Relative strength index-how you can benefit from this type of technical analysis indicator

Relative strength index is the name of the index introduced by j. Welles Wilder June 1978 on an issue of the magazine "Futures" (formerly known as "commodities"). Then also presented the 1978 in his book "New concepts in technical trading". The relative strength index is designed to measure the dynamics of price action and it ranges between 0 and 100. As we shall see in the formula, the index tracks the value in itself and, therefore, is a measure of speed.

As the relative strength indicator is an indicator of front-weighted momentum that measure the price performance compared with the past, gives a more accurate indication of other indicators. It is less affected by large and steep price drops-i.e. that filters out certain trading noise.

It is a big question to address after you start using such relative strength index "what time should I use?". Original proposal Wilder was to use a 14-day RSI, but nowadays they can be optimized with brute force using software like MetaTrader, etc.

The RSI values range from 1 to 100. Traditionally, anything above 30 would buy a brand image that anything above 70 should trigger a signal to sell. Many analysts use also 20 for long signals and 80 for short signals. As price levels, the relative strength index technical analysis is offered as support/resistance, moving average convergence divergence, etc.

It is noteworthy that relative strength index is a measure of momentum, i.e. whether the currency is overbought or oversold. There is a direction indicator trend per se. Indicate only if the trend is likely to reverse or not.

Overbought is in a bullish market when they buy the currency players with a view that prices will continue higher. Sooner or later, merchants will have accumulated several long and will start selling them back to their cash winnings. This can cause a sudden reversal of trend, as many sales people trying the same simultaneously.

Oversold is in a bearish market where players can sell the currency which is expected to fall further. Same as the overbought condition, at some point they will have accumulated in the short term and will look to buy them back. Everyone is trying to do the same thing at the same time can lead to a sudden reversal of trend.

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TradeStation price action indicator-moving over the old ADX indicator!

By Mark Johnson David Mark Johnson David
Plus the basic level:

Mark Johnson is a full time trader TradeStation developer, and commercial coaches. Personally developed over 60 strategies and over 200 indicators for. ..

A successful trader you need to know when a tendency to start, the strength of the trend, and when it ends the trend. Knowing these events trend is crucial, given that a trend is the fundamental market for most profitable trading methods. Having access to trend information is timely and accurate can dramatically increase your profits when trading.

One of the most commonly used yet obsolete tools for identifying trends is the indicator ADX. The ADX line increases, to demonstrate the strength of a trend. The most accurate through the use of the ADX is to only pay attention to a rising ADX line, since this is where the power voltage is the strongest. More indicators are a row of ADX level threshold somewhere around twenty or twenty-five. When the ADX is over the limit that you have a trending market and decreasing when it falls below this limit does not. It is important to know these details about a trend, we are sorry, but the ADX is too "hit and Miss" traditionally this significant trend information.

A huge problem with ADX indicator is "lag" recover time that occurs after you move a strong up. Look at a chart with a strong uptrend quickly followed by an immediate move quick strong terms. You will see that the indicator ADX lost completely the second down trend movement since the ADX line is still in a phase of recovery. Another shortcoming is that ADX provides no information about the direction of the trend. I know that you can use other indicators like DMI + and DMI-to get the direction of a trend, but I want each marker on my chart to provide the most amount of accurate and timely information possible. So why not use a trademark to indicate that much more than the old old indicator ADX may mean?

Price action indicator is the perfect replacement ADX indicator for the following reasons:

First, what exactly answer when starting a trend, the strength of the trend, and when it ends a trend. Secondly, it gives information without "delay". Getting those signals in early translates into more profitable trading. Thirdly, it says in the direction of the trend without the need for other indicators like DMI + and DMI-. Fourthly, can be placed right in your price lines to see the interaction between the bars, prices and price action indicators.

Price action indicator simply and clearly displays all information about this trend. Indicates the start of voltage changing both the color and direction of the line of action "value". Displays the strength of the trend, increasing the thickness of the line of action "value". It does this all without the "backwardness" associated with ADX. Finally, it can be placed directly on values to see the trend of the price bars, making this an extremely superior tool over the ADX. Price action indicator replaces the ADX, DMI-DMI + and most moving averages.

As fantastic as the index action of the TradeStation, line of action our values have been reached above is only one line taken from our multiple stocking action price time frame consisting of lines of action 8 different time frames. Price action indicator provides the largest commercial MTF "edge".

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Article submitted on: January 09, 2011

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Steps to develop a better indicator STEP

Since 1967 the TRIN index or arms index as it is sometimes used for the measurement of market power. At the time, was a revolutionary idea to use two non-variable values to determine the strength of the market in a given time. Today, whether the market is a bear or a bull can be made using the index finger TRIN. TRIN data is available for purchases both NASDAQ and NYSE.

TRIN index uses a formula that divides the quotient of advancing issues over declining issues from the quotient of declining volume over advancing volume. Themes represent the number of stock increases or decreases in value and volume represents the totality of the increasing or decreasing stocks are traded. The result is the number, either above or below them.

Understanding of the problems with TRIN index

1. the TRIN is not a natural value. If buying and selling is equal to the value is one; If more sale occurring value is more than one; and buying more would be a value below one. Thus, a high number must indicate a growing market and vice versa.

2. With a neutral point, values above one are integers and below a fraction of one. Therefore, the market seems balanced and a chart is displayed with high voltage spikes and shallow drops, which is not necessarily indicative of the market to sell and buy.

3. While traders average usually index TRIN during certain periods, the data that leads to a misleading, because the one-sided data used.

With a few adjustments to your charting software, a better indicator of TRIN can be made to provide a value indicator is more accurate when the average and easier to interpret market trends. Reverse simply value NYSE TRIN so negative is positive and vice versa and multiply by 100.

When the mathematical data changes are easier to interpret, and is a better indicator of trends in the market, especially when the average. Neutral is 0 (by buying and selling equal) and values is between-100 and 100. Positive values indicate buy and negative values denote sale. So a value of-10 and + 10 is obtained by the same amount of trading, if you sell or buy, providing a better method for indicating power market.

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Forex Predict Indicator

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