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Moving Averages

📊Moving Average(MA): Use Cases📍 What Is a Moving Average (MA)? A Moving Average (MA) is a popular technical analysis tool used in finance to indicate the stock's average price over a certain time frame. Its purpose is to reduce price volatility by creating a continually updated average price based on the stock's historical data. The computation of a moving average helps to minimize the influence of unpredictable and short-term price fluctuations on a stock over a designated period. Two types of moving averages are commonly used: simple moving averages (SMAs) that employ a straightforward arithmetic mean of prices over a particular timeframe, and exponential moving averages (EMAs) that prioritize recent prices over older ones by assigning them greater weight. 📍 Simple Moving Average(SMA) A simple moving average (SMA) is a technical indicator that calculates the average of a range of prices over a specific number of time periods. It can help determine if an asset price will continue or reverse a bull or bear trend. It is an arithmetic moving average, calculated by adding recent prices and dividing by the number of time periods in the calculation. SMAs can be short-term or long-term, with short-term averages responding quickly to price changes and long-term averages being slower. Other types of moving averages include exponential moving averages (EMAs) and weighted moving averages (WMAs). 📍 What Is an Exponential Moving Average (EMA)? The exponential moving average (EMA) is a moving average (MA) technique that assigns more weight to the most recent data points. It is also known as the exponentially weighted moving average. Compared to a simple moving average (SMA) that gives equal weight to all data points in the period, an EMA reacts more strongly to recent price changes. 👤 @AlgoBuddy 📅 Daily Ideas about market update, psychology & indicators ❤️ If you appreciate our work, please like, comment and follow ❤️
Education
by QuantVue
3
Harnessing Gains from Mean Reversion in WTI Crude FuturesThere are three kinds of lies: lies, damn lies, and statistics. Fortunately, not always. Statistics enables investors and traders in financial and commodity markets. In statistics, mean is also known as the average. It is a number that represents the entire data set. Mean is the sum of the data set divided by number of data points in it. For example, in a group of six men who weigh between 70kg to 80kg with an interval of two kilograms apart, the mean weight of the group is 75kg. Previously, Mint published two case studies looking at WTI crude oil futures. a short position and a long position . Both of these case studies were centered upon the same range-bound price action of WTI futures. Mean Reversion in Financial & Commodity Markets In financial markets, mean refers to the average of all the data observations. For example, let's say in WTI futures, it refers to the average price of a barrel of WTI futures over the observed period. For commodity traders, mean and reversion to the mean is a godsend. Reversion to the mean is a consistent occurrence in finance. Especially in crude oil, ample academic research shows that crude oil prices tend to mean revert. In other words, crude oil prices has a tendency to stray away from the mean but will eventually retrace back to the longer term average. Asset prices oscillate around the average. The bigger the diversion from the mean, the higher the probability that prices will revert to it. Harnessing Mean Reversion in Financial Markets An astute trader can identify the pattern embedded in the price. Such traders carefully ride the path of the asset prices to gain from it and switch their positions around when prices start to trace back. This phenomenon has led to the development of many investing and trading strategies that involve the buying & selling assets whose prices have veered away from their historical averages. At its core, trading the mean reversion strategy involves buying the asset whose values have fallen below the long-term average and waiting for prices to recover back up to the long-term mean before selling it. Trading strategies are based on either taking advantage of mean reversion or momentum in the market. Markets spend greater time in consolidation mode relative to trending phases. Incorporating mean reversion in trading strategies is not only important but potentially lucrative. For those assets, whose prices are far above the mean, the strategy would then involve selling the asset first in the hope of a price correction to the mean. When prices fall, the asset is bought back at a lower price to lock in the gain. Mean Reversion is not Guaranteed. Take Caution. Readers to take caution that mean reversion is not guaranteed. Unexpected highs or lows could indicate a shift in the norm. A significant price change could be structural indicating a new normal. The structural shift may provide a significant headwind or tailwind to asset prices in the longer run. Technical Indicators to help identify Mean Reversion This paper aims to illustrate mean reversion using WTI Crude Oil futures. Crude oil prices are known to follow Brownian motion with mean reversion, according to academic literature. WTI Crude Oil futures follow a lognormal distribution with slowly changing volatility. Brownian motion? Lognormal distribution? Park them aside for now. Mint will cover those topics in another educational paper in near future. Effective mean reversion involves effective timing of trade entry and exits. Trend following indicators, such as moving averages help to identify patterns. Oscillators, such as the RSI, also enable investors to identify overbought and oversold conditions. Bollinger Bands is a complementary indicator to identify mean reversion trend. Mean Reversion in Crude Oil Prices in 2022 and 2023 WTI crude oil prices soared in the first half of 2022 as the war in Ukraine clouded supply projections after sanctions were placed on Russian oil and gas by the US and EU. This reduced the available supply pushing prices higher. However, during second half of the year, the gloomy global economic outlook and recession risks in the US meant that demand for crude oil started to drop. Moreover, COVID outbreaks in China meant that the largest importer of Crude Oil had lesser appetite to buy. Over the past 3 months, WTI Crude Oil has traded in a tight range between $70 to $80 a barrel. The reasons behind the range bound price action are: At the bottom end of the range, there is strong support between $67-72 as that is the price range that the US DoE plans on purchasing oil to replenish the Strategic Petroleum Reserve. At the top end of the range, supply outpacing demand, as well as the availability of cheap Russian oil for major consumers – China and India – limits the upside potential for oil. Capex into new oil exploration has dropped as the world starts to shift towards alternative energy sources. Despite the SPR currently at a 40-year low, the Biden administration continues to draw more crude from the reserves to limit fuel price inflation in the US & keeping WTI crude prices lower.
NYMEX:MCL1!Education
by mintdotfinance
How to Use the Exponential Moving Average (EMA)The Exponential Moving Average (EMA) is a popular technical indicator used by traders to identify trends and make informed trading decisions. In this TradingView idea, we will discuss how to use the EMA in your technical analysis. Step 1: Understanding the EMA The EMA is a type of moving average that gives greater weight to more recent prices, making it more responsive to changes in the market. The EMA is calculated by taking the average of a set number of price data points over a specified time period, with more weight given to recent data points. Example: Let's say you are using 20-day and 50-day EMAs to identify trends and potential buy/sell signals. You notice that the 20-day EMA is above the 50-day EMA, indicating that the stock is in an uptrend. You then wait for the price of the stock to pull back to the 20-day EMA before buying in, as this could provide a good entry point. Conversely, if the price falls below the 20-day EMA, this could be a potential sell signal. Step 2: Identifying Trends with the EMA One of the primary uses of the EMA is to identify trends in the market. When the price of an asset is above the EMA, it is considered to be in an uptrend, while when the price is below the EMA, it is considered to be in a downtrend. Traders can use the EMA to identify potential buy and sell signals based on the direction of the trend. Example: Let's say you are using the 50-day EMA as a dynamic support or resistance level. You notice that the price of the pair has been consistently bouncing off the 50-day EMA, indicating that it is acting as a support level. You then decide to go long on the pair when the price approaches the 50-day EMA, with a stop loss below the EMA in case the price breaks through. Step 3: Using Multiple EMAs for Confirmation Traders can also use multiple EMAs to confirm trends and potential buy and sell signals. For example, using a shorter-term EMA, such as a 20-day EMA, in conjunction with a longer-term EMA, such as a 50-day EMA, can provide a more comprehensive view of the trend and potential trading opportunities. Example: Let's say you are using the 10-day, 20-day, and 50-day EMAs to confirm trends and potential buy/sell signals. You notice that the 10-day EMA is above the 20-day EMA, which is also above the 50-day EMA, indicating that the trend is up. You then wait for the price of gold to pull back to the 10-day or 20-day EMA before buying in, as this could provide a good entry point. Conversely, if the price falls below the 50-day EMA, this could be a potential sell signal. Step 4: Using the EMA as a Dynamic Support or Resistance Level In addition to identifying trends, the EMA can also be used as a dynamic support or resistance level. When the price of an asset is approaching the EMA, traders can use the EMA as a potential support or resistance level, depending on the direction of the trend. In conclusion, the EMA is a versatile and powerful technical indicator that can be used for a variety of trading strategies. You don't need a complex setup to be successful in trading, just using simple indicator such as EMA can make trading highly profitable. Vector -->
Education
by VectorAlgo
🏵MOVING AVERAGE TYPES🏵 🏆What Is A Moving Average: A moving average is one of the lagging technical indicators which the traders and investors use for determining the trend’s direction. It totals the data points of the chart and then divides the total by the number of data points over a specific time period for arriving at an average. It is referred to as the “moving” average as it is continually recalculated which is based on the latest price data. The moving average is used by the trader for determining support and resistance by evaluating the price movements. This indicator shows the previous price movement of the asset which the traders use to determine the potential direction of the future price move. 🏆Simple Moving Average: The SMA Is the simplest moving average that is obtained by adding the most recent data points set and then dividing the total by the number of time periods. The SMA indicator is used by traders to generate signals of when to enter or exit the trade. An SMA is a lagging indicator as it is based on the past price data for a given period that can be computed for different types of prices such as high, low, open, and close. Traders use this indicator for determining buy, sell signals. It also helps to identify support and resistance zones. 🏆 Exponential Moving Average (EMA): EMA is the other type of moving average that gives more weight to the most recent price points and makes it more responsive to recent volatility. EMA is more responsive to recent price change when compared to the SMA as it applies the same weight to all price changes in the given specific period. 🏆Most Common MA’s: • 20ema - Best for shorter time frames and volatile price movement • 50ema - Good for overall trend insight and outlook • 200ema - Best for longer time frames and larger trends 🏆KEY TAKEAWAY: While one might prefer one or the other type of MA, traders can use both to gain the trading edge. The key is to know how to use the indicator properly. I can say for myself that I use both sometimes, especially when going through my stocks watchlist and these indicators have proven to be effective despite being relatively simple. I Hope you guys learned something new today✅ Wish you all Best Of Luck👍 😇And may the odds be always in your favor😇 Do you like this post? Do you want more articles like that?
Education
by ProSignalsFx
30
What if RSI and EMA produce similar results?█ What if RSI and EMA produce similar results? In the world of trading , technical indicators play a crucial role in making informed decisions. One such indicator is the Relative Strength Index (RSI), and another is the Exponential Moving Average (EMA). Both of these indicators have been widely used by traders to analyze market trends and make predictions about future price movements. However, it has long been a topic of debate among traders as to which of these two indicators is better. █ What if RSI and EMA produce similar results? We wanted to determine the relationship* between the RSI and the EMA, specifically examining the hypothesis that when the RSI crosses above the value of 50, it returns similar results as when the price crosses above a certain length of an EMA. Similarly, when the RSI crosses below the value of 50, it returns similar results as when the price crosses below a certain length of an EMA. Our goal was to determine whether the RSI and EMA were related* in any way. █ Our Simulations We designed a series of simulations to compare the accuracy of the RSI and EMA in predicting market trends. The simulations were designed to test the assumption that the RSI and EMA were equal* in terms of accuracy in predicting price movements. █ Our definition of "predict price movements." If RSI crosses above the value of 50, there is a higher likelihood of a bullish move. If RSI crosses below the value of 50, there is a higher likelihood of a bearish move. █ Our assumption for this study When the RSI crosses above the value 50, it is equal* to when the price crosses above a certain EMA length, and when the RSI crosses below the value 50, it is equal* to when the price crosses below a certain EMA length. This assumption had never been tested until our team decided to put it to the test. █ Results To our surprise, we found a strong relationship* between the RSI and the EMA. We discovered that when the RSI crosses above the value of 50, it returns similar* results as when the price crosses above a certain length of an EMA. Conversely, when the RSI crosses below the value of 50, it returns similar* results as when the price crosses below a certain length of an EMA. The assumption was accurate and that the correlation* between the RSI and EMA was 1, indicating that the results of both indicators were highly consistent. This means that there is an EMA length that performs exactly* the same as the RSI in terms of predicting market trends. Validity Checks We stored crossover values for both RSI and EMA in 2 different arrays, and by running the following tests, we could conclude our findings. Correlation Check The correlation between RSI and EMA provides insights into the relationship between the two arrays. Array Size Checks The "diff" tells us how different the sizes of the two arrays are. If the size of both arrays is the same, "diff" would be 0, indicating that the two arrays have the same number of elements. Percentage Check The percentage difference between RSI and EMA is a measure of the similarity between the two arrays. A percentage difference of 0 indicates that the two arrays are the same size, while a higher percentage difference indicates that the two arrays are different in size. Ratio Check The ratio represents the relationship between the two arrays, in terms of the sum of their elements. If the ratio is equal to 1, it means that the sum of the elements in the two arrays is the same. The higher the ratio, the more the elements in RSIa are relative to the elements in EMA. The lower the ratio, the less the elements in RSI are relative to the elements in EMA. █ What is the exact relationship between the two indicators? After further testing and analysis, we discovered that the length of the EMA that returns results similar* to the RSI is given by the formula: "2* RSI Period - 1". This formula provides traders with a clear, scientific method for determining the length of an EMA that will return results similar* to the RSI. █ What does it mean for Traders? The study has provided valuable insights into the accuracy of RSI and EMA. It has shown that both indicators are approximately equal in terms of accuracy and that traders can use either one without having to sacrifice accuracy. This means that traders can choose RSI or EMA, depending on their personal preferences and trading style. █ Conclusion Our study has shown that when the RSI crosses above the value of 50, it returns similar* results as when the price crosses above a certain length of an EMA. Similarly, when the RSI crosses below the value of 50, it returns similar* results as when the price crosses below a certain length of an EMA. Furthermore, we have discovered the exact* relationship between the RSI and EMA, given by the formula "2 * RSI Period - 1". These findings provide valuable insights for traders and demonstrate the potential for data-driven approaches in trading. We showed that the RSI and EMA were highly correlated*, indicating that the results of both indicators were highly consistent*. This knowledge can save traders time and effort, as they can use one indicator to validate the results of the other. ----------------- Disclaimer *Our results are approximate. We encourage you to test the assumption yourself. We do not guarantee that you will get the same results. This is an educational study for entertainment purposes only. The findings/results may or may not be true. The information contained in my Scripts/Indicators/Ideas/Algos/Systems does not constitute financial advice or a solicitation to buy or sell any securities of any type. I will not accept liability for any loss or damage, including without limitation any loss of profit, which may arise directly or indirectly from the use of or reliance on such information. All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, backtest, or individual's trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on an evaluation of their financial circumstances, investment objectives, risk tolerance, and liquidity needs. My Scripts/Indicators/Ideas/Algos/Systems are only for educational purposes!
OANDA:DE30EUREducation
by Zeiierman
20
Are Retracements Stair-Stepping Toward a Breakout?The S&P 500 has frustrated traders for months as a tightening range punishes both bulls and bears. Picking levels in a market like this can be a huge challenge because prices keep revisiting the same spots as they narrow. It’s a bit like trench warfare, with armies battling futilely for weeks over a few yards of territory. But one basic technique has provided some clarity to help navigate the back-and-forth: Fibonacci retracements. Notice how SPX surged from below 3500 on October 13 toward 4100 by early December. The rally stalled around the 200-day simple moving average (SMA). Sellers quickly returned, and for a while it looked the bears were in control again. But then the index held 3800: a low from May 2022 and a “nice round number.” The level had other relevance because it represented almost exactly a 50 percent retracement of the preceding rally. (See the yellow markings.) SPX sat for the next two weeks before returning to the 200-day SMA. The bears tried another attack, but couldn’t get prices to close under 3890. This matched the December 21 high, but it was yet another 50 percent retracement. (Marked in white.) Here are two potential lessons for traders: First, retracements of current moves can be a simple way to find levels and manage risk. This is especially true when many price points and indicators compete for your attention. Second, this kind of Fibonacci analysis may suggest the bulls are taking charge. After all, if prices rallied, retraced and continued higher two times in a row, it could be trying to tell us that a new uptrend is taking shape. Are we stair-stepping toward a breakout? TradeStation has, for decades, advanced the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more. Important Information TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services. It is neither licensed with the SEC or the CFTC nor is it a Member of NFA. When applying for, or purchasing, accounts, subscriptions, products, and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means. This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates. Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: www.tradestation.com .
SP:SPXEducation
by TradeStation
3
📉 The "Death Cross" PatternDeath Cross, 5 Key things to watch The "death cross" is a market chart pattern that occurs when a short-term moving average falls below a long-term moving average, indicating recent price weakness. It is often studied using the 50-day and 200-day moving averages. The death cross pattern is more reliable when confirmed by other indicators such as high trading volume or momentum indicators like the MACD. These indicators can help confirm that a major trend change is occurring. 🟠 The Death Cross (convergence of moving averages) is a strong indication of a sell-off 🟠 If volume increases after the Death Cross, the downward trend is likely to strengthen 🟠 If price is above moving averages, strong volumes may be needed to suggest a turnaround 🟠 If price is below moving averages, the selling pressure is likely to be severe and any upward corrective moves will face strong resistance 🟠 The first sign of selling pressure weakens as moving averages start to turn upward 👤 @AlgoBuddy 📅 Daily Ideas about market update, psychology & indicators ❤️ If you appreciate our work, Please like, comment and follow ❤️
Education
by QuantVue
5
Heiken Ashi Algo and the Mass Effect Moving Average: Almost HereWell ladies and gentlemen I think I have created a monster and I'm really happy to call it the heiken Ashi algo and the Mass Effect moving average combination. Don't worry I have not been leaving you hanging. It's just been very busy and I want to make sure that this thing works beautifully for you. So what is the heiken Ashi algo oscillator? it is an oscillator much like the original heikin-ashi RSI with a ton more features. As you know a little while ago I came out with the CoffeeShop Crypto HARSI, Update to the original HARSI. And as development on that oscillator continued I had to change the name to the algo because now the oscillator actually speaks to you while trading is taking place. But as you know you should never use a single indicator by itself to enter and exit trades and understand what's happening on your chart. you should always use something as a secondary Confluence or even a tertiary confluence. Because the more confluences you have the better right? So with that I continued development on the Mass Effect moving average and you can use them beautifully in combination. In this video I don't want to get into the technical Aspect of all the details on how the oscillator and the moving average work but I do want to show you the parts that have been developed and what they mean. feel free to leave your suggestions below and I will make adjustments if needed. I'm probably going to need one more week before fully releasing both of these together and until then I'd love to communicate with you on anything to make it more fluid. With that let's take a look at my chart and see the breakdown. The Heiken Ashi Algo Double Stochastic - Uses a mean regression calculation for pullback notifications but it also adds support to knowing when a trend is in full swing. This happens when you see both stochastic ribbons touch each other while they are the same color Green touching green is a move to the upside. It matters most When it's above or below the 50 level. the other thing you can see here is when they touch and when they touch again as the same color is a clear sign of a Divergence. IBXL - Inside Bar Calculation. This will be moved to the Mass Effect MA as well Resistance / Support / are dynamic levels which change over time Bull Key level - Are Significant price or Price action levels which almost never change over longer periods of time. when I get a key level alert I Market on my chart with a thick line and I lock it in place. These are the major areas of supply and demand Zone on your chart and you want to watch them closely when price gets near these levels Pull Back - Helps you draw out targets to your trend lines. Now let's talk real quick about the mass effect moving average and what it will include. this uses a mean regression strategy so that you can swing trade- And get your confluences of when prices going to move up or down so doesn't matter if you are in an uptrend or a downtrend . Stop lost Trend color - Is this really a stop loss line which will follow your price action and depending on its color will tell you if you should be using a stop loss of a guy or a stop loss of a sell. Obviously if it's red you should be selling and if it's green you should be buying. do not use it incorrectly. Just because it changes to Green doesn't mean you by and just because it changes to Red doesn't mean you cell. It only means you are in an area where you should be buying or selling. The EMA's - it includes four different exponential moving averages which you can set appropriately to your style. The VWAP - Included in this is a VWAP Moving average. Even though the VWAP is used as a moving average against the RSI in the oscillator below, I included the VWAP in the Mass Effect moving average because once you switch to a daily chart The VWAP in the oscillator disappears but you can still have it on your chart in the Mass Effect moving average. So switching to a daily chart you will still be able to see your VWAP. The V-CROSS - This indication shows up so that you can see when the V WAP is crossing over your price level. This helps you know from point to point if you are above or below a support or resistance level and where is your price in relation to your VWAP. This will also help you notice when price is overbought or oversold. Fractals - Show you pivot points in market structure. I use them to find exit points for trades when there is no immediate swing low or high to be seen. Usually i look further left and use one of these points to exit. But they have even more application which I'll get into in another video. The Trend Ribbon - Is a bullish and or bearish colored ribbon to show you the trend that works in Confluence with your stop loss line which also changes from red to Green. when they are both the same color you are in a trend in that direction of up or down. The good thing about the trend ribbon is it's always seeking the same level as the VWAP and when it finally catches up to it that's when the trend usually goes flat and then reverses.
Education
by CoffeeshopCrypto
29
SK Chart OverlaySK Chart Overlay by Stephen Kalayjian and TradeEZ is advertised as a "cutting edge proprietary chart overlay, with built-in predictive analytics for trading" . The same set of indicators and similar chart setups were used by Stephen Kalayjian in his previous failed projects KnowVera and Ticker Tocker . A closer look into these projects reveals that these indicators are just rebranded well known indicators with a little bit of lipstick. Trade EZ MA - Welles MA (10) / EMA (19) Trade EZ 1 - MACD(12, 26, 9) Trade EZ 2 - DMI (14, 14) Trade EZ 3 - Stochastic (5, 3, 3) Trade EZ 4 - ATR Supertrend (52, 2.5) + Welles MA (5) / EMA (9) - previously known as KnowVera Trend Channel and later Ticker Tocker Trend Channel Chart setup is available at www.tradingview.com
CME_MINI:ES1!Education
by fktrdr
9
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
HOW TO USE TECHNICAL INDICATORS TO MAKE PROFITS IN TRADING Always combine technical analysis with fundamental analysis Successful traders always combine the two types of analysis. This is because technical analysis tends to focus on the past events and fundamental analysis focuses on the present and future issues. In addition, there are certain situations where technical analysis will not provide adequate solutions. For instance, technical indicators are not programmed to predict the outcome. In such situations, it is important to rely on fundamental analysis and avoid the market because no one knows the exact number and how the market will react. Understand the indicators It is also important to understand the indicators to use. Different one have different ways of analysis. It is important for you to take time to learn these indicators and how they should set up. There are many learning materials which one can use to learn how the indicators work. I recommend that you take at least 2 months to learn the indicators using a demo account before using real money. Use Few Indicators As stated before, many traders make the sad mistake of using very many indicators at a go. Always remember that two is a company, three is a crowd. Traders who use more than two indicators at a go make mistakes because of poor visibility and poor market data interpretation. Therefore, I recommend that you use at most 2 indicators per trade. Patience In day trading, patience is an important aspect without which no trader can make it. In fact, some indicators are usually require more time before their predictions can come true. Following these tips, your indicator-trading will go to the next level. Do you agree with all these tips? Hey traders, let me know what subject do you want to dive in in the next post?
OANDA:XAUUSDEducation
by TopTradingSignals
11
It’s trading wheaty (pretty) high now...Continuing the topic of spreads between related commodities, the Hard Red Winter Wheat – Soft Red Winter Wheat spread is another one trading at an extreme level now. A brief explanation on the different types of wheat we are referring to here: 1) The Hard Red Winter Wheat (HRW) is the most widely grown class of wheat. A high protein product, used for breads, some types of Asian noodles and general-purpose flour. 2) The Soft Red Winter Wheat (SRW) is the third largest class of wheat variety grown in the US, lower protein wheat used in producing confectionary products such as cookies, crackers, and other bread products. Generally, the HRW Wheat Futures (KE) trades at a premium to the SRW Wheat Futures (ZW) due to the higher protein content, however other factors such as production levels and supply demand dynamics may disrupt this spread, as seen from the wide range it has been trading since 1977. Currently, this spread is trading close to 132 cents, with only one instance where it has traded higher, which was in March 2011 when this spread reached an all-time high of 164. We attribute the spread trading at a high now due to the following 2 reasons: 1) The 2022 HRW production is currently the lowest on record since 1963, due to widespread droughts across many of the HRW production regions. 2) The average protein content of the 2022 yield is higher than last year, as well as the average of the past 5 years, resulting in a higher quality crop. As a result, HRW is trading at a premium as supply shortage and a higher quality product pushes the price higher, while SRW sees average production and quality. While it is challenging to assess the production levels and quality for the next season, from a risk reward perspective, we see an opportunity here. The past few spread peaks have been clearly marked out by Relative Strength Index (RSI) pointing oversold. With the 10-year average for the spread at 6.3 cents and the RSI now oversold, we lean bearish on the spread. Referencing the average of the past 3 declines at 150 cents and lasting 511 days, we could set out trade levels. If the historical pattern holds this time, a conservative target of 120 cents and a trade length of 500 days points us to the 15-cent level. We see the current set-up as an opportunistic one, with similar episodes in the past pointing lower. CME also has the synthetic KC HRW Wheat-Wheat Intercommodity Spread, which can be used to express the same view and is financially settled. The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com Disclaimer: The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios. Sources: www.uswheat.org www.cmegroup.com www.cmegroup.com www.usda.gov
CBOT:KE1!Education
by inspirante
14
RSI Supertrend Moving average in Heiken Ashi Algo OscillatorDownload this Oscillator Free: My Tradingview Profile: www.tradingview.com Welcome to the coffee shop everyone this is your host and baristo Eric, You know what we do around here so pull up a seat at the table and get ready for your caffeine overdose . I am happy to say that as of today we are at the final stage of development basically on The Heiken Ashi Algo Oscillator. It has proven to be a very powerful tool, very popular,, and very easy to use. up until now I have basically been showing you what all the parts do and what they mean because I figure you can't necessarily use a tool unless you know what it's settings are for. NOTE ABOUT SUBTITLES: I really believe that this new update will be a scalper's wet dream when it comes to being able to sit there and stare at your chart watching the oscillator and waiting for a break in the trend so that you can stay in your trade or you can exit your trade. That being said this being the final development that needed to be done with this oscillator, any videos that you see related to the algo from me are going to be strategy videos. So let's get into the final change that I have just made and uploaded to Tradingview. The final change as of right now is that the RSI Moving Average is now a colored line. It appears red when your average on your RSI is trending down (lower values) , and green when it is trending up (higher values). It also takes into consideration the momentum of the trend so it will not effectively change colors until the previous momentum is lost and volume has changed enough to the opposing side. For example you could have heiken Ashi candles traveling flat on your RSI but you're RSI moving average is still red. It will not change to green until the momentum starts moving the opposite way. So not only will you know that the previous momentum is lost but you will also know when it changes direction. As you know in the previous update to the RSI and the RSI moving average have a trend Cloud that appears behind it which switches from red to Green evenly. However there is a third black color that appears from time to time in that Trend cloud. This black color means a loss of momentum. Trend Cloud Meaning: Trend Cloud (Black) = No Momentum and Volume Trend Cloud (Green) = Bullish Momentum and Volume Trend Cloud (Red) = Bearish Momentum and Volume Price will run flat if: If the Trend cloud is Back, while the RSI Moving Average is green, you have lost momentum to the upside. If the Trend cloud is Black, while the RSI Moving Average is Red, you have lost momentum to the down side Trend is changing direction If: Trend cloud was one color but slowly blended to opposite color without changing into a back color. Now with the RSI, moving average being able to switch between colors you can tell when the new trend has started or the old trend has restarted because, just because there was a loss in momentum of the previous Trend doesn't mean it's just going to switch the other way and it doesn't mean that it's going to continue the same way however the moving average will tell you what it's doing along with the trend cloud. If you were previously in an uptrend and then you get a black cloud Showing behind your candles you know that you have a loss in momentum. If you look at your moving average, you will see that it will switch to the opposing color however if it then switches back to the original color then all you had was a pause in your Trend and is going to continue the same way it was going before. Iif the moving average has switched colors when the trend Cloud went to Black and the moving average stays that second color you know that your trend has changed Direction. The RSI Formula explained: Trading Like the Banks Do: Trading Trendlines: Using Support and Resistance Alerts to draw trendlines Range Trading with the Heiken Ashi Algo Setting Alerts on the Heiken Ashi Algo Oscillator
Education
by CoffeeshopCrypto
7
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
Setting Support and resistance levels using the CSC-HARSI 2022Watch the video to get FULL details and listen to some commentary. Always feel free to ask questions below. I love talking with you guys. Here is how we do it: Set your RSI and VWAP as its Moving average in the CSC-HARSI The lower the RSI setting, the more S/R levels you'll find. So don't set your RSI to a low setting on a large timeframe chart. For example: Dont set your RSI to 9 on a 1hr chart. Commonly I trade off of breaks of the 50 period EMA on my chart so i set my RSI to 50 and my chart to 1hr. 1. Setup your RSI to a 50 period length with source as CLOSE 2. RSI MA Settings: Set this to the VWAP (NOTE you can not change the RSI MA length if you set it for VWAP as it is now LOCKED to the RSI length) 3. Look for places on your CSC HARSI where the RSI and VWAP close at exactly the same level. 4. The close must results in a crossover and NOT a bounce. 5. If the Heiken Ashi close was a bullish candle, you mark a horizontal line on your chart ABOVE the candle 5a. If the Heiken Ashi close was a bearish candle, you mark a horizontal line on your chart BELOW the candle.
Education
by CoffeeshopCrypto
1
RSI Overbought & Oversold Strategy What Is the Relative Strength Index (RSI)? 1. The relative strength index (RSI) is a popular momentum oscillator introduced in 1978. 2. The RSI is displayed as an oscillator (a line graph) on a scale of zero to 100. 3. An asset is usually considered overbought when the RSI is above 70 and oversold when it is below 30. 4. The RSI line crossing below the overbought line or above the oversold line is often seen by traders as a signal to buy or sell. 5. The RSI works best in trading ranges rather than trending markets.
BINANCE:ETHUSD.PEducation
by yaser_rahmati
Golden Cross GOLDEN CROSS 1. A golden cross occurs when a faster-moving average crosses a slower moving average. 2. Specifically, you need the 50-period and 200-period simple moving averages. 3. Anything other than these two periods and it is not a true golden cross. 4. The golden cross is a powerful trade signal, but this does not mean you should buy every cross of the 50-period moving average and the 200. 5. You will need to bring a higher level of sophistication to the setup, to ensure you are buying into a trade with real opportunity. THE THREE STAGES OF A GOLDEN CROSS 1. As the downtrend in the stock market ends, the short-term 50-day moving average moves below the 200- day moving average. 2. In a crossover, when a stock recovers, the short-term moving average crosses over the long-term moving average. That’s where the term golden cross comes from, when the two average lines cross on a chart. 3. In a crossover, when a stock recovers, the short-term moving average crosses over the long-term moving average. That’s where the term golden cross comes from, when the two average lines cross on a chart. THE THREE STAGES OF A GOLDEN CROSSPROFIT POTENTIAL OF THE GOLDEN CROSS PATTERN A. DEATH CROSS 1. One option is to wait for a cross of the 50 back below the 200 as another selling opportunity. 2. The only issue with this approach is you are likely to give back a sizeable portion of your profits since moving averages are a lagging indicator. B. PRIOR SUPPORT 1. What you can also do is look for areas of resistance overhead which will act as selling opportunities for longs that have been holding the stock for a long period of time. 2. A caveat to this strategy is that the stock may consolidate and push higher. C. TRENDLINE BREAK 1. If the golden cross is real, the signal will likely generate a strong buying opportunity. 2. You can then use the first couple of reactionary lows to create an uptrend line. 3. You then hold the stock until this trendline is broken.
Education
by yaser_rahmati