Indicators * Buy and sell indicators * Chaikin Oscillator * Calculated as the difference between a 3 period exponential moving average of Accumulation/Distribution and a 10 period EMA of AD * Buy when the oscillator moves above the zero line * Sell when it moves below zero * If the security makes a new high or low that is not confirmed by the chaikin oscillator, a potential reversal is pending * Ease of Movement * Reduces each period’s Rice and Volume to a single value that represents the ease at which prices are moving upward or downward * Buy when EMV crosses above the zero line, indicating ease of upward price movement * Sell when EMV crosses below the zero line, Indication ease of downward price movement * Force Index * Combines price changes and Volume into a single value that attempts to represent the magnitude of the force driving a rally or decline * When the smoothed Force index crosses the zero line, it indicates a change in trend and can be used as a buy/sell signal * Linear regression forecast * Calculates a “line of best fit” at each date, then plots the price value of that line at the specified point in time * Similar in display and interpretation to a moving average * MACD * Moving Average Convergence/Divergence is a price oscillator based on the difference between two moving averages * Sell when the MACD move below the MACD Signal line * Buy when the MACD moves above the MACD Signal Line * Another approach * Sell when the MACH histogram makes a peak well above the zero line then begins to reverse * Buy when the MACD histogram makes a low well below the zero line, then begins to reverse * Moving Averages * Calculation of the security’s average price over a period of time * Go long when the security closes above its moving average * Go short when the security closes below its moving average * Parabolic SAR * A trend following trading system * Calculates a new stop-loss level each day * Point and Figure * Plots the rising and falling price trends of a security while filtering out minor reversals and completely ignoring the element of time * Stochastics * Compares the current close to the range of prices over a specified period of time * A %k reading of 0 indicates the current close is at the bottom of the recent trading range * A %k reading of 100 indicates the current close is the high of the recent trading range * Sell when stochastics reach overbought territory (greater than 80), then retrace back * Buy when stochastics reach oversold territory (less than 20), then retrace back * A more aggressive approach is to trade when the %k line crosses the %D line * Confirmation/Divergence Indicators * Accumulation/Distribution (Chaikin’s) * If the AD line is rising when the price is still moving lower indicates buying pressure preceding a potential price rally * If the AD line is declining when the price is still moving higher indicates selling pressure preceding a potential price correction * Bear Power * Low - Exponential moving Average of Closes * Normally negative * Rises when the bears become weaker * Falls when bears grow strong * Bull Power * High – Exponential Moving Average of Closes * Normally positive * Rises when bulls become stronger * Falls when the become weaker * Directional Movement * A complete Trading system * +DI, -DI. +DI represents the sum of adjusted increasing price movement over a period of time. -DI represents the sum of adjusted decreasing price movement over a period of time. +DI and -DI are normally plotted together in their own Pane. A buy signal is generated when +DI moves above -DI, a sell signal is given when +DI moves below -DI. * DX, ADX, ADXR. DX is a rating (0 - 100) of the absolute directional movement of a security's price over the specified time period. If a security moves up in price a number of days, then down in price, ending basically unchanged, the DX will give a low reading. If the security consistently moves up (or down) in price, the DX will be higher. DX can be volatile, so a smoothing average is applied, resulting in the ADX indicator. ADXR is a special averaging of ADX. * ADX and/or ADXR are normally plotted in a separate Pane. Low readings of ADX or ADXR indicate low directional movement, a consolidating or choppy market. High ADX or ADXR readings indicate high directional movement, a trending market. * Money Flow Index * An oscillator that attempts to quantify the strength of money flowing into and out of a security * Similar to that of Relative strength index * When the security’s price trends higher and the MFI trends lower, a top may form * When the security’s price trends lower and the MFI trends higher, a bottom may for * Another approach is to look for market tops or bottoms when the MFI reaches extreme values close to 0 or 100 then retraces * Negative Volume Index * Initially set to 100, then changes value only when volume is declining * On Balance Volume * Attempts to show the volume flow into or out of a security * Can be interpreted in much the same way as AD indicator * Positive Volume Index * Initially set to 100, then changes value only when volume is increasing * Price Volume Trend * Attempts to show the volume flow into or out of a security * Can be interpreted in much the same way as the AD indicator * TRIX * A price oscillator that displays that one period percentage change of a triple-smoothed exponential moving average of the security’s closes * The trend of a security has changed when TRIX moves across the zero line * Another approach is to plot TRIX with a 9 period moving average of TRIX * Buy when TRIX crosses above its moving average * Sell when TRIX moves below its moving average * Williams’ Accumulation/Distribution * Is a price momentum indicator that attempts to measure the “true” movement of prices during a trend * Distribution of the security (a potential top) is indicated when the AD plot makes a new local high, but the security does not * Accumulation of the security (a potential bottom) is indicated when the AD plot makes a new local low, but the security does not * Overbought/Oversold indicators * Commodity Channel Index * Relates the Typical Price of a security to the mean Typical Price over a period of time * Values beyond +/- 100 flag overbought/oversold condition * Go long at the +100 level, then cover during the retracement back down to +100 * Go Short at the -100 level, then cover during the retracement back up to -100 * Detrended Price Oscillator * An oscillator that attempts to eliminate the trend in prices, highlighting the overbought/oversold cycles in the price action * Relative Strength index * An oscillator that attempts to measure the internal strength by analysis of recent price changes * Overbought/oversold indicator * Williams’ %R * A price oscillator that relates the current close to the range of prices over a specified period * Gives overbought and over sold conditions * Volatility Indicators * Average True Range * Volatility measure that is calculated as an average of modified daily ranges * Increases when the range of price swings are increasing * Decreases when price variability slow * Often, volatility increases at market tops and decreases as a price correction end * Bollinger Bands * Defines the upper and lower boundaries of a security’s normal trading range * Measures volatility * During periods of price consolidation, Band width tightens * When a new price trend begins, the Bands widen * Potential tops and bottoms are highlighted when the security closes above the upper band or below the lower band * %B is an oscillator that measures the location of the close in relation to the trading range defined by the Bollinger Bands * Standard deviation * A statistical measure of volatility * Increases when the range of price swings are increasing * Decreases when the price variability slows * Often, volatility increases at market tops and decreases as a price correction ends * Volatility (Chaikin’s) * Measures price volatility as an expansion of the daily high – low range * Increases when the range of daily price swing are increasing * Decreases when price variability slows * Often, volatility increases at market tops and decreases as a price correction ends * Comparison indicators * Performance * Displays the price performance of the base security from a specified basis date in the past * Price overlay * Adds the price plot of another security to the current chart * Relative Performance * Compares the price performance of the base security to that of another security in you database * Increasing relative performance line indicates the base security is out performing the comparison security * Rate of Change * Compares the closing price of the security to the closing price a number of periods ago * As the security moves from a bearish trend to a bullish trend, the ROC will cross from negative to positive * As a bullish trend accelerates, the ROC will move higher * Relatively high ROC values, followed by a retracement can indicate exhaustion of the bull move * Spread * Represents the raw price difference between the base security and another security in your database * Increasing spread indicates the base security is outperforming the comparison security * General Market indicators * Advance Decline Line (General Market) * Compares the number of advancing issues to the number of declining issues on an exchange * Exchange Up-Down Volume (General Market) * Compares the volume of advancing issues to the volume of declining issues on an exchange * McClellan Oscillator (General Market) * Measures expanding or contracting market breadth based on the number of advancing and declining issues on an exchange * Net New Highs-Lows (General Market) * Compares the number of issues on an exchange setting a new 52 week high to the number of issues setting a 52 week low * Put/Call Ratio (general market) * Compares the volume of put and call options traded on the OEX * TRIN (arms index) (general market * Combines market breadth information with market volume information to produce a single value. * Other Indicators * Binary Wave * Used with trading systems * Bollinger Put Volume Indicator (General Market) * Compares current OEX Put Volume to its recent average * Data Lines * Simple line plots based on price fields in the quote file * Equity Line * Used with Trading Systems * Market Facilitation Index * Combines price action and volume to categorize each trading day into one of four types * See trading chaos for a complete description * Open Interest * A simple line plot of the open interest field values in the security’s quote file * Zig Zag * Filters out price moves that are less than a specified percentage or number of points * The Zig Zag indicator connects the major sequential highs and lows in the security’s price action * Overlaid onto a price plot and is used to highlight the major rallies and correction in the security’s price movement