How to create a-trading edge know the strong and the weak currencies

How to create a-trading edge know the strong and the weak currenciesHow to Create a Trading Edge: Know the Strong and the Weak Currencies

In our live Trading Webinars we often refer to finding out which currencies are the strongest and which are the weakest. By making that determination we can pair the currencies so that we have a strong versus a weak or a weak versus a strong. By doing that we are creating a “trading edge” for ourselves. If we trade a currency pair in which both currencies are fairly equal in strength, we give up the edge because either currency can “take control” since they are of equal strength.

By matching up a strong with a weak, however, we can have a bit more confidence in knowing the direction of the likely move. Then, if we match the direction of that potential move with the direction of the trend on the Daily chart, we have a clear trading edge.

For example, currently the USDCHF pair is in a downtrend on the Daily chart. Based on a strong/weak analysis we see that the USD is weak and the CHF is strong. So selling that pair in the direction of the Daily trend is a higher probability trade.

Briefly, here is how I go about doing a strong/weak analysis…

I use a 4 hour chart with a 200 SMA on it. On a sheet of paper, a legal pad or an Excel spreadsheet, I list the currencies (not the pairs but the currencies themselves) in a vertical column. For example, EUR, USD, CHF, etc.

Now, lets say the pair in question on the 4 hour chart is the EURUSD. If it is trading above the 200 SMA that means that the EUR is stronger than the USD at that point in time. I make a note of that next to the EUR and the USD in the vertical column…EUR gets an up arrow and the USD gets a down arrow. Then I go to the next currency and go through the same process. (All in all I bring up about 25 pairs on the charts each day before the open of the New York session and it takes less than 15 minutes.)

When I am done with the above process, I tally all the “up arrows ” and “down arrows” for the EUR against the other currencies and then I can tell where the EUR ranks strength-wise relative to each of them. For example, if the EUR has 5 up arrows and 2 down arrows and the JPY has 3 up arrows and 4 down arrows, that means that the EUR, overall, is stronger than the JPY. (It doesnt get much more simple than that!) When I have all the currencies in which I am interested evaluated in this way, I then have an overview of how they all relate to each other based on strength/weakness.

Next, I match the strongest with the weakest and go to the charts and look for a technical reason, such as a break of support or resistance, to enter the trade in the direction of the trend. A pair that has a strong currency paired against a weak currency would be a candidate for a buy in a Daily uptrend. On the other hand, a weak paired against a strong would be a candidate for a sell in a Daily downtrend.

As far as the pairs that I personally look at, I run this analysis on all combinations of the following currencies: USD, EUR, GBP, JPY, AUD, NZD, CHF and CAD.

The process is very basic, straightforward and quite boring …b ut it works.

As a side benefit, while I am going through the process of checking the 4 hour chart on each pair, I really get a sense for what is going on in the market at the time. And that information serves me well as the trading day progresses.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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Intraday trading strategies(formulae)

Intraday trading strategies(formulae)Intraday trading strategies (formulae)

Intraday trading strategies (formulae)

DIFFERENT TRADING STRATEGIES :-

We can categorize or divide our strategies as per different time frames situations for better understanding.

1. MORNING 30-MINUTES STRATEGY.

2. TRADES AFTER MORNING TRADES.

3. TRADES DURING QUARTERLY RESULTS.

4. GAP OPENINGS OF MARKET.

* MORNING 30-MINUTES STRATEGY *

This strategy is based on understanding the moves of the BROKER. ( sentiments )

If you track the Close price you will wonder the Open price of the trade day is not always the same as that of the previous days Close price. It is because the major brokers (BIG TRADERS) according to the sentiments lay a trap in which small traders get trapped and run into losses. If we understand the brokers mind we can make profits 90 % times in normal market in the first 3 to 30 minutes of trading.( Remember you should close your positions in this time frame )

Take the following figures and trade plan with you on the basis of calculations given below. We will call it Brokers Strategy ( BS )

Difference between HIGH LOW of previous day i. e. D = ( H ? L )

Now BS = D / 3

BUY PRICE = ( Pr. Close ? BS )

SELL PRICE = ( Pr. Close + BS )

For understanding the BS one should understand the following??..

STRONG SHARE or STRONG CLOSE (close price is higher than previous close)

WEAK SHARE or WEAK CLOSE ( close price is lower than previous close )

Now on the basis of above calculations you are ready with the figures i. e. BUY PRICE, Pr. CLOSE SELL PRICE of STRONG SHARE WEAK SHARE separately.

Now on trade day if STRONG share opens anywhere between Pr. Close BUY PRICE you can BUY first keep for sell SELL PRICE as your target.

The Trap :- As the broker opens the share at a price lower than Pr. Close one gets the feeling as if the share has become weak and sells it, thus falling in the trap.

On trade day if WEAK share opens at or above SELL PRICE you can SELL first buy later BUY PRICE as your target.

The Trap :- As the broker opens the share at a higher price than the Pr. Close one gets the feeling that the share has become strong and buys it thus falling in the trap.

Note: For this strategy Preferably take shares with high volumes less volatility(not operator driven stocks). This strategy will not work in GAP OPENINGS. This strategy requires you to be very fast in taking decisions and accordingly positions. Furthermore One should compulsorily come out or close the position in the mentioned time frame. Life is not that easy and if you find that your position was wrong immediately square it ( close it)

REMEMBER TO CLOSE POSITION WITHIN THE TIME-FRAME MENTIONED

FEEDBACKS WELCOME

Currency strength meter indicator(free download)

Currency strength meter indicator(free download)Currency Strength Meter Indicator (Free download)

Have you ever wondered why you are buying the currency pair EUR/USD and you are stuck in the trade for over three hours without no significant? You get frustrated why there’s no movement in the pair and instead it’s ranging. Then you start to ponder whether you did your analysis well enough. After waiting endlessly for a big move to occur which hasn’t, you decide to check another currency pair for example GBP/CHF to see the activity going on there and to your greatest surprise you find out that it has moved over a hundred pips.

You start to wonder why your trade is just ranging and another pair is trending nice without hassle. Well one of the secret to making a lot of money in forex trading is:

-First it is to identify the currency that has the biggest chance to appreciate.

Second it is to identify the currency that has the biggest chance to depreciate.

Third is to match those two.

In doing this, you have to compare the strength and weakness of a particular currency amidst seven other currencies. This way you will know which currency/currencies is/are strong or weak in correlation with other currencies. After deriving the strong and weak currency/currencies, you pair them together and see if it blends on with your trade-set up.

Say for example you check the currency meter and you discover that the strongest and weakest pair on board is the GBP/USD respectively. If your trade set-up gives you a buy signal, then it’s a good one as the GBP is the strongest and USD is the weakest. On the other hand, if the meter is telling you that USD is the strongest and GBP is the weakest on board and your trade set-up gives you a sell signal, then it’s a good one.

Another useful way to use the currency strength meter is to wait for the release of an economic news report and then pair the currency in question associated with the news release with a strong or weak currency. It can also be used to trade at the open of a new trading session i. e. the London, New York, Sydney and Asian session

Please download the free currency meter software here and run it after download

Free forex currency strength meter

Free forex currency strength meterExamples Of Our Currency Strength Meter

Let's look at a couple of examples taken right now. This is a snapshot of the meter levels right at this moment. You will see the USD is very strong, GBP is reasonably strong, and Euro is weakest from the three. CHF, NZD and CAD are all very weak.

So let us check the current chart right now for the USD/CHF pair. You can see for the last 5 hours the strong upward trend of the USD (strong meter reading) against CHF (weak meter reading). Trading in favor of the USD would have been a good direction.

Let us now look at EUR/USD. Again we see a similar move down in the EUR (weak meter reading) versus the USD (strong meter reading). The move was not as strong, and EUR was not fully red with one bar, like the other example (CHF) above.

What about EUR/GBP? Well as you see below, the price was dropping for the 2nd half of the day against the weaker of the two pairs (EUR), but not in aggressive way. This is because the opposite pair (GBP) was not much stronger overall. The stronger moves come when two opposite ends of the scale are touched in strength.

Hopefully you find this tool useful and use it to your advantage.

Currency Strength Meter

Strength Meter is a Forex Indicator that displays an at-a-glance view of what’s going on in the market, right now.

It points out the strengths and weaknesses of all the major currencies, so that you can focus on the pairs with the most potentials for break out.

Let me take this opportunity to explain what Currency Strength Meter (CSM) is and how to take advantage of this amazing little tool, because once you start using it, you won’t take another trade without it!

Here’s a brief description of CSM: a standalone program that calculates over 30+ currency pairs in real time and displays an at-a-glance view of the strengths and weaknesses of all major currencies, namely the USD, EUR, GBP, CHF, AUD, JPY, and NZD.

The Strength readings vary from 0.0 to 9.0, with 0.0 being the weakest and 9.0 being the strongest

YELLOW as normal (2.1 - 5.0)

ORANGE as strong (5.1 - 7.0)

RED as critical (7.1 - 9.0)

-Very Good for:

*MA trading *Trendline Break * Suply Demand *Price Action *Pro Trading *Divergence *Enter and exit the Markets

Currency Strength Chart. FX4Caster Software

Read Currency Strength Chart. FX4Caster Software Review

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Forex Currency Strength Meter Chart. The 244 FX4Caster. With the FX4Caster software. You just look at the currency strength chart and follow the lines.

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This Windows software program is completely different from freebie currency

Forex Currency Strength Meter Chart. The 244 FX4Caster

Jun 26, 2015. program.19.a. lia. vhostall - canadianto, forex trading FX4Caster currency

strength charting system.

Currency Strength Chart. FX4Caster Software

The FX4Caster Currency Strength Charting Software. This FX Laptop or Desktop Software works on all versions of Windows. Customize the colors or change the timing to.

Forex Currency Strength Meter Chart. The 244 FX4Caster | Forex Scalping.

This software was subject to rigorous testing. I put it through unique tests that only a trader and developer could. What this means is that once you’ve

Put the odds on your side

Put the odds on your sideMarket Commentary

The strong bull run that took place throughout October and into early November is over. The break of support at 2070 was negative for $SPX. It could trade down to the 2000-2020 area in the short term.

Equity-only put-call ratios have remained on buy signals, even as $SPX has begun to falter. This perhaps indicates that the current decline is just a minor correction, and not something of a more intermediate-term nature.

Market breadth has been weak, which is not surprising since breadth has been a laggard for 15 months. Breadth oscillators are now on sell signals, but are already in oversold territory.

Market Commentary

The strong bull run that took place throughout October and into early November is over. The break of support at 2070 was negative for $SPX. It could trade down to the 2000-2020 area in the short term.

Equity-only put-call ratios have remained on buy signals, even as $SPX has begun to falter. This perhaps indicates that the current decline is just a minor correction, and not something of a more intermediate-term nature.

Market breadth has been weak, which is not surprising since breadth has been a laggard for 15 months. Breadth oscillators are now on sell signals, but are already in oversold territory.

How to find the-best-currency pair to trade

How to find the-best-currency pair to tradeHow to Find the Best Currency Pair to Trade

Talking Points:

Whether traders are speculating in trends. ranges. or breakouts currency pair selection can bring significant value. While the major pairings can offer considerable volatility, they may not be the best markets for traders to voice their opinions We walk through two ways that traders can perform Strong-Weak Analysis: Manual, and Automated through the StrongWeak App

Options are abundant in the currency market…

While a few major pairings dominate the volume from many traders in the currency market, the value of finding the best possible pairing to execute your strategy cannot be understated. While the major currency pairs can offer significant volatility and fast movements, they may not be the best pairs to voice a traders opinion with. If youre not familiar with the ‘major currency pairs, they are outlined below:

The Major Currency Pairs:

Created with Marketscope/Trading Station II

These are the most popular currency pairs that are traded by forex traders, and if youd like to learn more on the topic, Walker England penned this article entitled ‘ Understanding the Forex Majors .

But are these the best pairings to focus on? Lets walk through an example together.

Lets say that a trader was expecting strength in the British Pound, so they decided to buy GBPUSD. And lets say that good news comes out for The United Kingdom, which should equate to British Pound strength; only the US Dollar saw even more strength than the Sterling, and instead of moving higher as you had expected, the pair moves lower.

So in essence: You were right but you still LOST in the trade because the Dollar got stronger than the British Pound.

When traders force themselves to only trade the major currency pairs, its similar to ‘trying to fit a square peg into a round hole.

Lets take the above scenario from another perspective:

Same as above, you expect the British Pound to increase in value, so you want to buy Sterling. But instead of just blindly buying GBPUSD you search for the most optimal pair to do it with. So, after some perusal, you find that the Canadian Dollar has been extremely weak (more so than the US Dollar); and you decide that you want to marry up what you think is a strong GBP with a weak CAD.

And lets consider that this time, you were wrong… and the British Pound didnt see strength. Well, as long as the CAD remained even weaker than British Pounds you can still win.

So, by focusing on the most optimal pairing, the trader stands the chance of being wrong and still winning in the trade.

Because every currency pair includes two economies being traded against each other, traders are best served best by analyzing both economies in an effort to match a strong currency with a weak one. Traders want to look to eliminate the instances of being right, but still losing; while increasing the chance of being wrong and still winning.

How to Separate the Strong from the Weak

As you can imagine, pair selection is a key tool of the FX trader; and as such weve tried to provide a litany of resources to assist traders with the analysis.

Strong-Weak analysis is a process with which traders can look at, and accordingly grade a single currencys strength and/or weakness against each of the other individual currencies. This is the process that the trader in the above scenario that would lead the trader to look at buying GBP against CAD as opposed to the US Dollar, and this is how traders can begin to focus on the optimal pairings for their goals.

There are two ways to do this analysis. The manual, long-form method for doing this analysis was outlined in the article entitled How to Separate the Strong from the Weak. With a charting package and just a little bit of math the trader can build a table such as below:

Strong-Weak Analysis can be performed manually with a spreadsheet and charting package

A more simplistic way of doing this analysis is with a recently launched application from FXCMApps; which will monitor and grade currency strength and/or weakness based on four of the most popular time frames used by traders.

We walk through the application, as well as popular usages of the application, in this video embedded into the brainshark medium. After clicking on the link, youll be asked to input information into the ‘Guestbook, after which youll be met with a 12-minute video that further explains the app.

The StrongWeak App is available from FXCMApps for $99, but is currently available for free under this promotion.

The StrongWeak App will automatically grade each of the seven currencys strength or weakness over four of the most popular time frames. It will automatically display this data so that traders can quickly glance at the application to find which currencies may be most amenable for their goals, as shown below:

The StrongWeak App automatically grades strength and weakness based on Four time frames

How to Best Employ Strong-Weak Analysis in your trading

In the article Trading the Strong and the Weak. we covered how this form of analysis might be used by scalpers, swing traders, or longer-term traders. We took this a step further by focusing on how scalpers can integrate this analysis in the article Strong-Weak for Scalpers. In these articles, we include multiple ways of using this analysis; ranging from diagnosing trends to triggering into positions.

Traders can look to incorporate Strong-Weak Analysis into their trading plans. so that they can properly focus their approach in the most amenable environments available.

For instance, if a trader is utilizing a trend-based strategy. they want to focus on the pairs with the greatest deviation between strength and weakness (in which the pair may continue trending higher).

-- Written by James Stanley

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Would you like to enhance your FX Education? DailyFX has recently launched DailyFX University ; which is completely free to any and all traders!

Weve recently begun to record a series of Forex Videos on a variety of topics. Wed greatly appreciate any feedback or input you might be able to offer on these Forex videos:

Forex swing trading strategy#7(adx swing trading strategy)

Forex swing trading strategy#7(adx swing trading strategy)Forex Swing Trading Strategy #7:(ADX Swing Trading Strategy)

Posted by Mangi Madang 1171 days ago

If you don’t know what the ADX indicator is, here is a brief lesson:

This indicator stands for Average Directional Index

The ADX indicator measures the strength of a trend and can be useful to determine if a trend is strong or weak.

ADX will not tell you if the trend is up or down-it just tells you the strength of the current trend, whether it be uptrend or downtrend.

High readings indicate a strong trend and low readings indicate a weak trend.

When this indicator is showing a low reading then a trading range is likely to develop.

Avoid trading currency pairs with low readings! You want to be trading pairs that have high readings.

On some charting packages there are two other lines on the chart, +DI and - DI (the DI part stands for Directional Indicator). Ignore these lines. Trying to trade according to these two lines is your surest way to lose money-and its even more confusion.

The only thing that we are concerned with is the ADX indicator itself.

Here is a chart to give you more clarity:

In the chart above, the ADX indicator is the blue line. The other lines are the +DI (dotted green) and - DI (dotted white), you should ignore these.

The area in the brown rectangle box shows how this indicator identifies trading ranges and times when the market is not trending.

The ADX is showing a low reading and notice that the currency pair is trending sideways.

Now look at what happens when the indicator gets into higher territory, generally above 25. A strong trend develops! If you are looking to trade the ADX indicator, then trade when the ADX indicator is above 25.

HOW TO USE THE ADX INDICATOR SCALE

To setup the ADX scale, follow

the instructions shown on the chart on the right.

You will have a box pop up and then you can add ADX scale values like 25 as shown on the previous chart above.

If ADX is between 0 and 25 then the currency pair in a trading range. It is likely just chopping around sideways. Avoid Trading these.

Once ADX gets above 25 then you will begin to see the beginning of a trend. Big moves (up or down) tend to happen when ADX is right around this number.

When the ADX indicator gets above 30 then you are staring at a currency pair that is in a strong trend! You should be looking to trade these pairs when this happens.

Note: You won’t see very many currency pairs with the ADX above 50. Once it gets that high, you start to see trends coming to an end and trading ranges developing again.

HOW TO TRADE THE ADX

What forex trading strategies can you use with the ADX Indicator? In this website, here are a few I believe that you can use with the ADX indicator. Play around with the ADX with these forex trading strategies and see how it goes with you:

Trading strategy using adx

Trading strategy using adxADX: How to Trade Trends Using the ADX

In our last lesson we went over Bollinger Bands. an indicator which helps traders gauge the volatility in the market as well as how high or low current prices are relative to historical prices. In this lesson we are going to learn about the Average directional Index (ADX), an indicator which helps traders determine when the market is trending, how strong or weak a trend is, and when a trend may be about to start or reverse.

Example of the Average Directional Index (ADX)

I am not going to go into the formulas for the Indicator here however you do need to know that:

The +DI Line is representative of how strong or weak the uptrend in the market is.

The DI line is representative of how strong or weak the downtrend in the market is.

As the ADX line is comprised of both the +DI Line and the DI Line, it does not indicate whether the trend is up or down, but simply the strength of the overall trend in the market.

If you would like a deeper explanation of the computation of the indicator you can find it here: ADX Indicator

As the ADX Line is Non Directional, it does not tell you whether the market is in an uptrend or a downtrend (you must look to price or the +DI/-DI Lines for this) but simply how strong or weak the trend in the financial instrument you are analyzing is. When the ADX line is above 40 and rising this is indicative of a strong trend, and when the ADX line is below 20 and falling this is indicative of a ranging market.

So one of the first ways traders will use the ADX in their trading is as a confirmation of whether or not a financial instrument is trending, and to avoid choppy periods in the market where many find it harder to make money. In addition to a situation where the ADX line trending below 20, the developer of the indicator recommends not trading a trend based strategy when the ADX line is below both the +DI Line and the DI Line.

The final example that I am going to cover on how traders use the ADX is to position to trade long when the +DI crosses above the DI (as this is a sign that the buyers are winning out over the sellers) and to position to trade short when the +DI line crosses below the DI (as this is a sign that the sellers are winning over the buyers). As with the other crossover strategies that we have covered used alone, the DI crossover is prone to many false signals.

That completes our lesson for today. You should now have a good understanding of the ADX and several different ways that traders use this in their trading. In tomorrows lesson we are going to look at a new indicator which is called The Parabolic SAR. which many traders use to set stops when trading trends in the market.

As always if you have any questions or comments please leave them in the comments section below so we can all learn to trade together, and good luck with your trading!

ADX Quick Summary

Trading with ADX indicator involves the following signals:

ADX staying below 20 level — there is no trend or the trend is weak.

ADX moving above 20 level — trend is strong.

ADX passing 40 level — trend is extreme.

ADX value rising — trend is going stronger, falling — trend is weakening.

+DI stays on top of - DI — uptrend is in place.

-DI stays on top of +DI — downtrend is in place.

Two DI cross — trend is changing.

Average Directional Index (ADX)

The Average Directional Index (ADX) depicts a presence or absence of a trend. ADX advices on the strength of the dominant forces that move market prices here and now.

In other words, ADX advices on trend tendencies: whether the trend is going to continue and strengthen or it is about to lose its positions.

The author of Average Directional Index J. Welles Wilder considers his ADX indicator as a primary achievement; and only because signals given by ADX are not an easy to take a grasp of from the first look, many Forex traders avoid using ADX in favor of more visually comprehensive indicators.

How to interpret ADX

ADX indicator has 2 lines: ADX itself (white), +DI (green) and - DI (red).

Traders then need to draw a horizontal line at the level of 20.

All readings of ADX which are below 20 suggest a weak and unclear trend, while readings above 20 indicate that a trend has picked up.

That is, basically, the simplest explanation of the purpose of ADX. ADX allows Forex traders to determine whether the trend is strong or weak and thus choose and appropriate strategy to trade with: a trend following strategy or a strategy fit to consolidation market periods with no significant price changes.

There is also additional line to be added to ADX indicator window - at 40 level.

How to trade with ADX

Trading with ADX looks as follows:

If ADX is traded below 20 - there is no trend or the trend is weak, thus a non-trend-following strategies should be used, otherwise losses may occur as a result of false signals and whip-saws taking place. An example of non-trend-following method is channel trading.

If ADX is traded above 20 but below 40, it is time to apply trend following methods. An example would be: Forex trading Moving averages or or trading with Parabolic SAR indicator.

When ADX reaches 40 level, it suggests an overbought/oversold (depending on the trend) situation on the market and it is time to protect some profits of at least move Stop loss order to a break even.

When ADX passes 40 level, it is a good time to begin collecting profits gradually scaling out of the trades on rallies and sell-offs and protecting remaining positions with trailing stops.

ADX -/+ DI lines are used for spotting entry signals. All -/+ DI crossovers are disregarded while ADX remains below 20. Once ADX peaks above 20 a buy signal occur when +DI (green) crosses upwards and above - DI (red). A sell signal will be the opposite: +DI would cross - DI downwards.

If after a newly created signal another opposite crossover happens within a short period of time, the original signal should be disregarded and position protected soon or closed.

ADX indicator is never traded alone, but rather in combination with other indicators and tools. ADX indicator most of the time gives much later signals comparing to faster reacting moving averages crossover or Stochastic, for example, however, reliability of ADX indicator is much higher than for other indicators in traders' toolkit, which makes it a valuable tool for many Forex traders.

And just one more idea to test out:

When ADX rises above 20 for the first time and then goes flat for some time, there is believed to be a new trend being born and the reason for ADX being currently flat is because market reacts to this new trend formation by making first initial correction. During this correction it is a good time to initiate new orders.

Weekly forex forecast-january26,2014

Weekly forex forecast-january26,2014Weekly Forex Forecast January 26, 2014

Traders, there can be little doubt that last weeks price action serves as a reminder that markets do not go straight up. With recent readings showing most retail investors as bullish as they have been in a few years, it was only a matter of time before some cracks started to appear.

However, from an equity standpoint I am not turning outright bearish, but have adopted a bearish count and will await further confirmation. Just for everyones reference, here is my longer-term SP 500 count.

Oddly enough though, the sudden push lower in the SPs and indices in general does not alter my view in the forex markets. I continue to believe we are in the early stages of a Dollar Index (DXC) rally and that of course has implications for forex traders.

As we all know, or if you are not familiar with the relationship, a strong (bullish) DXC forecast impacts the major forex pairs as follows:

Strong DXC = weak EUR/USD, AUD/USD, NZD/USD, GBP/USD

Strong DXC = strong USD/JPY, USD/CAD, USD/CHF

Naturally there are exceptions from time to time, and prices are never perfectly correlated, but this serves as a solid gauge.

Naturally the charts above are longer-term outlooks and will be used as the overall thesis for the shorter-term counts and specific trade set-ups that we might see this coming week. However, framing ones forecast with time frames beyond a 30-min or 60-min chart goes a long way to increasing ones conviction when price action hits a bump in the road and goes against your overall thesis/forecast.

Stochastic strategy for day trading stocks and forex

Stochastic strategy for day trading stocks and forexStochastic strategy for day trading stocks and FOREX

SPY, 5 Minute - August 24. Arrows show entries and exits using the stochastic method.

Freestockcharts

A stochastic shows a stock's (or any trading instrument) ability to trade in the upper or lower part of its price range relative to the analysis period. Stocks that are in the upper part of the range (above 70) and the lower part of the range (below 30) are exhibiting signs of strength and weakness respectively, in relation to recent performance. This strength or weakness can be exploited by short term traders.

While a stochastic reading at these levels (above 70 or below 30) is often considered overbought or oversold, strong stocks will spend more time in the upper half of their range and weak stocks will spend more time in the lower half of their range. This means that we can take advantage of strong or weak stocks at points when they are showing above average strength or weakness. This movement will be called a "stochastic follow through."

The Strategy: In an up trending stock, buy when the fast stochastic line crosses above the 70 level with the slow line pointing up. Sell a down trending stock when the fast stochastic line crosses below 30 with the slow line pointing down. Cover longs when fast line crosses below slow line, and cover shorts when fast line crosses above slow line. Price can also be used - when it shows signs of slowing momentum it is best to exit.

The strategy takes advantage of strong (or weak) stocks that are showing signs of accelerating even more in the current upward (downward) direction. The problem with traditional strategies using stochastics is that they often enter a trader short, for example, too early and the stock continues to rise. To avoid this, we go long with the strength in the stochastic and stock price, and then we can see once the price slows or the stochastic turns over if we want to reverse our position. Thus, we catch the strong tail end of a rally (or decline) and place ourselves in a good position to reverse and go the opposite way when the time is right.

The downside of the strategy is that on slow or ranging days, the signals will not likely be profitable as there is no follow through in price movements. The strategy works best in trending environments where there is continued pressure in one direction. When the overall market is in a trend, this strategy has a higher probability of success. In ranging environments the stochastic can be used in more traditional ways - indicating overbought or oversold conditions.

Remember, indicators are derivatives of price and as such price action should always confirm what an indicator is telling us before we take the trade.

Cory Mitchell, CMT

If you enjoyed reading this article, please click on the subscribe button near the top of the page to receive an email when new articles are published by this Examiner.

For trading lessons and US market analysis please see: vantagepointtrading

**This article is not a recommendation. Consult your own financial professional before making investment or trading decisions. Trading involves substantial risk of loss and the author and/or the distributor of this article will not be held liable for any inaccuracies or losses which may occur as a result of this information.

Stochastic oscillator

Stochastic oscillatorStochastic Oscillator

The Stochastic Oscillator was developed by Dr. George Lane to track market momentum.

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The indicator consists of two lines:

%K compares the latest closing price to the recent trading range.

%D is a signal line calculated by smoothing %K.

Slow Stochastic incorporates further smoothing and is often used to provide a more reliable signal.

Stochastic Oscillator Trading Signals

If the Stochastic Oscillator hovers near 100 it signals accumulation. Stochastic lurking near zero indicates distribution .

The shape of a Stochastic bottom gives some indication of the ensuing rally. A narrow bottom that is not very deep indicates that bears are weak and that the following rally should be strong. A broad, deep bottom signals that bears are strong and that the rally should be weak.

The same applies to Stochastic tops. Narrow tops indicate that the bulls are weak and that the correction is likely to be severe. High, wide tops indicate that bulls are strong and the correction is likely to be weak.

Ranging Markets

Signals are listed in order of their importance:

Go long on bullish divergence (on %D) where the first trough is below the Oversold level .

Go long when %K or %D falls below the Oversold level and rises back above it.

Go long when %K crosses to above %D.

Short signals:

Go short on bearish divergence (on %D) where the first peak is above the Overbought level .

Go short when %K or %D rises above the Overbought level then falls back below it.

Go short when %K crosses to below %D.

Place stop-losses below the most recent minor Low when going long (or above the most recent minor High when going short).

%K and %D lines pointed in the same direction are used to confirm the direction of the short-term trend.

Lane also used Classic Divergences. a type of triple divergence.

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Trending Markets

Only take signals in the direction of the trend and never go long when the Stochastic Oscillator is overbought, nor short when oversold.

If Stochastic Oscillator rises above the Overbought line, place a trailing sell-stop. When you are stopped in, place a stop loss above the High of the recent up-trend (the highest High since the signal day).

Stochastic Example

The Slow Stochastic Example illustrates the trading signals. This study focuses on the trailing stop entry technique used in a trending market.

Intel Corporation is shown with aВ 21 day exponential moving average (MA) and 7 day StochasticВ %K andВ %D. The MA is used as the trend indicator with closing price as a filter .

Stochastic Oscillator

The Stochastic Oscillator is a momentum indicator that compares a currency pairs closing price to the normal price range it has been displaying over a specified time period. The Stochastic Oscillator can has its sensitivity to market movements reduced or increased by adjusting the time period, or by taking a moving average of the result.

The idea behind the Stochastic Oscillator is that in an uptrend market, prices generally tend to close nearer to the high for the period, and during a downtrend market, prices will often tend to close near their low for the period. The indicator is often used in several different ways at one time as it is multi-faceted.

The first way traders will use this indicator is to trade like a moving average crossover system. In other words, when the quicker of the two moving averages crosses above the slower one, it is a buy signal. Of course, this works in the opposite direction as well. This shows the near-term momentum is building in one direction or the other.

Much like other oscillators, traders will often use the moving averages to determine whether there is likelihood of the currency pair being overbought or oversold as well. There are two lines, the 20 and the 80 that determine this. For example, if you are in a long position and see the Stochastics have the moving averages above the 80 line, you might be getting warned that the pair is now entering overbought territory. The same can be said for the averages dipping below the 20, as it signals oversold conditions.

The Stochastic Oscillator can also determine divergence as well. Generally speaking, when a pair is making new highs, you want to see the averages on the oscillator doing the same thing. If not, you have divergence and a possibly weak undercurrent to the recent surge upward. This works in reverse as well, as a failure to make new lows suggests that there isnt as much selling conviction in the marketplace as the new lows have been made.

Trading strategies for intraday

Trading strategies for intradayStrategies and Formulae for Intraday Trading

STRATEGIES ( FORMULAE ) FOR INTRADAY TRADING

by………..intradaySuRe.

The intraday movements of share prices are generally governed by Support Resistance levels. The intraday volume, OPEN, HIGH, LOW, CLOSE previous CLOSE prices are very important one should track these prices daily. Previous data of 3 to 5 days is what is to be maintained or tracked. And the intraday data prior to the trading day is important.

If we are trading on Tuesday than intraday data of previous day i. e. Monday is what we need .

It consists of:

OPEN ( O ). The opening price for the particular day.

HIGH ( H ). The highest price for the particular day.

LOW ( L ). The lowest price for the particular day.

CLOSE ( C ). The closing price for the particular day.

Some basics for a novice trader .

Intraday as the term itself is self explanatory is the position you take and clear on the same trading day.

As a general understanding of trading people feel that they have to first buy something to sell it later at profit.

But in intraday trading you can SELL a share even if you don’t have it with you. This is termed as SHORT SELL . i. e. You sell suppose 100 XYZ share Rs. 250. here if the price comes down to say 230 and you buy back the 100 XYZ shares. Your transaction is complete. 250-230=20. And 20*100=2000 Rs is your profit.

i. e. Short sell is exactly opposite of the buy first and sell later transaction.

Very Important: SHORT SELL transaction has to be compulsorily completed by buying back the equivalent no. of shares on the same trading day.

General but IMPORTANT for all :

There are many strategies one can apply to make profits daily in intraday trading as per my experience, observations understanding. These strategies have been categorized or you can say designed on the basis of different TRADE TIMES, SITUATIONS, MARKETS, SHARES . As discussed Mostly traders worldwide use PIVOT formula of Support Resistance both for intraday trading as well as Delivery based trading short term long term. So my advice would be to refer the support resistance levels along with the various recommended strategies by me.

Although one can apply different strategies for different trades, I would suggest traders to select one strategy, which they are comfortable with, as per the mindset, personality risk taking capacity.( i. e. either BUYING strategy or SHORT SELLING strategy. A simple reason is that you cannot be two persons at one time, or you cannot have two views at a time.) Once you master one strategy, you can practice another and apply. YOU can also make profits forever by sticking to one strategy forever. What becomes important is choosing / finding separating scripts which fit your particular strategy daily. A little study or homework is compulsory to be successful and self sufficient, independent trader.

DIFFERENT TRADING STRATEGIES :-

We can categorize or divide our strategies as per different time frames situations for better understanding.

1. MORNING 30-MINUTES STRATEGY.

2. TRADES AFTER MORNING TRADES.

3. TRADES DURING QUARTERLY RESULTS.

4. GAP OPENINGS OF MARKET.

* MORNING 30-MINUTES STRATEGY *

This strategy is based on understanding the moves in context of the Sentiments / Supply – Demand Factor or Moves of Big traders or Operators.

If you track the Close price you will wonder the Open price of the trade day is not always the same as that of the previous days Close price. It is because the Operators according to the sentiments lay a trap in which small traders get trapped and run into losses. If we understand these Dynamics we can make profits 90 % times in normal markets in the first 3 to 30 minutes of trading. ( Remember you should close your positions in this time frame )

For this strategy it is compulsory to choose shares with very high volumes for example shares in nifty or for that matter other shares with volumes above 5 lac or 10 lac

Take the following figures and trade plan with you on the basis of calculations given below. We will call it Operators Strategy ( OS )

Difference (D) between HIGH LOW of previous day i. e. D = ( H – L )

Now OS = D / 3

BUY PRICE = ( Close – OS )

SELL PRICE = ( Close + OS )

For understanding the OS one should understand the following……..

STRONG SHARE or STRONG CLOSE (close price is higher than previous close)

WEAK SHARE or WEAK CLOSE ( close price is lower than previous close )

Now on the basis of above calculations you are ready with the figures i. e. BUY PRICE, CLOSE SELL PRICE of STRONG SHARE WEAK SHARE separately.

Now on trade day if STRONG share opens anywhere between Close BUY PRICE you can BUY first keep for sell SELL PRICE as your target.

The Trap :- As the share opens at a price lower than Close one gets the feeling as if the share has become weak and sells it, thus falling in the trap.

On trade day if WEAK share opens at or above SELL PRICE you can SELL first buy later BUY PRICE as your target.

The Trap :- As the share opens at a higher price than the Close one gets the feeling that the share has become strong and buys it thus falling in the trap.

This strategy requires you to be very fast in taking decisions and accordingly positions. Furthermore One should compulsorily come out or close the position in the mentioned time frame or as soon as target is achieved. Life is not that easy and if you find that your position was wrong immediately square it ( close it) Avoid putting Stop Loss, instead put orders immediately for covering

* Some more morning strategies :……………….

A ) SHORT SELL :- ( sell first buy later )

OPEN HIGH IS SAME….

Sell just below HIGH price if it is not breaking the high price for 3 minutes.

Example. If O-H is 110 sell 109 with a SL ( stop loss ) just above HIGH.

Best results are observed if :-

a) Market is Bearish ( weak )

b) O-H rate is near or above SELL PRICE i. e. ( Close + OS )

c) Weak share but O-H rate is or near SELL PRICE

d) If share price is not crossing above previous day’s HIGH

B ) BUYING :- ( buy first sell later )

1. OPEN LOW IS SAME…….. Buy just above LOW price if it is not breaking the low price for 3 minutes. Example. If O-L is 100 buy 101 with SL ( stop loss ) just below LOW.

Best results are observed if :-

a) Market is Bullish ( strong )

b) Close is Strong ( i. e. it is a strong share )

c) O-L is near or below Close

d) O-L rate is or near BUY price

2. STRONG SHARE :- ( i. e. strong close )

BUY if :-…………..

a) OPEN is BUY price.

b) OPEN is same as pr. Close.

c) OPEN LOW is same, as discussed above.

d) OPEN is just above pr. Close but far below SELL price.

3) BUY if Share crosses above its intraday High price.

Best results if market is bullish. Keep the target of getting out SELL price, if it is showing strength volume is more than pr. Day.

Losses . are part of intraday trading. success of 70% plus is what one should work for refine your strategy. Hard Fact . In The game of intraday trading if you are consistently achieving 1% profit of your total intraday volume you are achieving wonders.

Greed Fear are enemies of intraday traders.

Price range breakouts

# 1. Trade on 3 days and 5 days High/Low price brekaout : On Buy side, place previous close/high as stop order. On Sell side place previous close/low as stop order.

# 2. Trade on Weekly/Monthly High/Low price brekaout : On Buy side, place previous close/high as stop order. On Sell side place previous close/low as stop order.

# 3. 50% in range crossover : In this method, need to combine weekly & Intraday range.

Identify and Observe few stocks behaviour on a regualr basis. If any stock is continuously Gaining / Losing for more than 3 to 5 days, On 4th or 6th trading day, If stock trading in Opposite direciton, Try to initiate a trade with a stop loss of previous High/Low or Today's High/Low as stop order.

Please be cautious while using this method. apply only on high volume stocks and most active stocks only.

Example : If stock 'XYZ' 1 to 5 days regularly closed on Positive side, and today trading in Negative side, then try to initiate Short with stop order of previous day's high or Today's high.

Use relative strength to find the best day trades

Use relative strength to find the best day tradesUse Relative Strength to Find the Best Day Trades

By Cory Mitchell. Day Trading Expert

Cory Mitchell, CMT, is a short-term technical trader and financial writer with more than a decade of trading experience.

It happens all the time; you have a bunch of similar trades, but you want to pick the best one. Relative strength can help. In the stock market, an entire sector or industry may be rallying, and you want to get involved. Which stock do you buy, of the potentially hundreds in that sector? Or if a sector is weak, and you want to trade on the short side. what stock do you pick?

Maybe there is a long trade setting up in the GBP/CHF and EUR/CHF. These are likely to be similar trades, but which one is better? (Think Forex is Confusing? Heres What You Need to Know )

Relative strength is one method for making these decisions.

Whats Relative Strength (and Weakness)?

No, ites not an indicator. Dont confuse relative strength with the RSI (relative strength index).

Relative strength is comparing how one asset is performing in relation to another. If two oil stocks are both rallying, but one is up 2% today and the other is only up 1%, the former is stronger.

It is showing relative strength compared to the other stock.

If the EUR/USD is up 1% today, and GBP/USD is up 0.5%, then the EUR is stronger than the GBP, and is showing relative strength. For additional insight, see Best Time to Day Trade the EURUSD .

Relative weakness works the same way. If the Financial Sector ETF (XLF) is down 3%, while the Energy Sector ETF (XLE) is only down 1%, then Financials are relatively weak compared to Energy.

How to Use Relative Strength

There are a few basic guidelines for day trading using relative strength or weakness.

Continue Reading Below

During uptrend days (when the major market indexes are moving up), you want to be trading in sectors and stocks which are showing the biggest gains. These stocks are moving the most in a clear direction, and therefore the most attractive for day trading (depending on strategy).

During downtrend days (when the market indexes are moving down), you want to be trading in the sectors and stocks which are showing the biggest losses. These stocks are moving the most in a clear direction, and therefore the most attractive for day trading (depending on strategy).

You want to short the weakest stocks and go long the long strongest (see: What do Long, Short, Bullish and Bearish Mean? ).

Trading with relative strength still requires a strategy. Dont randomly buy a strong stock. You still need to follow a trading plan. which defines how/where you will enter, how you will control risk, what your position size is and how you will exit. Relative strength simply lets you know some favorable assets to execute your strategy in.

Since relative strength is about strong movement, trending trading strategies typically work best with this approach.

Finding the Best and Worst and Performers

On Fiviz. click the "Groups" tab. Itll show which sectors are performing the best/worst today, and across various time frames. You can then use the screener to see which stocks within those groups are performing the best and worst. Sign up for the Elite service for real-time alerts and movers.

Alternatively, on the home page, note the Top Gainers and Top losers. These are stocks which are the strongest and weakest compared to all other stocks. Sometimes this is simply due to a large price gap at the open though; therefore, intra-day the stock may not trend in the direction implied by its percentage performance.

If you have a group of stocks, currency pairs or ETFs you follow on a regular basis, you can plug up to six of them into FreeStockCharts. and monitor them all at the same time. Quickly see which of the six are performing the best/worst.

To do this, input one of the stocks/currency pairs/ETFs in the main symbol box. Then, click "Settings" and select "Comparison." Input 5 more symbols. Give them distinct colors so you can differentiate them. Also, select "Show percent scale." Using percentages makes it much easier to compare one asset to another, since assets may have very different prices. The attached chart shows an example.

Relative strength is not a strategy in and of itself. It is a tool to help you find good trade candidates for your already tested and established trading strategy. Focus on buying relatively strong stocks with your strategy, and selling/shorting relatively weak stocks with your strategy.

What is strong or weak now, may not be an hour from now. Monitoring relative strength is a constant task, but can be lucrative since the trader who masters it will always be trading in stocks and sectors which are moving the most, seeing the biggest gains (for longs) and losses (for shorts).

Sign up for Corys weekend newsletter. which includes stocks, futures and forex pairs to watch, as well trading trading tutorials.

Forex adx indicator explained

Forex adx indicator explainedForex ADX Indicator Explained

Riding the trend is one of the most profitable trading strategies you can have as it is a good way of producing high risk reward ratio trade and the best way to find out the status of the trend is to make use of the forex adx indicator.

So Why ADX Indicator?

If you have been reading my blog, you will know that I have written an article to help you identify the trend of the market using various forex trend indicators like the moving averages. The moving averages are still a good way to tell the trend but they are unable to give you a value for the trend and this is where the ADX indicator comes into play.

What Is ADX Indicator?

It is an indicator that is made up of a single line with value ranging from 0 to 100. You may think that it looks like an oscillator but it is uni-directional. Unlike the oscillator which tells you that the market is moving up when it is pointing up and the market is moving down when it is pointing down, the ADX is only meaningful when it is pointing up and thats why it is uni-directional.

If you take a close look at the picture below, you will find that the adx will point up when you are in a good uptrend as well as a downtrend.

How to Use the ADX Indicator?

I personally use it to tell whether the market is trending or ranging. As stated in the earlier part of this post, the ADX has a range value from 0 to 100. When it is moving below the 25 level, it is telling you that the strength of the market is very weak. What usually happens at this time is that the market is in consolidation and will most probably be moving in a range.

When the indicator moves above the 25 level, it is telling you that the trend is strengthening and the larger the value, the stronger will be the trend. However to have a better understanding of the trend you are in, you need to combine the direction of the indicator together with its value.

Sign of a Strong Trend:

You are in a strong uptrend or downtrend when the ADX indicator is pointing up and moving above the 25 level.

Market stock trading trend strategy rules

Market stock trading trend strategy rulesMarket stock trading trend strategy rules

Stock trading with a trend is a common strategy used by many professional traders in big funds and the best private traders that trade for a living. All these profitable traders use several rules that help them to make money on stock markets.

The first and foremost rule in these market stock trading trend strategies defines what trade should be preferred.

What are major trend direction for trading strategies

A typical stock market situation:

Prefer a long swing trading strategy

Prefer a short strategy

Neutral strategy

Aggressive short swing trading strategies preferred

Prefer long swing trading strategy

The stock market index is above 200 SMA and above key 20 and 50 EMA. In this phase prefer long trades. The best way is to check leading sectors and leading stocks and use these tickers for a trade.

Prefer short stock market strategy

The stock market index is above 200 SMA but below 50 EMA. 20 MA crossed below 50 MA is also an additional negative signal. Prefer short breakdown stock market strategies in weak stocks.

Neutral situation for trading

50 EMA and 200 SMA are very close, and there isn’t too much space between them. Expect a chop trading range. The stock market index is somewhere in this area.

Trade only strong stocks on the long side and weak stocks on the short side. Preferable strategies should be pullback stock market strategies.

Aggressive short swing trading strategies preferred

Market index is below 200 SMA and 50 EMA. Also 20 EMA is below 50 EMA. Look for good setups for short swing trades. Best strategies for such US market stock trading trend are short breakdown stock market strategies.

This is not good situation for bullish trading strategies.

Different parts of market could be in different trend situation

You can find US stock markets in bullish position but commodities could be in a bear market. Thats why you can always find something to be traded with bullish strategies and something that could be traded with bearish short selling strategies.