Video: Using IQC Zone in SwingTracker…
May 30, 2009
Here is another video lesson….
It’s about using the IQC Zone overlay in SwingTracker.
Remember, you can try SwingTracker out for a complimentary 30-day trial! For a complete rundown of all the features or to get started with your trial go here:
Good trading,
Shane Hurren
MrSwing Senior Swing Trader
support023@mrswing.com
+1 (360) 566-2281
A video: SwingTracker’s TrendCatcher…
May 30, 2009
Here is a quick video lesson…
It’s about using the TrendCatcher overlay in SwingTracker to help you identify trends…
Remember, you can try SwingTracker out for a complimentary 30-day trial! For a complete rundown of all the features or to get started with your trial go here:
Good trading,
Shane Hurren
MrSwing Senior Swing Trader
support023@mrswing.com
+1 (360) 566-2281
Intro Video SwingTracker
May 30, 2009
Here is a quick video introduction….
Remember, you can try SwingTracker out for a complimentary 30-day trial! For a complete rundown of all the features or to get started with your trial go here:
Good trading,
Shane Hurren
MrSwing Senior Swing Trader
support023@mrswing.com
+1 (360) 566-2281
Force Index
December 28, 2008
Definition:
The ForceIndex indicator relates price to volume by multiplying net change and volume.
Formula:
ForceIndex = Volume(today) * (Close(this period) - Close(last period))
ForceIndex is typically presented as two smoothed averages (slow and fast) to reduce the likelihood of false signals.
Interpretation:
ForceIndex is used by some investors as a running total of where money is flowing. Because this indicator multiplies price movement in a period by the volume of that period, the value of ForceIndex will change the most when net change is accompanied by higher relative volume. Investor can use this index to both (a) compare current price movements to past ones and (b) evaluate the current trend.
The periods used are a moving average of the ForceIndex values, which reduces choppiness. Generally, investors use periods which match the length of the trends in which they are studying. The longer-average will be the intermediate or longer-term trend and the shorter-average will be a shorter-term trend. Some conventional interpretations follow:
One interpretation is to look for a confirmation or divergence between ForceIndex and the price. When ForceIndex moves up with price increases or down with price decreases, it can indicate that the current trend is has momentum. When ForceIndex diverges from price, it can indicate that the trend may change.
Another interpretation is to receive signals based on a crossover of the two lines. When the slow line crosses above the slow line and they are both increasing, it can be considered a confirmation of an uptrend. Conversely, when the fast line crosses below the slow line and they are both decreasing, it can be seen as confirmation of a downtrend. When a crossover occurs when the lines are going in opposite directions, it can indicate a trend reversal.
Some traders seek to eliminate some false signals by using only the signals which correspond to the direction of the intermediate to long term trends.
Fisher Transform (FISH)
December 28, 2008
Definition:
Fisher Transform (FISH) is based on the article “Using The Fisher Transform” by John Ehlers that will be available in the November 2002 issue of Stocks and Commodities Magazine. FISH has sharp and distinct turning points that occur in a timely fashion.
Interpretation:
It is based on the assumption that prices do not have a Gaussian probability density function (PDF), but you can create a nearly Gaussian PDF for prices by normalizing price, or an indicator such as RSI, and applying the Fisher Transform. The resulting peak swings clearly identify price reversals.
Filtered Wave
December 28, 2008
Definition:
Filtered Wave automatically draws lines between the top and bottom of a price movement that is at least 10%. This percentage can be changed in SwingTracker by clicking “Utilities” >> “Parameters” and selecting “Filtered Wave” in the resulting pop-up window.
Interpretation:
The Filtered Wave does not have any predictive value in it of itself. However, it is useful in studying the degree of retracements during major price movements and can be used alongside other types of indicators (such as Elliot Wave analysis or Fibonacci Retracements).
Envelope - Envelopes
December 28, 2008
Definition:
The envelope study is a derivation of the moving average study. The parameters used to compute the study are:
• The period, the number of bars used to calculate the moving average, basis the close
• Percent, a percentage deviation from the moving average
Formula:
Top Band = * ((100+P)/100)
Bottom Band = MA * ((100-P)/100)
MA = Moving Average basis the close
P = percentage offset
Interpretation:
This indicator needs to be tuned to each individual market, beginning with a Moving Average that needs to be applied to smooth the volatility of the market. The percentage offset then needs to be ascertained so that the bands envelope the previous or recent trading activity. Half the average daily range or a little above is a good starting point, using a daily bar chart.
The theory is that when the market is stretched to an extreme price, relative to recent activity, it’s either trending or about to change direction. In general, the market spends most of the time not trending. It varies from market to market, but as a rule of thumb (basis a half hour chart) markets trend for only about 20% of the time. The rest of the time, about 80% of the time, is spent oscillating within a trading range.
If the market is trending, then it should be obvious or we can use another trend type indicator, like the ADX, to determine this state. If it\’s not trending then we can assume that as price approaches the top band it will attract sellers and as it approaches the bottom band it will be advertising to buyers. In simple terms we can say that there is a buying opportunity at the lower band and a selling opportunity at the higher band.
On the other hand, if it is determined that the market is trending or in a position to start a new trend, then price moving outside the envelope is actually a signal to go with the market.
Elder Ray
December 28, 2008
Definition:
The Elder Ray Indicator is a measure of bullish and bearish “power” and is a rather simple calculation of comparing the daily high and low to an exponential moving average.
Formula:
Bull Power = Daily High - n-period EMA
Bear Power = Daily Low - n-period EMA
Interpretation:
There are many possible interpretations of the Elder Ray Indicator since it is a simple way of comparing daily range to a smoothed average.
One common interpretation is to view it as bullish when (a) bear power is below zero but rising and (b) the previous bull power peak is higher than the previous peak.
Conversely, it can be considered bearish when (a) bull power is above zero but falling and (b) the previous bear power trough is lower than the previous trough.
DMI - Directional Moving Index
December 28, 2008
Definition:
The Directional Movement Index (DMI) is a trend-following indicator developed by J. Welles Wilder, Jr., designed to determine whether a security is in a trending or non-trending market. Since the market is in a strong trend only about 30% of the time and in sideways about 70% of the time, this indicator is used to capture the period when the market shows significant trending or directional behavior.
The calculation of the DMI is fairly complex, and consists of three lines:
- +DI: current positive directional index, the range of highs divided by the price range over the last day and previous close, smoothed over a given number of periods.
- -DI: current negative directional index, the range of lows divided by the price range over the last day and previous close, smoothed over a given number of periods.
- ADX: modified moving average of the difference of +DI and -DI divided by the sum of +DI and -DI, multiplied by 100.
Interpretation:
When the +DI rises above the -DI, it can be considered a signal for an uptrend. When the +DI crosses below the -DI, it can be considered a signal for a downtrend.
According to conventional interpretation, three criteria should be met for a signal to be considered valid in most circumstances.
- ADX should be rising
- ADX should be above 50
- Confirmation from another indicator is encouraged pointing towards strong trending or volatility characteristics.
A more strict interpretation of the Directional Moving Index calls for a fourth criterion to be met. For an uptrend to be valid, the price of the security must rise above the high of the day that the +DI crossed above the -DI. For a downtrend to be valid, the price of the security must dip below the low of the day that the +DI crossed under the -DI.
Detrended Price Oscillator
December 25, 2008
Definition:
The Detrended Price Oscillator attempts to isolate short-term trends by “filtering out” longer-term trends. It does so by comparing the closing price to a prior moving average.
The purpose of the indicator is to look at overbought or oversold conditions within a longer trend.
Formula:
The formula for a Detrended Price Oscillator is as follows:
Detrended Price Oscillator = [Closing Price – (Moving Average of (N / 2 – 1) days ago]
Interpretation:
The Detrended Price Oscillator has several uses and interpretations, primarily designed to take advantage of overbought and oversold conditions within part of a large trend:
One interpretation is to identify past oversold and overbought conditions in the price chart, and use that as a baseline for what is considered overbought and oversold.
For example, let’s say overbought conditions are at +1.5 and oversold conditions are at -1.5. When the indicator goes above 1.5 and then dips back below, it could be considered overbought and trending downwards as an intermediate trend within an overall larger trend. Conversely, when the indicator goes below -1.5 and then spikes above, it could be considered oversold and trending upwards as an intermediate trend within an overall larger trend.
A second interpretation is to look for divergences in DTO vs. the main price chart or against a longer moving average. If peaks or valleys in the DTO are higher or lower then they are in the main price chart or longer moving average, it could indicate an intermediate trend change. A higher valley or trough could indicate a bullish trend while a lower peak could indicate a bearish trend.
Finally, some traders simply use a crossover of 0 as indication of a trend change.
