Pathshala: Technical Indicators

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<span style="font-family: "arial" , "helvetica" , sans-serif;"><b>Definition of 'Technical Indicator'</b></span></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjxR3wP9rB0T4jXKddnQRlSljhn2M60PQTJdk2zoXCMNOJsmQXmB-IMOVeAZG3OdUfzU7Y1_MsKkM2CGW__GM1rvQhtpr7FqxcYv7Y4Xrsh5n4C-IdbjKF23QBFB2I0ueGah-Z58Sey8BA/s1600/indicators.png" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="226" data-original-width="322" height="139" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjxR3wP9rB0T4jXKddnQRlSljhn2M60PQTJdk2zoXCMNOJsmQXmB-IMOVeAZG3OdUfzU7Y1_MsKkM2CGW__GM1rvQhtpr7FqxcYv7Y4Xrsh5n4C-IdbjKF23QBFB2I0ueGah-Z58Sey8BA/s200/indicators.png" width="200" /></a><span style="font-family: "arial";">Any class of metrics whose value is derived from generic price activity in a stock or asset. Technical indicators look to predict the future price levels, or simply the general price direction, of a security by looking at past patterns. </span><br />
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<span style="font-family: "arial";">The price and market in trading are always changing. We can’t predict what will happen next. The price that seems stable could be down to the lowest point in an instant. Having a deep knowledge about chart patterns and technical indicators is essential in trading.These aspects could determine the success and failure. Keep an eye on the Chart indicators to avoid the big loss.<br />Technical indicators also play an important role in the analysis for take a trading decision. With simple mathematical tools, it becomes an important aspect to consider when trade.<br /><br />There are several indicators available on the screen. What is the best then? Well, the answer is none of them is the best. As stated earlier, the world of  trading is dynamic. It's always changed and unpredictable. Indeed, there are several types of the indicator and they have its own characteristic. For a particular chart, different indicators can give various significant. For example, an oscillator is the best partner for ranging markets.<br /><br />The best way is to combine all indicators to get a complete picture of the market. It might take time, but it provides a complete view of the current condition of the market. </span><br />
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<span style="font-family: Arial,Helvetica,sans-serif;">Some technical indicators are used to confirm price action (lagging 
indicators), others are used to predict price action while some others 
are used as an alert or warning of a possible break on price action.</span><br />
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<span style="font-family: Arial,Helvetica,sans-serif;">Lagging indicators</span></h5>
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</span><span style="font-family: Arial,Helvetica,sans-serif;"> These indicators follow the price action, in other words they 
confirm what the price just did. The signals that come out of this type 
of technical indicators usually happen after the change in price begins.
 These types of indicators are also called trend-following indicators 
and work best during trending markets, where they allow traders to catch
 most of the move. During trendless conditions (sideways or ranging 
market) these types of indicators give many false signals.</span><br />
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<span style="font-family: Arial,Helvetica,sans-serif;">Leading indicators</span></h5>
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</span><span style="font-family: Arial,Helvetica,sans-serif;"> These indicators try to predict future price movements. They give 
signals before the actual price movement begins. These kinds of 
indicators work best during consolidation periods or trendless markets. 
During trending conditions, only signals in direction of the existing 
trend are advised to be taken. During up-trending conditions, leading 
indicators help us identify oversold conditions (price has falling 
enough and it is ready to continue its trend). During downtrending 
conditions, they help us identify overbought conditions (price has 
rallied enough, and now it is ready to continue its trend).</span><br />
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</span><span style="font-family: Arial,Helvetica,sans-serif;">When using leading indicators it is also advisable to wait for the actual price movements before taking the indicator signal.</span><br />
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</span><span style="font-family: Arial,Helvetica,sans-serif;">Most important lagging indicators: <strong>Moving Averages (MA) and Moving Average Convergence-Divergence (MACD).*</strong></span><br />
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</span><span style="font-family: Arial,Helvetica,sans-serif;">Most important leading indicators: <strong>Relative Strength Index (RSI), Stochastics, Commodity Channel Index (CCI) and Momentum.*</strong></span><br />
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</span><span style="font-family: Arial,Helvetica,sans-serif;"><em>*Some of these indicators can be used both as a lagging indicator and as a leading indicator.</em></span><br />
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<span style="font-family: Arial,Helvetica,sans-serif;">Sensitivity vs. Consistency</span></h3>
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</span><span style="font-family: Arial,Helvetica,sans-serif;">Before going through all the indicators it is important to understand
 the relationship between these two concepts. Every indicator represents
 price movements over a chosen period. Each indicator gives you the 
option to decide on how many periods you want to go back over to do the 
calculation. If we shorten the period, we will get more and earlier 
signals, but at the same time, the percentage of false signals will also
 increase. If we increase the number of periods, false signals will 
decrease, but the signal will get us in a trade later, giving up some 
profits.</span><br />
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</span><span style="font-family: Arial,Helvetica,sans-serif;">It is up to the trader to select the approach that best suits his or her trading personality, trading style and objectives.</span><br />
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<span style="font-family: "arial";">That it know the chart analysis is an essential part of technical analysis. On the other hand, the essential part of chart analysis is the use of the indicator. </span><br />
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<span style="font-family: "arial";">Typically, the Technical Indicators are divided into several categories,<br />They are -  </span><br />
<ol>
<li><b><span style="font-family: "arial";">Trend Indicators - show trends. </span></b></li>
<li><b><span style="font-family: "arial";">Momentum Indicators - show trend strength/weakness. </span></b></li>
<li><b><span style="font-family: "arial";">Volatility Indicators - show magnitude of price fluctuations. </span></b></li>
<li><b><span style="font-family: "arial";">Volume indicators - show the level of trader's participation in the market. </span></b></li>
<li><span style="font-family: "arial";"><b>Cycle Indicators - show repeating patterns in the market.  </b></span></li>
</ol>
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<u><span style="font-family: "arial" , "helvetica" , sans-serif;"><b>No 1. Trend Indicators </b></span></u></h2>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEisMRG068FZywmVcR37kSKuWgWuABBXdwf48nyGOuYIepLg5nNCNPE7Nub_y49TYsT-RtsEZj6aEdrVtJXJ0O7-IIcuSosrWu4HSw_gIvEjoI93OzKLFwGofCbFZwx6HbGVjZ5fwDH3kcI/s1600/trend.png" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="249" data-original-width="362" height="219" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEisMRG068FZywmVcR37kSKuWgWuABBXdwf48nyGOuYIepLg5nNCNPE7Nub_y49TYsT-RtsEZj6aEdrVtJXJ0O7-IIcuSosrWu4HSw_gIvEjoI93OzKLFwGofCbFZwx6HbGVjZ5fwDH3kcI/s320/trend.png" width="320" /></a>Trend indicators in chart reflect three tendencies in price movements: </span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Up moves, Down moves and Sideways price moves.</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Trend indicators help defining the prevailing direction - trend - 
of the price moves by smoothing price data over a certain period of 
time.</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">In simple words, Trend indicators allow to visualize Trends in the market.</span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><u><b>Trend Indicators </b></u></span></div>
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<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Advance Decline Line (ADL)</span></b></li>
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<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Average Directional Index (ADX)</span></b></li>
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<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Average Directional Movement Index Rating (ADXR)</span></b></li>
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<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Commodity Selection Index (CSI)</span></b></li>
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<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Double Exponential Moving Average (DEMA)</span></b></li>
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<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Heiken-ashi candlesticks</span></b></li>
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<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Heiken-ashi ZoneTrade</span></b></li>
<b><span style="font-family: "arial" , "helvetica" , sans-serif;">
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<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">MACD</span></b></li>
<b><span style="font-family: "arial" , "helvetica" , sans-serif;">
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<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Moving Averages: EMA, SMA and WMA</span></b></li>
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<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Parabolic SAR</span></b></li>
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<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Percentage Price Oscillator (PPO)</span></b></li>
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<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Triple Exponential Moving Average (TEMA)</span></b></li>
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<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Triple Exponential Moving Average (TRIX)</span></b></li>
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<u><b><span style="font-family: "arial" , "helvetica" , sans-serif;">No. 2.  Momentum Indicators</span></b></u></h2>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEigvmU_n3FekJRMp1vY0FjwyrZem23quaQsPugT-cBjZMnXy7we9VNl5wWBFPe9wwRQ3vU-ntPPPVQ6_-M4bFZPPj1HK3CUj0ZF2m818XrHCHPzrxqcrSy1nHd7wHmsjRpQr3nFaExod1k/s1600/momemtum.png" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="251" data-original-width="358" height="224" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEigvmU_n3FekJRMp1vY0FjwyrZem23quaQsPugT-cBjZMnXy7we9VNl5wWBFPe9wwRQ3vU-ntPPPVQ6_-M4bFZPPj1HK3CUj0ZF2m818XrHCHPzrxqcrSy1nHd7wHmsjRpQr3nFaExod1k/s320/momemtum.png" width="320" /></a></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Momentum indicators in chart records the speed of prices moving 
over certain time period. At the same time Momentum indicators track 
strength and weakness of a trend as it progresses over a given period of
 time: the highest momentum is always registered at the beginning of a 
trend, the lowest - at its end point<span style="font-family: "arial" , "helvetica" , sans-serif;">.</span></span><br />
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<u><b>Momentum Indicators

</b></u></span><br />
<ul>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Accumulative Swing Index (ASI)</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Advance Decline Ratio (ADR)</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Aroon Indicator</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Aroon Oscillator</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Chande Momentum Oscillator</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Commodity Channel Index (CCI)</span></b> </li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Intraday Momentum Index</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Gravity</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Linear Regression Slope</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">MA Angle</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Mass Index</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Momentum</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Price Oscillator</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Random Walk Index</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Range Indicator</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Rate of Change (ROC)</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Relative Momentum Index</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Relative Strength Index (RSI)</span></b> </li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Smoothed Indexed Rate of Change (SIROC) </span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Stochastic</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Stochastic RSI</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Stochastic Momentum Index</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Swing Index</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Ultimate Oscillator</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Williams %R </span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Williams' Accumulation-Distribution</span></b></li>
</ul>
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<b><i><span style="font-family: "arial" , "helvetica" , sans-serif;">How to trade with Momentum Indicators
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;"><br /></span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;">With Momentum indicators traders look for controversy between chart prices and Indicator suggestions:</span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;">A. directional divergence between the price and momentum signals of a trend's developing weakness.</span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;">B. price spikes that occur during weak momentum, are the last warning signals of the trend change. </span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;">C. also trend change should be expected during sideways moving prices and controversially strong momentum.</span></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;">Momentum indicators, such as RSI and Stochastic, are favorite 
indicators for non-trending markets. Momentum indicators ideally gauge 
whether the market is overbought or oversold during its non-trending 
state, and highlight potential reversal points before those actually 
occur.</span></span><br />
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<h2>
<u><span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="font-family: "arial" , "helvetica" , sans-serif;">No. 3. </span>Volatility Indicators</span></u></h2>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgoPq1yvPRGDY-AhPd9V09Mk48nfPDoqusvYt3_WPTNPhnmYqI6Df-xK0_N-eeR6UTBBEG4A3QvQ7_HWqWqmaT6zsACVazbOO1KfVBO5PwJrVtH8SjETXWLVeiC5Ha-Dom5SY5BKnptpdk/s1600/volatylity.png" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="253" data-original-width="357" height="226" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgoPq1yvPRGDY-AhPd9V09Mk48nfPDoqusvYt3_WPTNPhnmYqI6Df-xK0_N-eeR6UTBBEG4A3QvQ7_HWqWqmaT6zsACVazbOO1KfVBO5PwJrVtH8SjETXWLVeiC5Ha-Dom5SY5BKnptpdk/s320/volatylity.png" width="320" /></a><span style="font-family: "arial" , "helvetica" , sans-serif;">Volatility indicators show the size and the magnitude of price fluctuations.<br />
In any market there are periods of high volatility (high intensity) and low volatility (low intensity).</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">These periods come in waves: low volatility is replaced by 
increasing volatility, while after a period of high volatility there 
comes a period of low volatility and so on.</span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Volatility indicators measure the intensity of price fluctuations, providing an insight into the market activity level.  </span></div>
<span style="font-family: "arial" , "helvetica" , sans-serif;"><br />
<u><b>Volatility Indicators:
</b></u>

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<ul>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Average True Range (ATR)</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Bollinger Bands (BB)</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Chandelier Exit</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Bollinger Bands Width</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Chaikin Volatility (CHV) </span></b></li>
</ul>
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</span><span style="font-family: "arial" , "helvetica" , sans-serif;">

<b><i> </i></b></span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;"><b><i>The methodology of using Volatility indicators</i>
</b></span><span style="font-family: "arial" , "helvetica" , sans-serif;"></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Low volatility suggest a very little interest in the price, but at 
the same time it reminds that the market is resting before a new large 
move. Low volatility periods are used to set up the breakout trades. For
 example, when the bands of the Bollinger bands indicator squeeze tight, traders anticipate an explosive breakout way outside the bands 
limit.</span></div>
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</span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;">A rule of thumb is: a change in volatility leads to a change in price.<br />
Another thing to remember about volatility is that while a low 
volatility can hold for an extended period of time, high volatility is 
not that durable and often disappears much sooner.</span></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhS3FNoxB9sVTgd61pfJHLhKa27mGoUExTyNkxi8x1Mc9_vJiC-DvnB8dP4in8OT4ZHAZPgAgYAKvRbD4KKb31_awlB2y1kxCKkJN32dpZAqWLPECaunB6onuvtsaly8oYdXTxuSTnchyY/s1600/volume.png" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="251" data-original-width="361" height="222" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhS3FNoxB9sVTgd61pfJHLhKa27mGoUExTyNkxi8x1Mc9_vJiC-DvnB8dP4in8OT4ZHAZPgAgYAKvRbD4KKb31_awlB2y1kxCKkJN32dpZAqWLPECaunB6onuvtsaly8oYdXTxuSTnchyY/s320/volume.png" width="320" /></a><br />
<h2>
<u><span style="font-family: "arial" , "helvetica" , sans-serif;">No. 3. Volume Indicators</span></u></h2>
<span style="font-family: "arial" , "helvetica" , sans-serif;">

</span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Volume indicators are used to determine investors' interest in the 
market. High volume, especially near important market levels, suggests a
 possible start of a new trend, while low volume suggests traders 
uncertainty and/or no interest in a particular market.</span></div>
<span style="font-family: "arial" , "helvetica" , sans-serif;"><br />
</span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;">In chart Volume data represents total number of quotes for the specified time period.</span></div>
<span style="font-family: "arial" , "helvetica" , sans-serif;"><br />
<u><b>Volume Indicators:
</b></u></span><span style="font-family: "arial" , "helvetica" , sans-serif;">
</span><br />
<ul>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Acceleration Bands</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Market Facilitation Index</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Volume</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Chaikin Money Flow (CMF)</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Accumulation Distribution </span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Volume Oscillator (PVO) </span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Demand Index </span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">On Balance Volume (OBV)</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Money Flow Index (MFI)</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">VWAP (Volume Weighted Average price)</span></b></li>
</ul>
<span style="font-family: "arial" , "helvetica" , sans-serif;">
</span><span style="font-family: "arial" , "helvetica" , sans-serif;">
<i><b>The methodology of using Volume indicators
</b></i></span><br />
<div>
<span style="font-family: "arial" , "helvetica" , sans-serif;"><br /></span></div>
<span style="font-family: "arial" , "helvetica" , sans-serif;">
</span>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">When Volume increases it indicates a growing interest in the 
market, therefore it may strengthen a  main trend or start a new trend;</span></div>
<span style="font-family: "arial" , "helvetica" , sans-serif;"><br />
</span><br />
<div>
<span style="font-family: "arial" , "helvetica" , sans-serif;">When Volume decreases it indicates that interest in the market is 
decreasing, which calls for either a trend reversal or temporary market 
consolidation;  </span></div>
<span style="font-family: "arial" , "helvetica" , sans-serif;"><br />
</span><br />
<div>
<span style="font-family: "arial" , "helvetica" , sans-serif;">Sudden and vigorous increase in Volume may signal for an upcoming 
reversal, while gradual decreasing in Volume may still be supported by 
rapid price moves.</span></div>
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<h2>
<u><span id="Label1"><span style="font-family: "arial" , "helvetica" , sans-serif;">No. 4. Cycle indicators
</span></span></u></h2>
<span id="Label1"><span style="font-family: "arial" , "helvetica" , sans-serif;">
</span></span>
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<span id="Label1"><span style="font-family: "arial" , "helvetica" , sans-serif;">A cycle in the market is determined by a series of repeating patterns.</span></span><br />
<span id="Label1"><span style="font-family: "arial" , "helvetica" , sans-serif;">
These patterns are, as a rule, dedicated to certain market events, such 
as seasons, simple day counts, event-to-event sequence, market theories 
and formulas and so on.   </span></span></div>
<span id="Label1">
</span><span id="Label1"><span style="font-family: "arial" , "helvetica" , sans-serif;">
<b> </b></span></span><br />
<span id="Label1"><u><span style="font-family: "arial" , "helvetica" , sans-serif;"><b>The list of Cycle indicators includes:
</b></span></u><span style="font-family: "arial" , "helvetica" , sans-serif;">
</span></span><br />
<br />
<ul><span id="Label1">
<li><span style="font-family: "arial" , "helvetica" , sans-serif;"><b>Detrended Price Oscillator (DPO)</b></span> </li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;"><b>Elliott waves</b></span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;"><b>Schaff Trend Cycle</b></span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;"><b>Wolfe waves</b></span></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Fibonacci Time Zones</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Cycle Lines</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Fourier Transform</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">MESA Sine Wave Indicator</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Pivot Points</span></b></li>
<li><b><span style="font-family: "arial" , "helvetica" , sans-serif;">Etc.  </span></b></li>
</span></ul>
<ul><span id="Label1">
</span></ul>
<span id="Label1">
</span></div>
<span style="font-family: "arial" , "helvetica" , sans-serif;"></span></div>
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<ul>
</ul>
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<h4 style="text-align: center;">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><u>Summary Of Indicator</u></span></h4>
<span style="font-family: "arial" , "helvetica" , sans-serif;">Using Technical Indicators To Develop Trading Strategies</span><br />
<span style="font-family: "arial" , "helvetica" , sans-serif;"><br />Choosing Indicators to Develop a Strategy What type of indicator a trader uses to develop a strategy depends on what type of strategy he or she intends on building. This relates to trading style and risk tolerance. A trader who seeks long-term moves with large profits might focus on a trend-following strategy, and, therefore, utilize a trend-following indicator such as a moving average. A trader interested in small moves with frequent small gains might be more interested in a strategy based on volatility. Again, different types of indicators may be used for confirmation. Figure 2 shows the four basic categories of technical indicators with examples of each.</span><br />
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<h3>
Summary: Common Chart Indicators</h3>
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<br />
<span style="font-family: "arial" , "helvetica" , sans-serif;">Everything you learn about trading is like a tool that is being added to your trader's toolbox. Your tools will give you a better chance of making good trading decisions when you use the right tool at the right time.</span></div>
<div>
<span style="font-family: "arial" , "helvetica" , sans-serif;"> </span></div>
<h4>
<span style="font-family: "arial" , "helvetica" , sans-serif;">Bollinger Bands.</span></h4>
<div>
<span style="font-family: "arial" , "helvetica" , sans-serif;"> </span></div>
<ul>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">Used to measure the market's volatility.</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">They act like mini support and resistance levels.</span></li>
</ul>
<div>
<span style="font-family: "arial" , "helvetica" , sans-serif;"> </span></div>
<h4>
<span style="font-family: "arial" , "helvetica" , sans-serif;">Bollinger Bounce</span></h4>
<div>
<span style="font-family: "arial" , "helvetica" , sans-serif;"> </span></div>
<ul>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">A strategy that relies on the notion that price tends to always return to the middle of the Bollinger bands.</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">You buy when the price hits the lower Bollinger band.</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">You sell when the price hits the upper Bollinger band.</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">Best used in ranging markets.</span></li>
</ul>
<div>
<span style="font-family: "arial" , "helvetica" , sans-serif;"> </span></div>
<h4>
<span style="font-family: "arial" , "helvetica" , sans-serif;">Bollinger Squeeze</span></h4>
<div>
<span style="font-family: "arial" , "helvetica" , sans-serif;"> </span></div>
<ul>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">A strategy that is used to catch breakouts early.</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">When the Bollinger bands "squeeze", it means that the market is very quiet, and a breakout is eminent. Once a breakout occurs, we enter a trade on whatever side the price makes its breakout.</span></li>
</ul>
<div>
<span style="font-family: "arial" , "helvetica" , sans-serif;"> </span></div>
<h4>
<span style="font-family: "arial" , "helvetica" , sans-serif;">MACD</span></h4>
<div>
<span style="font-family: "arial" , "helvetica" , sans-serif;"> </span></div>
<ul>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">Used to catch trends early and can also help us spot trend reversals.</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">It consists of 2 moving averages (1 fast, 1 slow) and vertical lines called a histogram, which measures the distance between the 2 moving averages.</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">Contrary to what many people think, the moving average lines are NOT moving averages of the price. They are moving averages of other moving averages.</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">MACD's downfall is its lag because it uses so many moving averages.</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">One way to use MACD is to wait for the fast line to "cross over" or "cross under" the slow line and enter the trade accordingly because it signals a new trend.</span></li>
</ul>
<div>
<span style="font-family: "arial" , "helvetica" , sans-serif;"> </span></div>
<h4>
<span style="font-family: "arial" , "helvetica" , sans-serif;">Parabolic SAR</span></h4>
<div>
<span style="font-family: "arial" , "helvetica" , sans-serif;"> </span></div>
<ul>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">This indicator is made to spot trend reversals, hence the name Parabolic Stop And Reversal (SAR).</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">This is the easiest indicator to interpret because it only gives bullish and bearish signals.</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">When the dots are above the candles, it is a sell signal.</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">When the dots are below the candles, it is a buy signal.</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">These are best used in trending markets that consist of long rallies and downturns.</span></li>
</ul>
<div>
<span style="font-family: "arial" , "helvetica" , sans-serif;"> </span></div>
<h4>
<span style="font-family: "arial" , "helvetica" , sans-serif;">Stochastic</span></h4>
<div>
<span style="font-family: "arial" , "helvetica" , sans-serif;"> </span></div>
<ul>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">Used to indicate overbought and oversold conditions.</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">When the moving average lines are above 80, it means that the market is overbought and we should look to sell.</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">When the moving average lines are below 20, it means that the market is oversold and we should look to buy.</span></li>
</ul>
<h4>
<span style="font-family: "arial" , "helvetica" , sans-serif;">Relative Strength Index (RSI)</span></h4>
</div>
<div style="margin-left: .5in; text-align: justify;">
<ul>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">Similar to the stochastic in that it indicates overbought and oversold conditions.</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">When RSI is above 70, it means that the market is overbought and we should look to sell.</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">When RSI is below 30, it means that the market is oversold and we should look to buy.</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">RSI can also be used to confirm trend formations. If you think a trend is forming, wait for RSI to go above or below 50 (depending on if you're looking at an uptrend or downtrend) before you enter a trade.</span></li>
</ul>
<div>
<span style="font-family: "arial" , "helvetica" , sans-serif;"> </span></div>
<h4>
<span style="font-family: "arial" , "helvetica" , sans-serif;">Average Directional Index (ADX)</span></h4>
<div>
<span style="font-family: "arial" , "helvetica" , sans-serif;"> </span></div>
<ul>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">The ADX measures how strong a trend is.</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">It fluctuates from 0 to 100, with readings below 20 indicating a weak trend and readings above 50 signaling a strong trend. </span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">ADX can be used as confirmation whether the pair could possibly continue in its current trend or not.</span></li>
<li><span style="font-family: "arial" , "helvetica" , sans-serif;">ADX can also be used to determine when one should close a trade early. For instance, when ADX starts to slide below 50, it indicates that the current trend is losing steam.</span></li>
</ul>
<div style="background-color: white; border: medium none; color: black; overflow: hidden; text-decoration: none;">
<span style="font-family: "arial" , "helvetica" , sans-serif;">Each indicator has its imperfections. This is why traders combine many different indicators to "screen" each other. As you progress through your trading career, you will learn which indicators you like the best and can combine them in a way that fits <b>your</b> trading style.</span></div>
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<b><span style="font-family: "arial";">Conclusion</span></b></div>
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<span style="font-family: "arial";">Indicators alone do not make trading signals. Each trader must define the exact method in which the indicators will be used to signal trading opportunities and to develop strategies. Indicators can certainly be used without being incorporated into a strategy; however, technical trading strategies usually include at least one type of indicator. Identifying an absolute set of rules, as with a strategy, allows traders to back test to determine the viability of a particular strategy. It also helps traders understand the mathematical expectancy of the rules, or how the strategy should perform in the future. This is critical to technical traders since it helps traders continually evaluate the performance of the strategy and can help determine if and when it is time to close a position.<span style="color: blue;"><span style="font-size: small;"> </span></span>Traders often talk about the Holy Grail - the one trading secret that will lead to instant profitability. Unfortunately, there is no perfect strategy that will guarantee success for each investor. Each trader has a unique style, temperament, risk tolerance and personality. As such, it is up to each trader to learn about the variety of technical analysis tools that are available, research how they perform according to their individual needs and develop strategies based on the results. </span></div>
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Definition of 'Technical Indicator' Any class of metrics whose value is derived from generic price activity in a stock or asse...