Reblog: 6 Technical Indicator Signals Basics


Chart Courtesy of StockCharts.comChart Courtesy of StockCharts.com

Signals help traders filter out their opinions and focus on price action. These tools help capture trends in your own time frame.

  1. The 200 day SMA measures the long term trend. Price above long term bullish, prices below signal long term bearish.
  2. The 10 day EMA measures the short term trend. Price above short term bullish, prices below signal short term bearish.
  3. The MACD crossover can signal an intermediate swing trade.
  4. The Slow Stochastics crossovers can signal short term reversals in the trend.
  5. A declining ATR shows volatility decreasing and an ascending ATR shows volatility increasing. This is a signal to help calibrate position sizing.
  6. The RSI shows the risk/reward ratio increasing and decreasing. The 30 RSI favours the bulls risk/reward for entry and the 70 RSI favours the short sellers risk / reward ratio.

The magic of these trading indicators comes when you combine them to create your own trading methodology that fits your own risk tolerance levels and then trade your system with the right risk management and discipline.

The original article is posted by Steve Burns on newtraderu.com and is available here.


Reblog: 4 Simple Relative Strength Index (RSI) Trading Strategies


In this article, we will cover one of the most popular oscillators – the relative strength index (RSI).  You have probably read a number of general articles on the RSI; however, in this post I will present four trading strategies you can use when trading.

Before we dive into the strategies, let’s first ground ourselves on the RSI indicator and provide you with a few techniques not widely known.

Relative Strength Index Definition

The Relative Strength Index (RSI) is one of the most popular indicators in the market.

The RSI is a basic measure of how well a stock is performing against itself by comparing the strength of the up days versus the down days.  This number is computed and has a range between 0 and 100.  A reading above 70 is considered bullish, while a reading below 30 is an indication of bearishness.

Relative Strength Index Formula

The RSI was developed by J.Welles Wilder and detailed in his book New Concepts in Technical Trading Systems in June of 1978. For all you hardcore technicians, below is the relative strength index formula example.

The default setting for the RSI is 14 days, so you would calculate the relative strength index formula as follows:

Continue Reading


Reblog: 10 Price Action Trading Tips That Will Help You Become Better Traders


What is price action trading and why it does make you a better trader

Price action trading is a type of trading that allows traders to observe and study the current market. This, in turn, allows you to anticipate the market trend and make certain assumptions/decisions based on the current (and actual) price movements.

Price action trading is the purest type of trading that eliminates all noise.

It does not anticipate, it reads the market.

Price action is great!

Is price action trading better than other types of trading?

Hard to say.

It is really difficult to say if one type of trading is better than another. What matters is which type of trading fits your personality.

Another important element of trading is money management. What matters is even not that much the trading system, but the way you use it.

Profitable traders will agree with me.

Continue Reading