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Moving Averages

Education excerpt: Simple Moving AverageSimple Moving Average (SMA) The origin of inventing the Simple Moving Average (MA) is not clear. Although, some of the first documented cases of its use date as far back as the early 20th century. Implementation of moving averages in technical analysis is one of the most successful methods of identifying trends. Moving averages are simply constant period averages - usually of prices, that are calculated for each successive period interval. The result of calculation is then plotted on the chart as a smooth line that represents successive average prices. Thus, the calculation of the moving average dampens fluctuations of price of an asset, making it easier to spot an underlying trend. Though use of the moving average goes beyond identifying trends. Support, resistance and price extremes can be anticipated by correct interpretation of the moving average. Different lengths of moving average directly translate to the amount of data used in the calculation. Including more data in the calculation of the moving average makes each data per time interval relatively less important. Therefore, a large change in one particular data would not have as large an impact on the overall result of the calculation in comparison to if the moving average with a shorter period was employed. Hence, the longer moving average produces less false signals at the cost of revealing underlying trend sooner rather than later. Usually, the use of two moving averages with different period intervals is encouraged as opposed to use of a single moving average. This comes from the premise that when two moving averages with different period intervals are plotted on a chart, they tend to show two separate lines converging and diverging. Generally, when the moving average with a lower period interval crosses above the moving average with a higher period interval it is considered a bullish signal. On the other hand, when the moving average with a longer period interval crosses above the moving average with a lower period interval it is considered a bearish signal. These crossovers can serve as specific buy and sell signals in markets that are trending. However, moving average crossovers tend to produce many false signals in non-trending markets. Furthermore, these same crossovers can act as support or resistance levels. Calculation and formula The calculation of the moving average usually involves use of the close price. Normally, 10, 20, 50, 100 or 200 periods are used and the calculation is conducted by creating the arithmetic mean of a dataset. SMA = (A1 + A2 + An) : n A = average in period n n = number of time periods Illustration of weekly chart of DAI: Red line = 50-day SMA Green line = 20-day SMA Disclaimer: This is just excerpt from our full text. This content is not intended to encourage buying or selling of any particular securities. Furthermore, it should not serve as basis for taking any trade action by individual investor. Your own due dilligence is highly advised before entering trade.
DEducation
by Tradersweekly
3
+341% profit, only 8.26% drawdown over a year. The humble EMA ⭐The choppy market has us back with a strategy for those that want to limit the downside and beat holding on spot. Remember as a trader you need one solid strategy that makes more than loses. This often has traders overcomplicating things and fishing for complex strategies with novel indicators that ruin their discipline at the end. Yet this strategy proves that even the humble EMA can rack in impressive returns at +341%. The goal of the strategy: 1. Single digit maximum drawdown over the past year - yes this includes recent pullbacks which means beating the market over the past month 2. Easy to track so you have no excuses not to execute correctly and can potentially automate it 3. Beat holding on spot - so make more than 243.01% without leverage (you can include it depending on your risk tolerance, but the strategy has to work without it too). 4. No scalping - we're focusing on swing trading to limit transactional costs WILL POST EVERY POSITION BELOW - will also show how each position was closed: close rule or stop loss The strategy: There was a lot of experimentation with the length of these EMAs (used for their responsiveness to recent prices) and this is the optimal version to fulfil the goals above. Of course you an experiment on your own if you have different ones. On the 1 h chart: 1. Open a position when EMA (25) is crossing up EMA (50) 2. Close the position EMA (25) is crossing down EMA (70) 3. Stop Loss set at 2% (although you can run this strategy without it too and works quite well) All conditions are respected 100% of the time. The results: The strategy profited at +341.03% beating holding by 100%. What's even better is the maximum drawdown is only 8.26% which for a crypto strategy is exceptionally stable. The result was accomplished over 52 position out of which the strategy wins 21. However the average win is at 10.2%, while the average loss is only -1.79%. This is important to know when you execute the strategy to not be thrown off after a cluster of loses. Winning trades are held for almost 8 days, while losing trades are cut after only 1-2 days. This is also connected to the tight stop loss and if you tolerate risk you may try expanding that time. For our purposes that did not fit the goals of the strategy. Lastly, over the past month this strategy performed about 35% better than the market, which means you would be left with plenty of funds at the moment. We consider the set goals achieved. The positions (Open Price, Close Price, Stop Loss, profit, what closed the position): 31/05/2021 13:00 01/06/2021 09:00 20 hours OP 36,777 CP 36,041 SL 36,041 -2% Stop Loss 24/05/2021 18:00 25/05/2021 11:00 17 hours OP 37,668 CP 36,915 SL 36,915 -2% Stop Loss 07/05/2021 14:00 10/05/2021 20:00 3 days OP 56,997 CP 55,858 SL 55,858 -2% Stop Loss 05/05/2021 19:00 06/05/2021 19:00 1 day OP 57,302 CP 56,156 SL 56,156 -2% Stop Loss 30/04/2021 13:00 04/05/2021 05:00 4 days OP 54,656 CP 55,809 SL 53,563 +2.11% Close Rule 26/04/2021 06:00 29/04/2021 20:00 4 days OP 52,535 CP 52,860 SL 51,485 +0.618% Close Rule 08/04/2021 23:00 16/04/2021 10:00 7 days OP 57,916 CP 60,644 SL 56,758 +4.71% Close Rule 05/04/2021 19:00 06/04/2021 15:00 20 hours OP 58,876 CP 57,699 SL 57,699 -2% Stop Loss 26/03/2021 23:00 03/04/2021 22:00 8 days OP 54,383 CP 57,631 SL 53,295 +5.97% Close Rule 24/03/2021 18:00 24/03/2021 20:00 2 hours OP 56,126 CP 55,003 SL 55,003 -2% Stop Loss 17/03/2021 23:00 18/03/2021 21:00 22 hours OP 58,300 CP 57,134 SL 57,134 -2% Stop Loss 07/03/2021 02:00 15/03/2021 13:00 8 days OP 49,122 CP 56,440 SL 48,140 +14.9% Close Rule 01/03/2021 12:00 05/03/2021 00:00 4 days OP 47,722 CP 48,374 SL 46,768 +1.37% Close Rule 01/02/2021 20:00 22/02/2021 16:00 21 days OP 33,838 CP 53,237 SL 33,161 +57.3% Close Rule 01/02/2021 13:00 01/02/2021 17:00 4 hours OP 33,770 CP 33,461 SL 33,095 -0.916% Close Rule 28/01/2021 19:00 29/01/2021 08:00 13 hours 0.74633 BTC OP 32,634 CP 31,981 SL 31,981 -2% Stop Loss 25/01/2021 05:00 25/01/2021 22:00 17 hours OP 33,378 CP 32,710 SL 32,710 -2% Stop Loss 19/01/2021 01:00 20/01/2021 00:00 23 hours OP 36,677 CP 35,943 SL 35,943 -506.16 USDT -2% Stop Loss 13/01/2021 23:00 15/01/2021 16:00 2 days OP 37,204 CP 36,460 SL 36,460 -2% Stop Loss 05/01/2021 19:00 11/01/2021 00:00 5 days 0.68049 BTC OP 33,373 CP 38,150 SL 32,705 +14.3% Close Rule 24/12/2020 23:00 05/01/2021 08:00 11 days OP 23,708 CP 30,818 SL 23,234 +30% Close Rule 22/12/2020 22:00 23/12/2020 12:00 14 hours OP 23,435 CP 22,966 SL 22,966 -2% Stop Loss 12/12/2020 10:00 22/12/2020 01:00 10 days OP 18,433 CP 22,558 SL 18,065 +22.4% Close Rule 06/12/2020 01:00 06/12/2020 14:00 13 hours OP 19,269 CP 18,883 SL 18,883 -2% Stop Loss 28/11/2020 21:00 04/12/2020 23:00 6 days OP 17,673 CP 18,665 SL 17,320 +5.61% Close Rule 16/11/2020 08:00 26/11/2020 05:00 10 days OP 16,236 CP 17,772 SL 15,911 +9.46% Close Rule 03/11/2020 19:00 15/11/2020 20:00 12 days OP 13,741 CP 15,855 SL 13,466 +15.4% Close Rule 30/10/2020 16:00 02/11/2020 13:00 3 days OP 13,550 CP 13,279 SL 13,279 -2% Stop Loss 29/10/2020 18:00 30/10/2020 01:00 7 hours OP 13,584 CP 13,312 SL 13,312 -2% Stop Loss 18/10/2020 07:00 29/10/2020 09:00 11 days OP 11,450 CP 13,124 SL 11,221 +14.6% Close Rule 15/10/2020 20:00 16/10/2020 05:00 9 hours OP 11,521 CP 11,291 SL 11,291 -2% Stop Loss 08/10/2020 15:00 15/10/2020 04:00 7 days OP 10,912 CP 11,379 SL 10,694 +4.28% Close Rule 04/10/2020 15:00 07/10/2020 00:00 2 days OP 10,605 CP 10,600 SL 10,392 -0.0461% Close Rule 01/10/2020 03:00 01/10/2020 17:00 14 hours OP 10,817 CP 10,601 SL 10,601 -2% Stop Loss 24/09/2020 21:00 29/09/2020 18:00 5 days OP 10,627 CP 10,675 SL 10,414 +0.459% Close Rule 14/09/2020 12:00 20/09/2020 18:00 6 days OP 10,470 CP 10,895 SL 10,261 +4.06% Close Rule 09/09/2020 17:00 14/09/2020 01:00 4 days OP 10,240 CP 10,273 SL 10,035 +0.329% Close Rule 28/08/2020 16:00 02/09/2020 12:00 5 days OP 11,529 CP 11,299 SL 11,299 -2% Stop Loss 24/08/2020 05:00 25/08/2020 10:00 1 day OP 11,679 CP 11,599 SL 11,445 -0.681% Close Rule 14/08/2020 00:00 19/08/2020 06:00 5 days 0.87822 BTC OP 11,780 CP 11,711 SL 11,544 -0.581% Close Rule 10/08/2020 02:00 10/08/2020 11:00 9 hours OP 11,851 CP 11,614 SL 11,614 -2% Stop Loss 05/08/2020 11:00 09/08/2020 18:00 4 days OP 11,393 CP 11,527 SL 11,165 +1.17% Close Rule 19/07/2020 23:00 02/08/2020 21:00 14 days OP 9,185.8 CP 11,088 SL 9,002 +20.7% Close Rule 18/07/2020 17:00 19/07/2020 04:00 11 hours OP 9,164.6 CP 9,153.4 SL 8,981.3 -0.122% Close Rule 13/07/2020 00:00 14/07/2020 05:00 1 day OP 9,303.3 CP 9,190 SL 9,117.2 -1.22% Close Rule 12/07/2020 09:00 12/07/2020 14:00 5 hours OP 9,254.4 CP 9,210 SL 9,069.3 -0.479% Close Rule 06/07/2020 08:00 10/07/2020 01:00 4 days OP 9,200.1 CP 9,214 SL 9,016.1 +0.152% Close Rule 05/07/2020 04:00 05/07/2020 22:00 18 hours OP 9,129 CP 8,946.4 SL 8,946.4 -2% Stop Loss 29/06/2020 21:00 01/07/2020 07:00 1 day OP 9,185 CP 9,134.5 SL 9,001.3 -0.549% Close Rule 21/06/2020 08:00 24/06/2020 15:00 3 days OP 9,369.5 CP 9,295.2 SL 9,182.1 -0.793% Close Rule 16/06/2020 04:00 17/06/2020 15:00 1 day OP 9,562.5 CP 9,371.3 SL 9,371.3 -2% Stop Loss 08/06/2020 02:00 11/06/2020 16:00 4 days OP 9,742.6 CP 9,547.8 SL 9,547.8 -2% Stop Loss
Education
by CleoFinance
2
ETH vs. BTC - Who's the likely winner?DISCLAIMER: Trading Forex/Cryptocurrency involves risk and you may lose more money than you started with! These posts are not to be taken as financial advice and I offer NO guarantee that any of these ideas will result in profit. Also, trade ideas may change, depending on ever-changing market conditions. You are trading at your own risk and past performance is NOT indicative of future results. Please, know how much you are willing to risk on EVERY trade that you take and be SMART! Simplify your trading. Always measure your risk and be okay with being wrong ; ) Wait patiently and get the price that you want. Use the market. Don't let the market use you!
Education
by Simple_Renko
How to find potential strength ; )DISCLAIMER: Trading Forex/Cryptocurrency involves risk and you may lose more money than you started with! These posts are not to be taken as financial advice and I offer NO guarantee that any of these ideas will result in profit. Also, trade ideas may change, depending on ever-changing market conditions. You are trading at your own risk and past performance is NOT indicative of future results. Please, know how much you are willing to risk on EVERY trade that you take and be SMART! Simplify your trading. Always measure your risk and be okay with being wrong ; ) Wait patiently and get the price that you want. Use the market. Don't let the market use you!
Education
by Simple_Renko
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!
Education
by zsamochin
126
Spotting Wyckoff Distribution Early? Come see how!DISCLAIMER: Trading Forex/Cryptocurrency involves risk and you may lose more money than you started with! These posts are not to be taken as financial advice and I offer NO guarantee that any of these ideas will result in profit. Also, trade ideas may change, depending on ever-changing market conditions. You are trading at your own risk and past performance is NOT indicative of future results. Please, know how much you are willing to risk on EVERY trade that you take and be SMART! Simplify your trading. Always measure your risk and be okay with being wrong ; ) Wait patiently and get the price that you want. Use the market. Don't let the market use you!
Education
by Simple_Renko
Simple Renko Trading Explained - Pt. 1DISCLAIMER: Trading Forex/Cryptocurrency involves risk and you may lose more money than you started with! These posts are not to be taken as financial advice and I offer NO guarantee that any of these ideas will result in profit. Also, trade ideas may change, depending on ever-changing market conditions. You are trading at your own risk and past performance is NOT indicative of future results. Please, know how much you are willing to risk on EVERY trade that you take and be SMART! Simplify your trading. Always measure your risk and be okay with being wrong ; ) Wait patiently and get the price that you want. Use the market. Don't let the market use you!
Education
by Simple_Renko
Ethereum 05/13/21, Mean Reversion studyThis is a really simple (almost too simple) way of predicting the most likely number of candles before a revisit to a certain level, presuming no outside factors increase the required sample of study. I have just tried to predict very specific candle positions and times as well as the bottom, but this is only for the extreme near future (ie, the easiest to predict), past that it becomes harder unless you reduce your precision several factors. This is an ideal situation where there is a clear median that it has clung to, and the standard deviations are very obvious and apparent. Note: I am only counting candle bodies, not wicks. edit: I also made the highlight before the current hour while I was writing this it seems to agree with me so far.
Education
by rubyatmidnight
Hash Ribbons buy signal breakdown and verbose explanationThere are two decision branches the indicator may take to trigger a buy signal. I've copied the most relevant lines of code below and added comments. I added a visual representation for every single element that exists in those lines of code. The different indicators I add here have educational purposes only. The original script already does an excellent job presenting the most relevant information. The coloured spring (circles) leading to a buy signal has everything I want to know. Publishing this idea has the main objective of serving as a cheatsheet for myself if I forget all the underlying context later. first buy condition (blue circle and dotted line) price momentum just turned positive, and hash rate growth has recovered after price momentum turned negative and miners capitulated crossover(s10,s20) and // simple moving average checkmark barssince(recovered) < barssince(crossunder(s10,s20)) and // red range on the price chart barssince(recovered) < barssince(capitulation) // red range on the price chart or second buy condition (purple circle and dotted line) price momentum is currently positive, and shorter term hash rate growth is higher than the longer term hash rate growth s10>s20 and // green range on the price chart crossover(HR_short,HR_long) // hash rate growth checkmark
BITSTAMP:BTCUSDEducation
by givanse
1
Pennant Pattern On The H4 Chart (2021 April 28 ; 20:00)Trading the Pennant (Symmetrical Triangle). Wait for a close above/below the diagonal level. In this case, wait for a close below diagonal support resistance level. After the close, diagonal support turned resistance. Next, watch for a pin bar to form at the Resistance Line, EMA 10, EMA 20 in a Pull Back. Enter at closing price of the pin bar, break of the pin bar nose with a sell stop order, or 50% Fibonacci Retracement of the pin bar with a sell limit order. Stop Loss is place 5-10 pips above the pin bar tail. Or stop loss is placed above the break out candle. Take Profit is the first point of the trend line. In this case, the take profit level is 0.94906. Pin Bar is date 28 April 2021 time 20:00.
Education
by TradeLive-
How to Select the Most Suitable Trading Indicators? One of the most commonly asked question by novice traders is "what indicators should I use?" which is unsurprising given the vast array of available tools on a typical trading platform. Some traders prefer to crowd their charts with all sorts of indicators, whereas others prefer a more minimalistic approach. While there is no perfect solution, one thing should be abundantly clear- the indicators you select should help you make sense of the price action rather than distract you. When it comes to the number of indicators one should use, the more does not necessarily mean the better. In order to narrow down your options, you can use the following guidelines we have compiled for you so that you can diversify your options depending on the underlying market sentiment. Is the market trending or ranging? The first thing that needs to be determined is what the underlying sentiment is - is the market trending or range-trading. While a keen eye can catch the subtle difference between the two without the use of any indicators, the ADX (Average Directional Index) can be used to determine the strength of the trend. Whenever the ADX is threading above the 25-point benchmark, this underpins a robust trending environment. Conversely, a reading of the index below this threshold indicates undetermined (ranging) market sentiment. If the market is trending, focus on the underlying momentum Price trends are by definition probing either lower or higher, which is why you need to track their changing strength as they develop. This is crucial for the implementation of trend-continuation or trend-reversal strategies. Filling the chart with multiple moving averages with different periods does a perfect job of underlining the changing market bias over time. That is so because MAs can be used as floating supports and resistances, and the behaviour of the price action each time it probes a given MA highlights the changing nature of the trend. The inability of the price to break down below one or several MAs in an uptrend can be perceived as an indication of persisting bullish commitment in the market. Hence, traders can use trend-continuation trading strategies and place long orders while the price probes the MAs. The opposite is true for downtrends. The eventual probing and subsequent penetration of the price above (in uptrends) or below (in downtrends) MAs with higher periods signifies waning commitment in the market. The gradual narrowing down of the space between various MAs followed by an eventual breakout/down underpins the possibility for using trend-reversal strategies. Also, keep in mind that MAs with higher periods are usually found at the bottom of the string in uptrends and on top of the bundle in downtrends. If the market is ranging, bet on the Stochastic RSI In ranging markets, in contrast, there is little need for moving averages, as the price action is naturally contained within a horizontal area. Instead of focusing on the direction of the price action, in this case, it makes more sense to study the discrepancies in the underlying buying and selling pressures. The Stochastic RSI is among the best-fitted indicators to do this job, which is why it is most effective in strong ranging environments. It can be used to gauge the likely rebounds of the price action within the two extremes of the underlying price range. If the ADX has been threading below the 25-point benchmark for quite a while and the Stochastic RSI is getting into one of its two extremes (overbought and oversold), this can be perceived by traders as a potential indication of imminent reversals in the direction of the price action.
TVC:SILVEREducation
by Trendsharks
Moving Average/Support/Resistance ExampleHere's a great example on how you can use a moving average to watch for trend reversals and to trigger trades in case you don't like drawing a lot of lines on your chart. In this example, when the 50 Moving Average (MA) crossed the 200MA in May 2019, it signaled a bearish reversal (known as a bearish cross). Later, in November 2020, it crossed again signaling a bullish cross and an uptrend. If you had shorted the stock, you would've gotten around 60% gain. Now, if I was in this trade right now, it's near a recent high and just poked over a global (weekly chart) resistance line, so if it fails to stay on top of that, instead of turning into support for a continued uptrend, it may stay as a resistance level and begin a downtrend. Watch for consolidation at it's current level and be ready to change your strategy.
NASDAQ:ANGOEducation
by collintwols
A Quick Guide to Multi-Timeframe ScalingQuick Intro =========== Regardless of what type of trader we are, most of us will look at the same chart in different timeframes to help make the "case for a trade". The risk of doing so is that we need to understand the fundamental concept of Multi-Timeframe Scaling (let's call it MTF scaling) as we inspect the various timeframe charts of the same underlying, otherwise, we risk receiving confusing signals - that rather than helping a trade decision, will possibly hinders the decision, if not even triggering the wrong decision. This concept has possibly been published about here before - i though it won't harm to put together a quick primer / reminder if it helps some of our new fellow traders on TradingView - if this sounds interesting, please read on. What do I mean by Multi-Timeframe Scaling? ------------------------------------------------------- in my trading, and as i check if there's a good trade to make on, say TSLA- i would first look at the daily chart -- cause i'm a position trader. is there a trend forming? has there been a recent consolidation? is there a possible breakout soon ? ..etc i then "zoom-out" to a larger timeframe -- say the weekly chart. i need to see the prevailing sentiment and the "context" - this is important because even if it looks like a bottom is forming on the daily, if TSLA on the weekly shows a diminishing momentum, i would avoid making a long trade assume the larger (weekly) timeframe is favorable -- so i will then "zoom-in" to find an ideal entry - using a smaller timeframe chart - the 1hr or 15mins so what did we do here: ===================== Larger timeframe = Context and prevailing sentiment Medium timeframe = Trade Decision Shorter Timeframe = Trade Execution i will do the same for exits as well - i assume most traders have a similar "protocol" before they hit the trigger - but may use different "preferred set of timeframes" based on the type of trading -- day traders may use 15min for trading, with 1min for execution and 1 or 2Hrs for context -- swing traders may use 1hr for trading, with 10 mins for execution and 1 day for context and so on .... the problem for many traders, as they switch between the charts of various timeframes is, they will see conflicting signals .. the indicators/charts many of us use are usually not "sync'ed" - to demonstrate how this looks like, look at the chart on top - to demonstrate what happens when there's lack of indicator scaling across the timeframes, i used a 3-SMA basic system -- but the same concept applies for any indicators you use (RSI, MACD, ADX/DMI, Stochastic)....etc -- the list goes on :) -- so what's wrong here and how can it be fixed? ---------------------------------------------------------- There's nothing "really" wrong, it's just there's an element at play that we may not be aware of here - We need to get very familiar with that concept of "MTF scaling" when we switch between different TF charts - the concept is really simple, and the key is the "scale factor" the 1 day chart has 7 x 1hr bars (for stocks) -- so, for example, if i look at an SMA or EMA of length 9 on the daily chart, i need to look at the
NASDAQ:TSLAEducation
by RedKTrader
64
Popular Trading Indicators (Simply) ExplainedEvery full-time trader knows that rule number 1 in this business isn't to make money; rule number 1 is: don't lose money. Hence, any successful, long term trading strategy must inherently focus on managing risk. I know that lately the word risk carries next to no meaning, and that's because the more risk you take, the more you're rewarded, while those who manage their risk, and are potentilly risk averse in general, pay the price (in purchasing power terms). Having said that, in this context, trading with risk in mind is critical to following rule number 1, and it's essential to managing your risk exposure, and creating a sustainable, successful trading strategy. Moving averages (MA): Sifting through dozens of mathematical functions to help understand, and predict price action can be very challenging. But, having an understanding of why we use certain indicators is a great place to start. Let's begin by talking about MAs. The name is self-explanitory, of course, and it's not much more complicated than that. When we're looking at a MA, what we're seeing is an average of the price over a specified period of time. Now, you could say that using a 20 day simple MA is better than using a 21 day exponential MA (which places more emphasis on recent PA). But, this is a moot conversation, because we don't actually know what they mean until we explore what the MAs reveal for the timeframe being analyzed. By knowing and focusing on industry standard MAs, we can see what larger institutional desks might be seeing, and those MAs include the 20 day MA (20DMA), 50 day MA (50DMA), 100 day MA (100DMA), and the 200 day MA (200DMA). When we apply these MAs across multiple timeframes to derive a thesis on price action, it all starts to make sense, and you can see these industry benchmarks being respected on the longer time frames, clearly. However, when you look at price action post 2008, it's almost as if the intraday MAs are seemingly ignored completely. The HFT EFT flows are so heavy and they distort price so drastically, imo it's a losing battle trying to day trade based on intraday MAs. Relative Strength Index (RSI): The relative strength index (RSI) is a great momentum indicator used to gauge whether or not a financial instrument is overbought or oversold. It's analyzed as a line graph with a range of 0 to 1, the latter being the top of the range, with overbought conditions identified at a value of greater than 0.70, and oversold conditions being observed with a value of 0.30 or lower. These polar extremes often indicate that a reversal is about to occur. Fibonacci Retracement (Fib): The Fib is a very popular and is used to gauge the magnitude of a price retracement. For example, if a stock falls 25%, and then bounces hard on high demand, we could apply a Fib to benchmark the move against previous, similar moves. How the Fib works, is it uses a mathematical formula which adds the previous two number together to get the next. For example, starting at 0, the Fibonacci sequence is as follows: 0, 1, 1, 2, 3, 5, 8, 13, 21, etc.. Within the Fib indicator, there are 5 key levels to watch after you've applied the 0 and 1 ranges to your price move, which includes the 0.236, 0.382, 0.5 (not officially included but useful), the 0.618, and finally the 0.786. Typically, I divide the asset price by the money supply (M2), to find tradable Fib levels (a lot of price distortion currently as I mentioned). Volume: When the price of an underlying security changes, what we're witnessing is the demand and supply (discovery) process. While this does tell us a lot, volume tells us the power of the move, and hence also the weakness of a move. For example, when we're seeing price rise as volume falls, the power of the move is diminishing, therefore it tells us that the move/trend could be nearing exhaustion. Placed together with other indicators that may also be flashing "red" could help us make better, and more informed decisions. In forex, however, volume points to the number of price changes which occured within the specified time interval. This is a bit different than stock or bond price volume, but essentially speaks to the depth of the market as well as the participation rate, just as it's peer does.
AMEX:SPYEducation
by Hedge_Of_The_World
4
Alligator Indicator (How To Use It)Alligator is the indicator which is designed to show a trend absence, its formation and direction. Bill Williams saw metaphorical resemblance between alligator’s behavior and the allegory of the market’s one: sleeping gives way to price-hunting after which it’s again time to sleep. The longer the alligator sleeps the hungrier it becomes and logically, the stronger the market movement will be. The indicator includes 13-, 8- and 5-period smoothed moving averages each with its own displacement (8, 5 and 3 bars respectively) which are colored blue (jaws), white (teeth) and red (lips) thus representing the alligator’s jaw, teeth and lips. Alligator is sleeping when the three averages are intertwined progressing in a narrow range. Therefore, more distant averages indicate sooner price movement. To Buy: If the averages go on in an upward direction (red followed by white and blue) this shows an emerging uptrend interpreted as a signal to buy. To Sell: If the averages go on in an downward direction (red followed by white and blue) this shows an emerging downtrend interpreted as a signal to sell. See two examples on GBPUSD 15 minute chart: 1st) possible sell trade was during Tokyo session, with low liquidity and low volume, for 50 pips. Would or should you trade this? No or Yes. 2nd) possible buy trade was during London and NY session, with high liquidity and high volume, for 70 pips. Would or should you trade this? No or Yes. You can use just 15 minute naked charts with only this Alligator Indicator on it. If These alligator lines are in correct buy or sell order during either London session or London/New York overlap session- I would highly recommend you make this trade. Alligator Indicator can be used on all charts.
Education
by Anbat
5
Asynchronous BB Timeframe Indicator - BTCUSDTThis indicator allows you to draw Bollinger bands using higher timeframes. Note: The timer of your Bollinger Bands must be a multiple of the current chart of the chart. For example: If your chart is 4 h and you set the sync value to 3, the Bollinger Bands will be drawn with a 12H time frame. 3 * 4H = 12 If the sync is equal to 1, normal Bollinger bands are drawn and will be no different from the normal Bollinger band. Using this indicator may be appropriate for fractal perspectives. Indicator name: Asynchronous Bollinger bands - Async BB
Education
by Chikamoto