports and resistnace. I find it easy and accurate way of determining supports and resistances. The word Renko is derived from Japanese word renga. Renga means brick. As you can see in the chart below it shows a kind of Brick formation. The brick size is determined wither by the user and mostly it depends of typical average movement on the stock historically. A new brick is formed once the price moves upwards on downwards in the same proportion or ratio of the typical brick. New brick is only added post the price moves in that particular proportion. A new brick might not be added in months if the price movement is not as per the ratio. At the same time a new brick might be added in a day or few bricks in a week is price moves accordingly. We will try to understand this concept further by looking at the chart in the post. We have used the chart of Reliance industries to understand this concept and concept only. Please do not consider this buy or sell call for the stock. As you can see in the above chart I have used a combination of RSI, EMA (50 and 200 days) and Bollinger band strategy. RSI support for Reliance is at 35.89 with current RSI at 40.13. Bollinger band suggests that support might be round the corner for the stock. The peaks from previous tops are used to find out further supports and resistances. Mid Bollinger band level and Bollinger band top level coincide with other pervious tops making them tough resistance when the price moves upwards. Mother line EMA is a resistance now and Father line EMA support is far away. All these factors indicate the support zones for the stock to be around 2736, 2657, 2601 and 2561 in the near term. Resistance for Reliance seem to be at 2814, 2972, 3006, 3048 and 3202 levels. Let me give a disclaimer again. The above data is for analysis purpose and to understand Bollinger band, RSI, effect of EMA and Renko Bricks only. Please do not trade based on the information provided here as it is just for understanding Renko charts. Disclaimer: There is a chance of biases including confirmation bias, information bias, halo effect and anchoring bias in this write-up. Investment in stocks, derivatives and mutual funds is subject to market risk please consult your investment advisor before taking financial decisions. The data, chart or any other information provided above is for the purpose of analysis and is purely educational in nature. They are not recommendations of any kind. We will not be responsible for Profit or loss due to descision taken based on this article. The names of the stocks or index levels mentioned if any in the article are for the purpose of education and analysis only. Purpose of this article is educational. Please do not consider this as a recommendation of any sorts.
NSE:RELIANCEEducation
by Happy_Candles_Investment
Beating the S&P500 (SPX) Buy&Hold strategy by 16 timesS&P500 (SPX) strategy using Stochastic RSI Min-Max, normalized Volatility and Trailing Stop signals, beats the Buy&Hold strategy by 16 times Embarking on the quest to time the market accurately, the 'Holy Grail' of strategies, led me to create a script to approach this goal. Unlike other strategies that I tested, this one not only surpasses the long-term S&P500 Buy&Hold approach but does so by a remarkable 16.38 times! Initially, I employed an A.I. program based on an LSTM Neural Network using TensorFlow. Despite achieving a 55% next-day prediction accuracy for short/long positions, I sought improvement using a heuristic pine-scripting approach, incorporating stochastic RSI oscillators, moving averages, and volatility signals. With default parameters, this strategy, freely available as "XPloRR S&P500 Stock Market Crash Detection Strategy v2" delivered a staggering 2,663,001% profit since February 1871. In the same period, the Buy&Hold strategy "only" generated 162,599% profit. Picture this: a $1,000 investment in 1871 would now be worth $26,630,014 by February 2024. Check it out for yourself loading this strategy. The script operates as a Stochastic RSI Min-Max script, automatically generating buy and sell alerts on the S&P500 SPX. What sets it apart? The strategy detects "corrections," minimizes losses using Trailing Stop and Moving Average parameters, and strategically re-enters the market after detecting bottoms using tuned Stochastic RSI signals and normalized Volatility thresholds. Tailor its parameters to your preference, use it for strategic exits and entries, or stick to the Buy&Hold strategy and start new buy trades at regular intervals using buy signals only. In the pursuit of minimizing losses, the script has learned the effectiveness of a 9% trailing stop on trades. As you can clearly see on the upper graph (revolving around 100), the average overall green surfaces (profits) of all trades are much bigger than the average red surfaces (losses). This follows Warren Buffets first rule of trading to "Never lose money" and thus minimizing losses. Update: Advanced S&P500 Stochastic RSI Min-Max Buy/Sell Alert Generator I have also created an Alerter script based on the same engine as this script, which auto-generates buy and sell alert signals (via e-mail, in-app push-notifications, pop-ups etc.). The script is currently fine-tuned for the S&P500 SPX tracker, but parameters can be fine-tuned upon request for other trackers or stocks. If you are interested in this alerter-version script or fine-tuning other trackers, please drop me a message or mail xplorr at live dot com. How to use this Strategy? Select the SPX (S&P500) graph and set the value to "Day" values (top) and set "Auto Fit Data To Screen" (bottom-right). Select in the Indicators the "XPloRR S&P500 Stock Market Crash Detection Strategy v2" script and set "Auto Fit Data To Screen" (bottom-right) Look in the strategy tester overview to optimize the values "Percent Profitable" and "Net Profit" (using the strategy settings icon, you can increase/decrease the parameters). How to interpret the graphical information? In the SPX graph, you will see the Buy(Blue) and Sell(Purple) labels created by the strategy. The green/red graph below shows the accumulated profit/loss in % of to the initial buy value of the trade (it revolves around 100%, 110 means 10% profit, 95 means 5% loss) The small purple blocks indicate out-of-trade periods The green graph below the zero line is the stochastic RSI buy signal. You can set a threshold (green horizontal line). The vertical green lines show minima below that threshold and indicate possible buy signals. The blue graph above the zero line is the normalized volatility signal. You can set a threshold (blue horizontal line) affecting buy signals. The red graph above the zero line is the slower stochastic RSI sell signal. You can set a threshold (red horizontal line). The red areas indicate values above that threshold. However real exits are triggered if close values are crossing below the trailing stop value or optionally when the fast moving average crosses under the slow one. The red areas above the threshold are rather indicative to show that the SPX is expensive and not ideal to enter. Please note that in bullish periods the red line and areas can stay at a permanent high value, so it is not ideal to use as a strict sell signal. However, when it drops below zero and the green vertical lines appear, these are strong buy signals together with a high volatility. These Parameters can be changed Buy Stochastic Lookback Buy Stochastic Smoother Buy Threshold Buy Only After Fall Minimum % Fall Sell Stochastic Lookback Sell Stochastic Smoother Sell Threshold Sell Only With Profit Minimum % Profit Use Sell MA Fast MA Sell Slow MA Sell MA Sell Threshold Use Buy Volatility Volatility Smoother Volatility Threshold Use Trailing Stop Use ATR (iso of a fixed percentage for the trailing stop) ATR Lookback Trailing Stop Factor(or fixed percentage if "use ATR" is false) Trailing Stop Smoother Important : optimizing and using these parameters is no guarantee for future winning trades!
SP:SPXEducation
by XPl0RR
MACD-Divergences: Assessing Present Varying Exemplifications!_____ Hello Traders Investors And Community, _____ Welcome to this tutorial in which I will analyze the MACD-Divergence and its various types that can come up in the market movements. The MACD is an indicator developed in 1986 and since then established as a primary indicator in the oscillator types besides the RSI or stochastic. The indicator mainly has the function of spotting reversals and potential entry points into the market to catch the appropriate values and upcoming reversal developments. Although the indicator can be used as a single signal for market action only it is best combined with other technical analysis aspects such as candlesticks or volume. The main timeframe to apply the indicator should be the daily timeframe, it can be also applied to higher timeframes such as the weekly to assess broader trends. The indicator can also be applied on lower timeframes such as the 4-hour or hourly however in this case the fake signals getting higher. The MACD consists of 3 main elements, the first is the MACD-Line marked in my chart in orange which is calculated by the 12-day EMA (Exponential-Moving-Average) minus the 26-day EMA. The second element is the signal-line which is a 9-day EMA. Further comes the histogram which measures the distance from the MACD-Line to the signal line and the histogram is positive when the MACD-Line is above the signal-line as well as negative when it is below. The main signal happens when the MACD-Line crosses the signal-line when it crosses from the downside to the upside this is typically seen before a bullish reversal takes place and the same in reverse with the MACD-Line crossing the signal-line down when a bearish reversal takes place, in both cases also the histogram changes from positive to negative or negative to positive. In any case, it is always necessary to combine the MACD with the current price-action happening as in this case comes the interesting part with the divergences happening that can lead to dedicated signals. These divergences happen when there is a discrepancy between MACD and the actual price-action happening indicating a potential change in direction of actual price-action as the MACD shows up with these signs. In any case, it is unavoidable to consider the price-action together with the MACD as otherwise, it can lead to catching a fake-out and getting stopped out of the position what should be avoided in trading. The MACD also does not typically spot overbought or oversold conditions as it is an indicator consisting of EMAs it represents the previously developed price-actions in relation to the ongoing and upcoming price-actions. _____ Regular MACD Divergences: __ Classical MACD Crossover - The Classical MACD Crossover comes up when the MACD-line crosses the signal-line either from the upside to the downside or from the downside to the upside. Both versions can indicate a reversal into the direction the MACD-line crossed the signal-line however the timeframe and structure is important here. When this crossover happens on the lower timeframes below 6-hours it can happen that there are many fake signals with several crossovers behind each other while the price-action is actually trending into one direction. The higher timeframes such as the daily are therefore the best to apply this regular classical MACD crossover. Classical MACD Histogram Divergence - This divergence occurs when the histogram has formed a new high together with the price-action, for example, the histogram forms the new high at 0.3 in the MACD-histogram then the price-action moves further and forms a higher high exceeding the previous one however the MACD-histogram does not do a higher high also while staying below the 0.3 level. This indicates that the market is likely to reverse into the other direction because the histogram does not correspond with the actual price-action and therefore forms a divergence. This can be applied in the reverse direction as well and a good combination would be to look also at the volume or overbought and oversold conditions. Histogram Divergence Fakeout - In this case, it is the crucial part of the histogram divergence. The price-action and MACD fulfilled the initial requirements for a classical MACD histogram divergence and the price-action should markdown after forming the final high and the divergence, however in this case it does not happen instead the price-action moves lower a little bit signaling the possible normal development after this signal and then moves up again exceeding the previous high and stopping out traders who may have entered the market because of the divergence, after that the price-action can markdown finally and move lower, therefore it is necessary to look at the price-action also and see if the market is really ready to markdown after the signal. __ Bearish Regular Divergence Ⅰ - The Bearish Regular Divergence Ⅰ is a divergence in the price-action that marks two important confirmations including this a technical confirmation in the MACD normally seen in price-action. In this divergence, the price-action marks consecutive higher highs while the MACD forms a double-top with the rejection at the upper baseline confirming the double-top. This divergence is likely to reverse the previously established bullish trend to the downside and continue with bearish determinations. It is important to watch out for fakeouts before potentially entering and when this possibility is low it can be a good entry. Bullish Regular Divergence Ⅰ - This is the counterpart to the Bearish Regular Divergence Ⅰ. In this case the price-action marks lower lows in the structure in the best case also with falling volume and momentum while the MACD makes a double-bottom which is a good sign when both form that the price will likely reverse into the bullish direction. A trendline breakout of the previous established lower highs in the downtrend can also add additional confirmation to the final bullish reversal. __ Bearish Regular Divergence Ⅱ - This is a very interesting divergence as it combines the classical price-action formation double-top with the lower highs forming in the MACD. A confirmed double top alone can also be a strong signal for a reversal nevertheless with the additional MACD making lower lows this can add to the main bearish reversal coming in and accelerating it. A valid confirmation will take place when the price-action regularly confirms the double-top with the neckline breakout to the downside. Bullish Regular Divergence Ⅱ - Here is another divergence in which the price-action forms a reliable reversal-formation, in this case, a double-bottom which also can alone be the decisive factor for the final reversal, together then with the higher lows forming in the MACD it is a strong signal to reversing the trend into the bullish direction and similarly to the Bearish Regular Divergence Ⅱ it finally confirms with the neckline breakout by the established double-bottom with proper volume to the upside. __ Bearish Regular Divergence Ⅲ - This divergence has a good and appropriate application in the market formations to form. In this divergence, the price-actions form higher highs while the MACD forms lower lows signaling a bearish reversal to take place. A good confirmation occurs when the price-action closes below the lastly established lows and after that continues also further to form further bearish continuations, it can be a good point to spot the final reversal when the MACD looks like it develops the next lower high. Bullish Regular Divergence Ⅲ - This is the exact counterpart of the Bearish Regular Divergence Ⅲ while the price-action forms lower lows in the structure the MACD develops higher highs showing this given divergence and likely to indicate the bullish reversal to take place sooner or later. Additionally, a falling volume and momentum in the actual price-action will lead to more increased validations followed by an upcoming rise in volatility above previously lower highs, these structures and developments are always also important. _____ Hidden MACD Divergences: __ Bearish Hidden Divergence Ⅰ - This divergence is actually the counterpart to the Bearish Regular Divergence Ⅰ and in this case, the MACD also forms a double top in the structure however unlikely as in the Bearish Regular Divergence Ⅰ in this case the price-action forms lower highs in the structure showing the exceptional weakness of the bulls as the price-action does not manages to maintain further higher highs, this is why the formation is finally likely to confirm bearishly to the downside and the reversal took place. Bearish Hidden Divergence Ⅰ - In this divergence the MACD forms a double-bottom with both lows forming a lower baseline in the MACD-histogram structure while the price-action forms higher lows which is very important here as such a constellation is normally defined as bullish with the possibility to reverse, the double-bottom in the MACD then confirms the further bullishness to establish and likely bullish volatility to show up in the structure, the requirement is that the established uptrend-line does not invalidate to the downside. __ Bearish Hidden Divergence Ⅱ - The next divergence is forming a classical reversal-development with the formation of a double-top in the price-action as the two highs form a horizontal baseline where the price-action rejects while the MACD is developing higher highs in the structure. In this case, the final confirmation sets place when the price-action breaks out below the neckline of the double-top in the structure which is the set-up for the further continuations bearishly to the downside, the best is to wait on the final confirmation before considering moving into. Bullish Hidden Divergence Ⅱ - This classical bullish reversal-formation marks out the potential stopping of the downtrend with two lows building the baseline of a potential double-bottom while the MACD is establishing this lower low structure it is the proper further confirmational part to develop a sufficient bullish reversal which will finally take place when the price-action breaks out above the upper neckline of the double-bottom to complete it and show up with further continuations to the upside. __ Bearish Hidden Divergence Ⅲ - When the price-action forms lower highs that do not maintain new higher highs in an uptrend it is always a sign that the uptrend is struggling and that it is likely to reverse together then with the higher highs divergence in the MACD to form the final bearish reversal has a high possibility to emerge which will validate when price-action moves below the previous lows in the uptrend and continues to the south. Bullish Hidden Divergence Ⅲ - With this form the uptrend and the higher highs structure that developed in the price-action have a tendency to reverse as the MACD forms the lower lows in the structure signaling that the MACD is already doing the markdown that follows also in the price-action. In this case the final confirmation will take place with a breakout below the established ascending trend-line after which a bearish continuation will likely follow up. _____ Therefore moving through all these important different forms the MACD can be a substantial indicator for spotting reversals in the structure when done right. It is always necessary to maintain the objection to the current situation and further technical factors to apply the MACD-divergences rightly. In this manner, thank you everybody for watching, support the idea with a like and follow or comment, have a good day as well as weekend, and all the best to you! Information provided is only educational and should not be used to take action in the markets. _____
BYBIT:BTCUSD.PEducation
by VincePrince
20
Choosing the Right Moving AverageMastering Moving Averages: A Comprehensive Guide to Choosing the Right One for Your Trading Strategy Moving averages are among the most widely used technical indicators in trading. They serve as a simple and effective way to identify trends, support and resistance levels, and potential entry and exit points for trades. With numerous types of moving averages available, determining the best fit for your trading strategy can be a challenge. In this comprehensive guide, we will delve into the various types of moving averages, their strengths and weaknesses, and when to use them to maximize your trading profits. Simple Moving Average (SMA) The Simple Moving Average (SMA) is the most basic type of moving average. It calculates the average price of an asset over a specific time period, typically 20, 50, or 200 days. The SMA smooths out the price data by creating a constantly updating average price, providing a clear picture of the asset's direction of movement. I personally use the SMA for long-term trading strategies because it offers a more stable picture of the asset's direction of movement. The SMA is also useful in identifying potential support and resistance levels, which are critical indicators for traders. However, the SMA can be slow to respond to changes in price, which can result in missed opportunities for short-term traders. Advantages of SMA 1. Easy to calculate and understand. 2. Provides a stable picture of the asset's direction of movement. 3. Useful in identifying potential support and resistance levels. Disadvantages of SMA 1. Slow to respond to changes in price. 2. Can lag behind the current price action, leading to missed opportunities. Exponential Moving Average (EMA) The Exponential Moving Average (EMA) is a more complex type of moving average that places greater weight on recent price data. This weighting provides the EMA with a more immediate response to price changes than the SMA, making it a popular choice for short-term traders. The EMA is calculated by taking the weighted average of the asset's price over a specified time period, giving more weight to recent prices. Traders use the EMA for short-term trading strategies because it offers a more immediate response to price changes, which is crucial for short-term trades. The EMA is also useful in identifying potential price reversals, support and resistance levels, and momentum. However, the EMA can be more volatile than the SMA, which can lead to false signals and increased risk. Advantages of EMA 1. Provides a more immediate response to price changes. 2. Useful for short-term trading strategies. 3. Helps identify potential price reversals and momentum shifts. Disadvantages of EMA 1. Can be more volatile than the SMA, leading to false signals. 2. May require more complex calculations than the SMA. Weighted Moving Average (WMA) The Weighted Moving Average (WMA) is another type of moving average that places a greater weight on recent prices. Unlike the EMA, the WMA assigns a weight to each price point based on its position in the time period. This means that the most recent prices receive the highest weight, with each price point receiving a progressively lower weight as you move back in time. Traders use the WMA for short-term trading strategies when they want a more sensitive indicator than the SMA. The WMA is also useful in identifying potential price reversals and support and resistance levels. However, the WMA can be more volatile than the SMA, which can lead to false signals and increased risk. Advantages of WMA 1. Provides a more sensitive indicator than the SMA. 2. Useful for short-term trading strategies. 3. Helps identify potential price reversals and support and resistance levels. Disadvantages of WMA 1. Can be more volatile than the SMA, leading to false signals. 2. equires more complex calculations than the SMA. Smoothed Moving Average (SMMA) The Smoothed Moving Average (SMMA) is a type of moving average that applies a smoothing factor to the price data, resulting in a smoother curve. The SMMA places an equal weight on all price data, with the smoothing factor determining the weight given to each data point. Traders use the SMMA when they want a smoother curve to analyze the asset's trend. The SMMA is useful in identifying potential support and resistance levels and entry and exit points. However, the SMMA can be slow to respond to changes in price, which can lead to missed opportunities for short-term traders. Advantages of SMMA 1. Provides a smoother curve for trend analysis. 2. Useful in identifying potential support and resistance levels and entry and exit points. 3. Less sensitive to short-term price fluctuations. Disadvantages of SMMA 1. Can be slow to respond to changes in price. 2. Not as suitable for short-term trading strategies. Which Moving Average Should You Use? The type of moving average you should use depends on your trading strategy and time frame. If you are a long-term trader, you may want to use the SMA or WMA, as they provide a more stable picture of the asset's direction of movement. If you are a short-term trader, you may want to use the EMA or WMA, as they provide a more sensitive indicator of price changes. Additionally, if you are looking for a smoother curve to analyze, the SMMA may be the best option. It is essential to note that moving averages should not be used in isolation. They should be used in conjunction with other technical indicators, such as oscillators or volume indicators, to confirm potential buy and sell signals. It is also crucial to consider the market conditions, such as volatility and liquidity, when choosing a moving average for your trading strategy. How to Combine Moving Averages for Better Trading Signals 1. Use multiple timeframes: Employing moving averages from different timeframes can help you identify both short-term and long-term trends, as well as potential entry and exit points. 2. Use multiple types of moving averages: Combining different types of moving averages, such as the SMA and EMA, can help you identify trend reversals and filter out false signals. 3. Apply other technical indicators: To confirm the signals provided by moving averages, use additional technical indicators like the Relative Strength Index (RSI), the Moving Average Convergence Divergence (MACD), or the Bollinger Bands. Strengths and Weaknesses of Moving Averages Each type of moving average has its strengths and weaknesses, depending on the trading strategy and time frame. Here is a summary of the main differences between the four types of moving averages: 1. SMA: provides a more stable picture of the asset's direction of movement, but can be slow to respond to changes in price. 2. EMA: provides a more immediate response to price changes, making it a popular choice for short-term traders, but can be more volatile than the SMA. 3. WMA: assigns a weight to each price point based on its position in the time period, providing a more sensitive indicator than the SMA, but can be more volatile than the SMA. 4. SMMA: applies a smoothing factor to the price data, resulting in a smoother curve, but can be slow to respond to changes in price. It is important to understand the strengths and weaknesses of each type of moving average to make an informed decision when selecting a moving average for your trading strategy. Conclusion Moving averages are a powerful tool in a trader's arsenal, but choosing the right type can be challenging. The SMA, EMA, WMA, and SMMA each have their advantages and disadvantages, and the one you choose should depend on your trading strategy and time frame. By combining moving averages with other technical indicators and considering market conditions, you can maximize your trading profits. As a trader with experience in using various technical indicators, I've found moving averages to be quite helpful in identifying trends and potential entry and exit points. However, despite the usefulness of moving averages, I personally prefer indicators that use linear regression. The reason for my preference is that linear regression-based indicators, such as the "Regression Envelope MTF", take into account the slope of the trend, rather than assuming that the trend is linear. This means that the bands will adapt to the slope of the trend, providing more accurate signals in trending markets. For instance, I typically use the "Regression Envelope MTF" (one of my indicators that I have just recently published) on the daily chart with a parameter setting of 250 periods. This allows me to quickly see where the price is positioned relative to the past year's trend. I find this approach to be particularly insightful and beneficial for my trading decisions. Remember to always use caution when trading, and never risk more than you can afford to lose. It is also essential to continue learning and refining your trading strategies to stay ahead of the curve and become a successful trader.
NASDAQ:AAPLEducation
by Julien_Eche
Everything I've learned about the RSI BINANCE:BTCUSDT In this post, I'll make an attempt to share everything I've learned over the Relative Strength Index (RSI) Over the past 24 months. Nothing described in this post is financial advice, it's just me, sharing thoughts and ideas with you. nb: this post is more suited for traders and investors that are already educated about the RSI Indicators. A brief introduction about the indicator itself : The relative strength index (RSI) is a momentum indicator used in technical analysis. RSI measures the speed and magnitude of a security's recent price changes to evaluate whether it's better to buy, sell, or wait. The RSI is displayed as an oscillator (a line graph) on a scale of zero to 100. The RSI is probably the most used oscillator in finance nowadays, by both retail traders and institutions, hence meaning that when used well , it can be used as a great edge to profitability. RSI popular uses : - An asset is usually considered overbought when the RSI is above 70 and oversold when it is below 30. - The RSI can give us insights on a potential trend's loss of momentum or validity when the price pivots levels are diverging with the RSI indicator (hidden and regular divergences) - The most popular RSI length is 14 periods. My findings 1. Overbought and oversold: myth or reality? RSI's 30 and 70 levels never proved themselves to be a strong enough edge for me to be used as a standalone signal for trade entries. As an example, just look at the irregularity of the results you would get when using just these zones : My take on it is that as a price oscillator when it crosses into extremes, it simply means price momentum is at extreme levels. To me it's basically like a mountain cyclist in the middle of a race: he might very well go faster and higher, however, the quicker and higher he goes the more unlikely he is to keep up with that speed. Eventually, he might either decrease its speed or even go backward. What does this tell us ? The RSI 30 and 70 levels seem to be better used when used as timing indicators. For example, the 70 and 30 levels could be used as a filter for a trader to eliminate market noise when using a trend reversal strategy (mean-reversion). For trend traders, the levels could be used to timing signals where they'll start looking for price to do a pullback (consolidation) to get in the trend. My experience using the 30 and 70 levels as exit signals however has been better (when it comes to using it as the only signal for a trade exit). Say you are long on BTCUSD, in profit, and you get an RSI closure above 70. Well, in that case, you could exit 50% of your position and wait for the oscillator to cross down the 70 levels to exit the rest (as the overbought and oversold zones are rarely a defining factor for trend reversals and corrections). 2. Divergences in the overbought and oversold zones : The lower the time frame you are trading on is, the higher the noise when it comes to divergences, especially with volatile assets such as BTCUSD. So you might want to filter out most of the ones you see to only take the best ones. On the 15M and 5M timeframes, on BTCUSD, I find that on average about 1/3 of the divergences I see play out. However, we are not expected to take every divergence we see. Here's what has helped me get better results with divergences : - When approaching supply and demand zones, especially the higher timeframe ones, we might want to be more aggressive with the divergences we enter into. As the hit rate is not always amazing, the R:R is usually much better, and if the trade works out, it might give you great results which accounts for the low win rate. - If you want to increase your win rate, I also find that going for higher timeframes is usually better when it comes to divergences. - Take only divergences where RSI divergence's first pivot point is over 70 or under 30. Ideally, you don't want the noise to go below 60, or above 40, so that your trade has the necessary momentum to play out. - For extra confirmation, wait for a break of the noise level to enter the trade. - Regular and hidden divergences play hand in hand creating a form of momentum equilibrium. Hidden divergences always create regular divergences and vice versa. Hence a hidden divergence can be considered an early pullback warning to get in a bigger-picture trend. - Regular divergences tend to play out better than hidden divergences. This is especially true when the volume is decreasing, or after a longer period of consolidation when volatility has been contracting and might be about to expand soon. - Regular divergences in strong trends can be both a disaster and a treat. "The trend is your friend". This saying is especially true here. However, 2-3 drives of regular divergences are a great indication of a potential reversal, with enough confirmation factors to produce (often time) a great entry. - The angle of the trend line between divergences pivot points, both on the price chart and the RSI, can be a good indication of the severity of the divergence occurring. - The ideal lookback period for detecting divergences for me has proved to be between 5 and 28 bars. (Below 5 bars is not enough to confirm a true pivot point for me and above 28 bars has probably already played out in past price movements). - Like all edges, using a divergence strategy always produces better results when used in confluence with other signals. I find the best confluences happen when divergences occur: alongside a stochastic cross, near medium-slow moving averages, near horizontal supply and demand zones, alongside volatility expansion, when the volume is decreasing (meaning market makes are in disagreement with the move occurring), near Bollinger bands 2.5 to 3 standard deviations (period 20). - Convergence between your timeframes and higher timeframes is key to understanding how to better choose your trades. Try to play the big divergences but enter smaller timeframes divergences. - When you lose a divergence trade, don't get disappointed. Jump back in because often time, and price will need to do several divergences before getting in your desired direction (however, be careful not to jump in tilt mod. Know your win rate and R:R and keep your money management serious. You'll get blown out if you start tilting on this, especially if you trade reversals with divergences, as it's difficult to get the right timing every time). 3. RSI as a trend filter? - I've found that in trending markets, when RSI's Exponential Moving Average (EMA) crosses above the 50 line, it's an indication of an uptrend and vice versa. However, this is less effective in ranging markets as there's more noise, hence more invalid crosses. - I've found that in trending markets when the RSI line crosses above the EMA (I use a 12 period), it's an indication of an uptrend and vice versa. However, this is less effective in ranging markets as there's more noise, hence more invalid crosses. - As an indication of the trend's direction, I don't find any value in using bullish and bearish control zones. The only use I can find them is when using them for divergence levels filters. This is the end of the first post of this 2 parts series. There's just so much more you can discover about this indicator that it simply cannot be constricted to a few lines of writing. However, you are welcome to take a few of my findings and go test them out using replay and backtesting. See for yourself, and find your balance. Most of my learnings have been made through screentime, trial, and error, backtesting, mistakes, and research. Have a good day, Arthur Girard
Education
by arthurgirard15
RSI Trend Strategy GuidelinesThe RSI is a versatile indicator, and can be used to provide entry signals during a trend. To get the signals a moving average is applied to the RSI. 1. Trades are only taken in the direction of the trend. For an uptrend only take longs. For a downtrend only take shorts (puts). 2. During a downtrend the RSI must move above 60 to indicate a pullback. When the RSI crosses back below its moving average (can be at any number, just as long as the RSI is or was above 60 recently) go short. 3. During an uptrend the RSI must move below 40 to indicate a pullback. When the RSI crosses back above its moving average (can be at any number, just as long as the RSI is or was below 40 recently) go long. 4. Give the price at least two or three bars (whatever time frame you are trading on) or more before considering an exit. This gives the price some time to move in your favor.
BINANCE:ETHUSD.PEducation
by yaser_rahmati
How to Catch a Falling Knife by the HandleI'm not suggesting here that the broader equity market is going to violently sell-off soon or anything like that. I figure that posting an idea on such a scenario might be useful just in case volatility picks up a few knots with some foreseeable seasonal headwinds. Also, the broader equity market is probably going to sell off soon. Now that the possibility of such an event has been thrown out there, I offer something that could make the whole experience even more fun than meme stocks. That would be the use of the 186-period exponential moving average to locate the approximate price level where the first safe area to take profits would be under a crash scenario. Typically, you don't want to "catch falling knives", or any other falling weapon because it is assumed that the trader catching said knife/weapon thinks he has caught the bottom. Of course, he has done the opposite and is in fact, holding a bag of something that will drop in value very soon and the hand he is holding it with can barely hang on because he missed the knife's handle on the way down. While this scenario happens all too often, i believe that catching a falling knife can be done safely and profitably if using the 186 EMA and a SHORT position. What you are then catching is not the stock/derivative itself at a discount long, but rather closing out a short knife that you threw a while back for extreme profits. The key is that the 186 EMA offers you a nearly perfect target to safely exit an extreme short position, without using complicated time/price methods that are usually esoteric to some extent. Just take a look at the chart displayed above, which offers a detailed look into the kind of weapons that SP Futures traders had to deal with over the years. To fully appreciate the results of this demonstration, you must understand the difficulty of trading this futures market. The degree of leverage is high enough to wipe out new entrants within hours and is also severe enough whereby the assumptions required to use Wave Principle cannot be relied upon. In summary, the fact that this EMA either caught outright or was the cause of the first major bounce of ALL significant selloffs over the past 10 years is remarkable. On the weekly timeframe, it will undoubtedly prove useful for bearish swing traders using an intermediate time horizon. In a whipsaw scenario intraday, the 186 can be quickly applied in a pinch, which can prevent panic selling in all sorts of situations. The uses for this tool are many and I am lucky to have randomly stumbled upon it about a year ago when messing around with pinescript for the first time. In fact - see for yourself how the 186 EMA somehow plays a structural role in at least one timeframe (even the 5-min at times) of any given price chart. The key is to find which timeframe the 186 is fitting most closely with at the current time. Remember, use wisely when catching weapon-profits, not weapon-long-positions. -PiggishMagician AMEX:SPY SP:SPX GLOBALPRIME:US500
CME_MINI:ES1!Education
by UnknownUnicorn5511258
7
McGinley Dynamic IndicatorMcGinley Dynamic Indicator: It was invented by John R. McGinley. It would automatically adjust itself in relation to the speed of the market. This future can be very helpful as it is sometimes difficult to choose the right period for the MA. It also helps to account for the gap that often exists between prices and moving average lines. Can't be used as a single indicator and we need to combine this with other indicators or another McGinley indicator. Price actions respect moving averages because so many traders use them in their strategies. Because of the formula, the Dynamic Line speeds up in down markets and moves more slowly in uptrends. One wants to be quick to sell in a down market, yet ride an up-market as long as possible.
Education
by apadanaforex
How To Trade Support Resistance Levels Price closed above EMA 10, EMA 20, Trend Line, and Horizontal Support & Resistance Level. Enter at close price of rejection candlestick. Close price of rejection candlestick is 0.73150. Set Stop Loss below EMA 20 Close Price and Low Price. Set Target at next support resistance level. Support and Resistance Levels are: EMA 10 EMA 20 Horizontal Line Diagonal Line High Price 0.73195 Close Price 0.73150 Open Price 0.73046 EMA 20 Price 0.72939 Low Price 0.72921 Close Price 0.73150 EMA 10 Close Price 0.73045 EMA 20 Close Price 0.72939
Education
by TradeLive-
1
We talk about Moving Averages. 🖌Origin of moving averages: They are used to filter out market noise and clarify the direction of the trend, as they eliminate minor movements that could be hiding what the market is actually doing. The average price of a given period in the past is calculated, the result is plotted on a line chart next to the price chart. They are more suitable for detecting trends but are also useful for analyzing the evolution of the price in different periods of time. How are they calculated? The moving averages are the moving average and to calculate them the last periods that are parameterized for their calculation are taken. For instance; For a 10-period moving average, the last 10 price closing candles are taken and their average is taken. Remember that a moving average is always lagging because it is the result of making a calculation on the prices of the past, they do not predict the price, they only summarize more clearly what has happened in the price. Its usefulness, therefore, helps us to detect or see trends more clearly. And in technical analysis, it is considered that when there is a trend it is more likely to continue. The shorter the moving average calculation period, the less lag it will have, but it will include more volatility than longer period moving averages. The longer the moving average calculation average, the longer it will take to react to recent market changes. What is the best moving average? Surely you were waiting for me to tell you which is the best moving average because there is no better moving average than another, they are all worth it, they are all good, you just have to understand them well. Some are true that they are more used as 20, 50, 100 and 200. All the moving averages are showing you the line chart with the longest temporality (Except 1). So, a 5-period moving average is equivalent to the linear graph of multiplying that timeframe by 5. For example; If we were in 1-minute time frames it would be equivalent to the 5-minute line chart and if it were the 60 moving average it would be the 1-hour line chart. Moving averages and temporalities. If we take into account the moving average of 160 periods, it would be exactly equal to the moving average of 80 periods in 1 hour and of 20 periods in 4 hours. Types of moving averages. Since it is understood how the moving average works, we are going to talk about the 3 most used types of moving average. a) Simple moving average (MA): All the data of the period are weighted equally, all the candles have the same importance from the first to the last candle that is periodized, of which an average is taken. It is the most typical and the easiest to calculate, but also the slowest to adapt to the most recent price changes. b) Media móvil ponderada ( WMA ): Con este tipo de media móvil se le da diferente importancia a cada una de las velas, dando más prioridad a las primeras velas y dando menos importancia a las últimas velas a calcular, en su fórmula se asigna un coeficiente a cada uno de los valores. Esta media móvil reacciona más rápidamente a los últimos cambios de precios. c) Exponential moving average (EMA): Its calculation is more complicated but basically, an additional value is carried to the selected period, that is; for a 10-period exponential moving average, the last 11 candles are considered. These are done to minimize the sudden effect that occurs when eliminating the first data in the series, the most recent candle or price is weighted in greater percentages, while the rest of the candles all weigh equally. Arguably the "EMA" is equivalent to a simple moving average to which an additional period is added and the recent price is weighted much more. How to use them? Moving averages are considered to act as dynamic support and resistance, when the price is trending they act as a trend line that sets the guideline, but they also have the quality of "Attracting" the price, as they remain an average of the price. and by the statistical principle that everything returns to its average at some point. Another utility is that it also helps us to detect price highs, since all the data of distribution tend to group around its average, if a strong impulse moves the price away from the moving average, at some point the price will return to its average. half. and this will help us to detect extremes of the market For example; when the price is too far from its midpoint and you may be ready to make a correction. This is the beginning for which indicators like the MACD are created. If the price is far from its moving average it is very easy to detect it visually.
Education
by Ed_Ale
The Moving Average Explained !!! Hello everyone , as we all know the market action discounts everything :) A lot of people asked me about the MA and how to use it so i prepared this video for you guys explaining it please enjoy . or if you prefer to read : what is a moving average : its a simple technical analysis tool that smooths out price data by creating a constantly updated average price.. we use it to to create sell and buy signal (if the price is above the MA then it’s a buy signal , if the price is below the MA then it’s a sell signal ) Now lets talk about the different types of moving averages : 1_ the simple moving average (SMA) 2_ Exponential moving average (EMA) Notice that the simple MA line is slow which means if the trend moves quickly its gonna take time for the simple MA to move and this is a problem called LAG , but the Exponential MA (EMA) tries to solve this The EMA is the same as the SMA except it gives more weightage to recent price action What does this means , it means when the trend changes quickly so does the EMA , the response time on the EMA is much faster then the SMA So what if we combined them both to try to understand where sell and buy signals are . That’s called a crossover 3_weighted moving average (WMA) it simply combines the features of the SMA and the EMA Its basically like a hybrid car it uses electric engine and a diesel engine so it has both of the two worlds ,, how ever the WMA is not as poplar as much as the SMA and the EMA And that’s it now u guys have a better idea on what is a moving average is and its different types Make sure to Follow and Like for more content If you have any questions please ask Thank you for reading & watching .
BINANCE:BTCUSDEducation
by GabiDahduh
17
Using the Moving Average Convergence Divergence (MACD)MACD – What it is The Moving Average Convergence Divergence (MACD) is the momentum indicator that shows the relationship between two different moving averages: 1. The 12 period exponential moving average – On Tradingview it is the Fast Length. 2. The 26 periods exponential moving average –On Tradingview it is the Slow Length. The MACD line is calculated by subtracting the 26 period EMA from the 12 period EMA. The Signal line is the 9 period exponential moving average. These two lines are then plotted on top of each other. These are the two lines you see when you turn on the MACD indicator. Additionally, there is a histogram that shows the distance between the two lines. Larger bars tell us that the MACD and Signal are further apart. When it comes to candles, size matters. The larger the candle the more momentum the trend has. The histogram will turn green when the MACD line is above 0 (bullish) and it will turn red when the MACD line is below 0 (bearish). Very bearish momentum is shown above. Photo was taken May 23, 2021. How to use the MACD The most important thing to know about the MACD is how to read the relationship between the two lines. I’ve found that the best timeframe to use the MACD with is daily. This is because the MACD is a lagging indicator and using daily data prevents a lot (not all) of false buy and sell signals. These signals are: • When the MACD line crosses above the signal line it is a buy signal • When the MACD line crosses below the signal line it is a sell signal Additionally, it is best to use the MACD in a trending market; a market with a clearly defined up or down trend. Using the MACD with trend lines is a very powerful combination. The reason for this is that if the market is moving sideways, you can see small fluctuations where the MACD and Signal Line cross but the price does not really go anywhere. These are false breakouts. Therefore, these signals are not automatic buys and sells. There are ways of confirming the indications from the MACD chart. One way is a strategy that uses the RSI and MACD together (which is beyond the scope of this text, but I will discuss in my next article). Another way is to use the MACD with the current trend. So, if you are in an uptrend and then you see a bullish cross, then this is confirmation that you are likely to go higher. The same is true in reverse. Also, please note that the cross over happens well after the price either stabilizes or rises. Again, this is because the MACD is a lagging indicator. Leading Indicator? Since the MACD and Signal lines are lagging indicators is there something that can be used in a predictive way? Some traders use the histogram as a way to predict when a reversal will occur. Since the MACD is a momentum indicator it can show us when sell pressure is alleviating. Meaning it might be a good time to buy. This doesn’t always work of course, but with good risk management (stop losses) you can often get into a position well before its breakout. Conversely, it can show you when your long position is running out of steam and can warn you when to get out. MACD Divergence Another useful way to use the MACD is to spot divergences. A bullish divergence, very similar to the RSI, is when the short-term price trend is going down but, the MACD is going up. Bearish divergence, also very similar to the RSI, is when the price trend is going up but, the MACD is going down. Trading this way is sometimes not a good idea because you are trading against the trend. Please practice good risk management if you are trading reversals. Also, notice the buy signal right before the sell signal that is circled. I really want to hammer home the point that the signals are not automatic buys and sells. Price action is a great way to confirm the reversal (to the up or down side) of a trend. Because simply spotting a divergence does not guarantee the price will follow. Final thoughts As you can see there are different ways of successfully using the MACD. I hope I’ve made a few of these ways clear in this beginner guide. Please let me know if you have any questions and if you like it, please hit the thumbs up and be sure to follow for more. Links to my Fibonacci Retracement and RSI guides are below. Thanks for reading!
Editors' picks
Education
by zsamochin
126
EURUSD 1D MEAN REVERSION TRADING STRATEGYBest Mean Reversion Strategy: Before we get to that point, first and foremost, let’s see what tools we need to use for this strategy. The best mean reversion indicator that works 85% of the time is the RSI indicator. So, you will need the RSI oscillator on your charts. Now, there is one more important thing that needs to be done. The RSI settings must be changed from the default 14-period to 2-period RSI. So, we’re having not just any type of RSI, but a very fast RSI. Levels are 10 & 90. The other technical indicators we’re going to deploy on the charts are: 10-period simple moving average. 200-period moving average. Note* Another thing to keep in mind is the recommended time frame is the daily chart. Intraday charts won’t work because the fast-period RSI will generate a lot of false signals on lower time frames. Now, let’s see how we can combine the 3 indicators into a profitable mean reversion strategy. The first obvious question is when to buy and sell currency. To answer this question the mean reversion trading strategy needs to satisfy 3 triggers: The price needs to be above the 200-day EMA. This means that the overall price is in an uptrend so, we’re only going to look for buy signals in bull markets. Second, we look for the price to below the 10-day SMA, which shows a deviation from its mean. Last but not least, we look at the RSI to overshoot below 10, which signals that we’re in oversold territory. Note* For sell signals use the same trading rules but in reverse. Once all 3 conditions are satisfied we enter a trade at the open of the following day. Once we’re in a trade we also need, we also need to know when to exit the market. This is where the 10-period simple moving average comes into play again. What we’re looking for is for the price to reverse back to the 10-period SMA strategy. More often than not the price will overshoot to the upside and break above the 10-period SMA. So, to fully capitalize on the entire move we use multiple take profit targets: The first profit target is to cash half of the position once we touch the 10-period SMA. The second portion of your position is left until we break and close above the 10-period SMA. Based on our backtesting result, on average your trades should reach the second target within 1-3 days. The longer you keep your position open, the lower the chances of the trade to succeed. As a general rule, you should cash out of your entire position within the first 3 trading days. Now, we have left out for last the most important part, which is managing risk. When it comes to the protective stop loss we’re advising not to place a stop loss right away, but instead, use a time stop. Let me explain… Based on our backtesting results we have found that a lot of the times the market will do a false breakout below the previous day low (high) and hurt our position. So, to avoid this scenario we have found a great trick to move around it. Our rule is very simple: If by the first half of the day our position shows a loss, we close that trade and call it a day. This is a risky play but we have the edge on our side to play this kind of trick. After all, trading is a risky game and everyone needs to decide for themselves how to manage risk. Final Words – Best Mean Reversion Strategy In summary, the most alluring thing about mean reversion trading is the high win-loss ratio and the simplicity behind it. One thing to keep in mind is that the mean reversion strategy tends to perform poorly when the market is in a hard-mode trend. But that shouldn’t be much of a big deal since the market is ranging 75% of the time. The key takeaways from the mean reversion trading strategy are as follow: Mean reversion can be used with all asset classes (stocks, commodities, currencies or cryptocurrencies). Range trading and overbought/oversold signals work the best with this method. Adjust the RSI settings to a fast-period. You can generate quick profits – short holding time periods. A trading tip – use a time stop instead of a price stop. Thank you for reading! Mean Reversion Trading Strategy with a Sneaky Secret. In this guide, you’ll learn a mean reversion trading strategy with some trading secrets that will assist you to limit the downside. The first part of the guide will highlight what is mean reversion trading, while in the second part we’ll reveal the mean reversion strategy and how you can fine-tune it to fit your personality. If this is your first time on our website, our team at Trading Strategy Guides welcomes you. Make sure you hit the subscribe button, so you get your Free Trading Strategy every week directly into your email box. The mean reversion trading systems are more appealing to a lot of traders because it tends to have a higher win rate as opposed to the trend following strategies. Even when the markets are in well-established trends, mean reversion happens quite often. So, there are more opportunities to profit from mean reversion trading. Let’s kick the ball rolling and start with the basic by first explaining what is mean reversion in trading and then we’re going to reveal 5 trading principles that can be used with the mean reversion strategy. Table of Contents 1 What is Mean Reversion Trading? 2 How Mean Reversion Trading Works? 3 Why the Mean Reversion Strategy Works? 4 Mean Reversion Trading Strategy 5 Final Words – Best Mean Reversion Strategy What is Mean Reversion Trading? Put it simply; mean reversion trading assumes that over time the prices of any asset (stock, commodity, FX currency or cryptocurrency) in time will revert back to the mean or average price. In other words, reversion to the mean trading comes down to the old saying: “What goes up must come down.” The mean reversion theory is at the foundation of many trading strategies that involve buying and selling of those asset class prices that have deviated from their historical averages. The idea is that in the long-term prices will return back to their previous average prices and normal pattern. Example of mean reversion trading strategies includes: Reversals. Pullback trading. Retracement. Range trading system. Overbought and oversold strategies. Our best mean reversion strategy is to trade those price ranges that occur after a severe price markup or markdown. In this case, reversion to the mean implies trading around the middle of the range as our average price. In essence, mean reversion is playing around a central value be it the middle of the range, or a moving average, or however you wish to express it. The reversion to mean trading system tends to produce a higher win rate in those instances where we can notice extreme changes in the price. We can measure extreme price changes relative to the time frame used. Obviously, there is also a probability that the price will not revert back to its mean. This can indicate that there is a real shift in the market sentiment and we’re in a new paradigm. Now that we know what is mean reversion trading, let’s see how the mean reversion regression works. How Mean Reversion Trading Works? With mean reversion, we’re looking to trade against the heard. A lot of the times when you’re doing mean reversion trading, you’ll be quick in-and-out of a trade. That’s why day trading mean reversion strategy works better. There are other different ways to trade with the mean reversion strategy, including: Price stretch from a simple moving average strategy. A break outside the Bollinger Bands strategy and a return back to the mean. A test of support and resistance strategy while the price is consolidating. The linear regression is clearly slopping upwards and it’s acting as a magnet to the price. Each time the price deviates from the average price line it snaps back to it outlining the reversion to the mean concept. The main advantages of the mean reversion strategy include: Effective exit strategy – the take profit target is always the average price. High win rate – the shorter the mean reversion time frame used the higher the win rate. Good risk-adjusted returns. All trading strategies have their own pros and cons. The biggest flaw is that once you’re in a trade you’ll often see first a loss before you see a profit. The main components of the mean reversion strategy should include: 1. Entry signal after the price has moved away from its average price. You can simply calculate how far away percentage-wise are from the mean or use an ATR strategy multiple declines or simply use a volume oscillator to gauge oversold/overbought readings. 2. Exit signal gives you a way out once you get into a trade. 3. Broad market timing. Why the Mean Reversion Strategy Works? Mean reversion is a key element part of how all financial markets work. Mean reversion happens because the prices have a tendency to overshoot and undershoot their intrinsic value. These “price anomalies” happens because the impact of new information that hits the market takes time to be digested by the market. The market participants will take some time to understand the new information as the information is filtered slowly. Additionally, it takes time for the market to establish a fair value. Secondly, mean reversion trading also works because prices also move based on collective emotions. What this means for traders is that the price tends to overshoot to the downside a bit more than they overshoot to the upside. This is true because fear tends to be a bigger emotion than greed. Let’s put the puzzle pieces together and construct our reversion to the mean trading strategy.
Education
by Tradingstrategyguides
3
How to use MTF T-Line (8 EMA)T-Line stands for Trigger Line and is 8 EMA, concept invented and taught by American trader Steven Bigalow. He uses daily 8 EMA and stays in trades as long as price is above or below 8 daily ema. If price closes below or above 8 daily ema in the opposite direction he exits. I went further with this concept, implementing Multitimeframe 8 ema trading system which is very effective. For that one needs indicator able to plot higher resolution EMAS on lower resolution charts (Moving Average Collection by Wataru Inoue can do that - www.mql5.com - better than TradingvIew MTF ma function). But you need a powerful PC (8 GB RAM at least) as many PC freeze when applying MTF indicators especially on many charts. For exits, reversal or entries you may add Pivots (Camarilla, Fibonacci Pivots seem to be most effective resistance support levels, especially longterm ones yearly, monthly, weekly). But you are free tp use Ichimoku, daily, monthly, weekly highs, lows or whatever level tools convinient. At least this system will help you to stay on the right side of the market. This sytem works well with gold, oil, sp500, eurusd, btcusd and many other pairs. Good luck my friends!
Education
by ICFX
RSI and breakoutsIve noticed that when : 1The RSI hits below 30 on the 30min sometimes 1hr time frame 2Then goes up to just before 70 ...say 67 on the RSI 3Then drops again to 25-29 THAT'S A BUY I think that would indicate a breakout to the upside. The RSI will go up and down in wave patterns. This doesn't mean the price will follow. BE CAREFUL. So, if it has to hit 70 on the RSI but doesn't. Then drops ,all those people who FOMOed in are FOMOing out at a lower price bringing it up but with more volume. THIS IS JUST ME TALKING AND NOT ADVICE.
KEducation
by UnknownUnicorn5174798
200 EMA - best use for entries!I don't use indicators, they're not my style, they lag, they repaint; and in my opinion they don't work. The 200 EMA on DAILY can be useful because of how slow it is. We can use it to filter the direction of which way we trade. Price ABOVE 200 ema = ONLY BUY Price BELOW 200 ema = ONLY SELL Then drop timeframes for your entries via your strategy whatever that may be. If your strategy says go long but price is below EMA, don't take the trade etc... Ignore the EMA on other timeframes lower than the daily. You want a slow daily direction indicator. Don't blindly trade this, wait until price is clearly past the EMA and maintaining a good distance from it. Use it as a guideline if you struggle working out fundamentals to help you filter a direction to trade. NOT TO REPLACE FUNDAMENTAL ANALYSIS!!!
Education
by joebrownFX
BTCUSDT 4H DOUBLE DEATH CROSS LONG TRADE STRATEGYThe double death cross strategy employs one more moving average that will help you anticipate when the death cross signal will occur. The third moving average is the 100-day MA, which is a medium-term MA situated between the other two moving averages. Step #1: Wait for the 50-day EMA to cross below the 100-day EMA. The two moving averages also need to converge with the price action. You can read more about day trading price action here. If we get the crossover of the 50-day MA (blue line) and 100-day MA (orange line) at the same time the price is testing those moving averages like it’s doing on the GBP/USD chart below, that’s the best-case situation for trade because we can define the risk. The rule you need to keep in mind is that when the MAs converge with the price you have to get ready for the ride because it is going to get BUMPY! Step #2: Multiple entry strategy: Sell1 when we close below 50-day MA and 100-day MA. Sell2 when we break and close below 200-day MA. Using multiple entries to improve your average entry price can be the best way to approach the death cross signal. Scaling into a position is our preferred trading method when looking to capture a large price move in a currency pair. The fact that the price was near the death cross signal, it created tension in the market that eventually will lead to a sharp move to the downside. We pull the trigger on the first half of the trade once we close below the 50-day and 100-day moving averages. If at the moment when the death cross developed we’re already trading slightly below the two moving averages, sell at the market the moment we close below. The second half of our position is entered once we break and close below the 200-day moving average. **Note: It’s important to remember that the success of the death cross signal relays on this simple trade secret that price and the two moving averages need to converge. Keep it 'simple stupid' is not just a simple aphorism, but it’s an old truth that can make the difference between losing and making money trading. Step #3: Hide your protective Stop Loss above 50-day MA and 100-day MA The most important thing we need to define when trading is our risk. If you want to be a profitable trader you really need a limited risk. This is the type of death cross trades that we want to pull the trigger on. If the price were to move back above those moving averages, we can safely assume this is yet another false trade signal. In this trade case scenario, we’re risking a little and our reward is potentially much bigger. So, the best place to hide your protective stop loss is above the 50-day MA and 100-day MA. Step #4: Choose your own Take Profit strategy or use this Two-step process for the take profit strategy: Mark on your chart the high of the candle when the 50-day MA crossed below 200-day EMA. Take profit when this high is broken. Our take profit strategy might seem a little bit complex, but once we break down the steps you need to follow, it will make more sense why we’ve chosen this approach. The first thing you have to do is to remember what we said at the beginning of the article which is that when the price doesn’t converge with the two MAs this is a death cross false signal. In the example below, we can observe this type of price action. Now all you have to do is to mark the high of the candle when the death cross happened and take profit as soon as the high gets broken. **Note: The above was an example of a SELL trade using the death cross strategy. Use the same rules for a BUY trade – but in reverse, in which case we have the golden cross trading strategy. Conclusion - Death Cross Stocks Following the death cross trade signal can be a very efficient approach to identify bearish sentiment in the market. If you want to switch from short-term trading and try capturing larger trends the double death cross trading strategy can help you achieve your goals. You must know that the death cross definition is universally applicable to any other asset classes. We can have a death cross crypto or a death cross gold the same way we can have a death cross S&P 500. Capturing and detecting bearish trends can be a hard task because downtrends are typically different than bullish trends. However, the double death cross strategy gives you a systematic way to tackle bearish trends.
Education
by Tradingstrategyguides
2
CFDs on WTI CRUDE OIL 1HHOW TO USE 200 EMA TO BUY COMMODITIES. 1 - 200 EMA standard measurement of bullish or bearish trends in commodity market. 2 - MA breakouts have multiple false breakouts. 3 - Wait for a breakout and then a retest of EMA. 4 - Buy at breakout of high of breakout candle. If you want to predict which commodity trading levels are worth to base your trade-off, then look no further than the 200-day moving average. The 200-day EMA is regarded as being the standard measurement of bullish and bearish trends in the commodity market. However, a breakout of the 200-day EMA is not always a reliable signal. The reason is that like with all technical indicators it’s prone to give multiple false signals. A simple solution to this very common problem is to wait for the breakout of the 200-day EMA and a retest. This means that you can buy/sell commodities at the first retest of the 200-day EMA. Now, we know that not many traders have the right amount of capital to invest in the long-term. Holding a position for a yearlong period is not suitable for everyone. If you don’t have a big account balance and the patience to ride the cyclical commodity trends, you’re better off if you stick with short term commodity trading
TVC:USOILEducation
by Tradingstrategyguides
9