Top Ten Ten Advanc Advanced ed Ind Indic icato ators rs with Thomas Long
Risk Disclaimer Lev eve eraged foreig ign n exchange and options trading carrie ies s a sig ign nificant le lev vel of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you shou sh ould ld car aref eful ully ly co cons nsiide derr you ourr in inv ves esttmen entt obj bje ect ctiv ive es, le lev vel of ex expe perrie ienc nce, e, and ri risk sk appetite. You should be aware of all the risks associated with foreign exchange and option trading, and seek advice from an independent financial advisor if you have any doubts. The contents provided in this seminar are subject to change at any an y ti time me wit itho hout ut no noti tice ce.. There is no guarantee that the systems, trading techniques, trading methods, indicators or other information presented at this seminar will result in profits or not result in losses. The content is provided for informational purposes only and is not inte in tend nded ed as a tr trad adin ing g re reco comm mmen enda dati tion on..
Technical indicators indicators are a tool designed to help you time your entry into a trade. But in order to use them this way, you first have to identify identi fy a trading opportunity opportuni ty..
We identify a buying opportunity as a pullback down to support when the market is in an uptrend.
We identify a selling opportunity as a rally up to resistance when the market is in a downtrend.
Donchian Channels (sometimes called Price Channels) Developed more than 50 years ago by Richard Donchian, who eventually become known as the father of modern commodities trading methods, these channels are formed by noting the highest high and the lowest low of the certain number of days on a chart. The Donchian channel is a useful indicator for seeing the volatility of a market price. If a price is stable the Donchian channel will be relatively narrow. If the price fluctuates a lot the Donchian channel will be wider. Its primary use, however, is for providing signals for long and short positions. If a security trades above its highest n day high, then a long is established. If it trades below its lowest n day low, then a short is established. But only in the direction of the trend.
Aroon
Developed by Tushar Chande in 1995, Aroon is an indicator system that can be used to determine whether a stock is trending or not and how strong the trend is. "Aroon" means "Dawn's Early Light" in Sanskrit and Chande chose that name for this indicator since it is designed to reveal the beginning of a new trend. The Aroon indicator system consists of two lines, 'Aroon (up)' and 'Aroon (down)'. It takes a single parameter which is the number of time periods to use in the calculation. Aroon (up) is the amount of time (on a percentage basis) that has elapsed between the start of the time period and the point at which the highest price during that time period occurred. If the currency pair closes at a new high for the given period, Aroon (up) will be +100. Aroon (down) is calculated in just the opposite manner, looking for new lows instead of new highs. When a new low is set, Aroon (down) is equal to +100.
McGinley Dynamic A little known technical indicator developed by John McGinley in 1990. The indicator attempts to solve a problem inherent in moving averages which use fixed time lengths (i.e. a 10 or 21 period moving average), a problem that causes those moving averages to be outrun in fast markets. McGinley sought to invent an indicator that would automatically be more responsive to the raw data than simple or exponential moving averages.
Linear Regression Indicator Plots the trend of a market instrument’s price over a specified length of time. However, unlike a moving average, the Linear Regression Indicator does not exhibit as much delay since it is fitting a line to data points rather than averaging them.
Bollinger Band Width An indicator derived from Bollinger Bands. In his book, Bollinger on Bollinger Bands, John Bollinger refers to Bollinger BandWidth as an indicators that can be derived from Bollinger Bands. The other indicator is %B. Non-normalized BandWidth measures the distance, or difference, between the upper band and the lower band. BandWidth decreases as Bollinger Bands narrow and increases as Bollinger Bands widen. Because Bollinger Bands are based on the standard deviation, falling Bandwidth reflects decreasing volatility and rising Bandwidth reflects increasing volatility.
Bollinger Band %B Derived from Bollinger Bands. In his book, Bollinger on Bollinger Bands, John Bollinger refers to %B as one of two indicators that can be derived from Bollinger Bands. The other indicator is Bollinger Band width. %B quantifies a security's price relative to the upper and lower Bollinger Band. There are six basic relationship levels: %B equals 1 when price is at the upper band %B equals 0 when price is at the lower band %B is above 1 when price is above the upper band %B is below 0 when price is below the lower band %B can be used to identify overbought and oversold situations.
Rate of Change The Rate of Change (ROC) indicator is a very simple yet effective momentum oscillator that measures the percent change in price from one period to the next. The ROC calculation compares the current price with the price n periods ago. The plot forms an oscillator that fluctuates above and below the zero line as the Rate of Change moves from positive to negative. The oscillator can be used as any other momentum oscillator by looking for higher lows, lower highs, positive and negative divergences, and crosses above and below zero for signals.
Parabolic SAR Developed by Welles Wilder, the Parabolic SAR sets trailing price stops for long or short positions. Also referred to as the stop-andreversal indicator (SAR stands for "stop and reversal"), Parabolic SAR is more popular for setting stops than for establishing direction or trend. Wilder recommended establishing the trend first, and then trading with Parabolic SAR in the direction of the trend. If the trend is up, buy when the indicator moves below the price. If the trend is down, sell when the indicator moves above the price.
StochRSI Developed by Tushard Chande and Stanley Kroll, StochRSI is an oscillator that measures the level of RSI relative to its range, over a set period of time. The indicator uses RSI as the foundation and applies to it the formula behind Stochastics. The result is an oscillator that fluctuates between 0 and 1. In their 1994 book, The New Technical Trader , Chande and Kroll explain that RSI sometimes trades between 80 and 20 for extended periods without reaching overbought and oversold levels. Traders looking to enter a market based on an overbought or oversold reading in RSI might find themselves continuously on the sidelines. To increase the sensitivity and provide a method for identifying overbought and oversold levels in RSI, Chande and Kroll developed StochRSI.
Fractal Recurring patterns that can predict reversals among larger, more chaotic price movements. These basic fractals are composed of five or more bars. The rules for identifying fractals are as follows: A bearish turning point occurs when there is a pattern with the highest high in the middle and two lower highs on each side. A bullish turning point occurs when there is a pattern with the lowest low in the middle and two higher lows on each side.
1.
Open daily chart with one year of trading.
2.
Add 200-day Simple Moving Average.
3.
Look for strongest trending markets.
4.
Use your favorite technical indicator to time your entry in the direction of the trend.
