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Showing results for tags 'active trading'.
Found 290 results
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The traditionally important areas which are used to perform a trade price response are the support and resistance zones. If the price of the asset moves upwards to a resistance point and touches it repeatedly without breaking it to the upside, the trade price response adopted by the trader would be to short the asset at the resistance level. Likewise, if the asset’s downward move repeatedly bounces off a particular point, the trade price response would be to go long at that point.
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Trade signals are derived in several ways. For traders who trade the news, the deviation (if any) of the actual numbers released from the consensus (expected) numbers provide a trade signal that forms the basis of what direction the trader’s position will assume. In technical analysis, certain chart information obtained from candlesticks and technical indicators will point out signals that can be used to trade.
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By extension, this is a measure of how much of an asset is being bought (money going into an asset) or how much of the asset is being sold (money going out of the asset). By being able to determine periods of accumulation and distribution, the trader can use the TVI to determine when to buy and when to sell the asset. The TVI is created using price data on an intraday basis.
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Trend analysis aims to spot patterns or other information that could be used to predict a developing trend. In addition, trend analysis aims to find out how long a trend could possibly last and when a reversal is imminent. All this information is to help the trader trade with the trend and not against it.
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The principle behind trend trading is that the trend in the forex market is a function of the sentiment of the majority of traders in the market, and the net flow of orders from these traders in the direction of their sentiment will cause a demand push that will drive the currency pair in that direction. Trading against the trend will therefore most likely lead to losing trades, hence traders are advised to practice trend trading with this dictum: “the trend is your friend until it ends”.
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Trend lines can be used individually or as components of chart patterns. They are also used as indicators in technical analysis. Trend lines can be horizontal, ascending or descending.
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The trigger line is usually a moving average line and is used often with the MACD indicator. The position of the trigger line relative to the other two lines of the MACD indicator will indicate when to buy or sell an indicator. The crossover of the trigger line usually serves as the trade signal, with an upside crossover of the trigger line on the MACD lines indicating a buy signal and a downward cross indicating a sell signal.
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It is obtained by first dividing the advancing assets by the declining assets, and then dividing the result by the result of a division of the volume of advancing assets by the declining assets. TRIN = (advancing issues/declining issues) (up volume/down volume) The Arms Index is named after its inventor, Richard Arms. If the TRIN > 1, the market is bearish and if the TRIN <1, the market is bullish. A value of 1 indicates that the market is flat or in consolidation.
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The downtrending asset first makes a low, then reverses upwards to a particular point (the neckline area), then resumes a further downward move that bounces at the same area as the first low, reverses back up to the neckline and then drops once more to the same support as the previous two lows, before making a full reversal which breaks above the neckline resistance, providing the bullish reversal signal.
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Developed by Jack Hutson, the TRIX indicator is made up of 4 lines: - The 15-day EMA of the closing price which is triple smoothed - The 9-day EMA The most important trade signal for the TRIX is the crossover of the signal lines. A bullish signal occurs when the TRIX 15-EMA crosses above the 9-EMA (the signal line) and a sell signal occurs when the 15-EMA crosses below the 9-EMA.
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It works by calculating the EMA of the EMA to determine a double EMA (DEMA), and then take another EMA of the double EMA to derive the Triple EMA (TEMA). This serves to eliminate the lagging nature of the moving average and makes the indicator to suggest the trend changes much earlier so that the trader can pick the signals as they occur. The calculation of the TEMA is as follows: TEMA= (3xEMA)-(3xEMAofEMA)+(EMA of EMA of EMA) TEMA is a trend indicator which works best in long term trending markets.
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The asset (which is an uptrend) makes a high, then reverses downwards to a particular point (the neckline area), resumes a further move upwards that comes off the first resistance as the first high, reverses back down to the neckline and moves up once more to the same resistance as the two previous highs, before making a full reversal which breaks the neckline support, providing the bearish reversal signal.
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The TSI can be used to trade overbought/oversold conditions in the market, provide convergence/divergence signals and signal line crossovers. It also provides a centerline crossover signal which is the best possible signal that can be used.
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By creating the channel, the trader can identify an area of entering long, which occurs when the price of the asset is at the lower band (oversold). The trader can also identify a short entry area, which is at the region of the upper band of the turtle channel (overbought).
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High UI values indicate that it will take a longer time for the asset to recover to its initial highs and hence the asset is a high-risk investment, while a lower UI value indicates that the recovery time for an asset is shorter and hence that asset is a low-risk investment.
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A unique indicator is the opposite of a hybrid indicator, which combines two or more elements of analysis such as chart analysis and algorithms. A unique indicator combines either solely chart analysis or solely algorithmic calculations.
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For instance, Apple, RIM and Google can be classified as a basket of securities because these three companies manufacture smartphones, and are all listed on NASDAQ.
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This is an indication that the volume of trades on the bullish side was greater than the volume of trades on the bearish side, leading to net bullishness for the day. Up volumes are usually signs of an impending upside breakout.
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It is made up of the following candles: - long bullish candle (Day 1) - bearish candle which gaps above the Day 1 candle (Day 2) - bearish candle which engulfs the Day 2 candle and which closes above the Day 1 candle. The arrangement of the candlesticks is such that the Day 2 and Day 3 low/closing prices are progressively lower, and this is seen as a sign that whatever bullish sentiment depicted by the upside gap has waned, opening the door for the asset to move lower.
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It is made up of the following candles: - long bullish candle (Day 1) - another long bullish candle which gaps above the Day 1 candle (Day 2) - bearish candle which opens within the body of the Day 2 candle and closes in the gap between the Day 1 candle and the Day 2 candle. The Day 3 candle fails to close the gap, and this indicates that the prior uptrend is likely to continue.
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Put another way, a higher uptick volume indicates that the asset is beginning to show an upward momentum.
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Vertical line charting also uses the vertical line tool to draw vertical lines that match the filtering signals of indicators in the indicator windows below the charts to the trade signals on the candlesticks on the charts. This helps the trader to get concurrence when looking for timing of the signal on the chart to the signal on the indicator window.
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To do this, the VPT factors in the percentage increase or decrease in price of the asset in its calculations, as opposed to just adding or subtracting volume based on if the asset’s market price is higher than the closing price of the previous day. This information can then be used by traders to spot and trade divergences.
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The VWAP cross bears its name from the volume-weighted average price, which is a ratio of the value of the asset traded over a particular time frame to the volume of the asset traded in the same time frame.
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If a trader is expecting a downtrend to end soon, but the price of the asset is still some distance away from any support level or potential market bottom, we will see a pattern where traders use weak shorts; sell positions with small profit targets. The aim is to be able to profit from whatever is left of a downtrend without the risk of the trade getting caught out by a major bullish reversal.
