32.How to Trade the Morning/Evening Star Candlestick Pattern
Produced By:
InformedTrades on 28 Dec 2007
Tags: howtotradecandlestickmorningstar(more...)eveningstardaytradeinvestingmoneyforexfuturesstockmarket
informedtrades(less)
Description: http://www.informedtrades.com/
A (more...) lesson on how to trade the morning and evening star candlestick chart patterns for active traders and investors using technical analysis in the stock, futures, and forex markets.
In our last lesson we looked at the Hammer and Hanging Man Candlestick Chart Patterns. In today's lesson we are going to look at two more reversal candlestick patterns which are known as the Morning and Evening Star.
The Morning Star
Pic
The Morning Start Candlestick Pattern is made up of 3 candles normally a long black candle, followed by a short white or black candle, which is then followed by a long white candle. In order to have a valid Morning Start formation most traders will look for a close of the third candle that is at least half way up the body of the first candle in the pattern. When found in a downtrend, this pattern can be a powerful reversal pattern.
What this represents from a supply demand situation is a lot of selling into the downtrend in the period which forms the first black candle, then a period of lower trading but with a reduced range which forms the second period and then a period of trading indicating that indecision in the market, which is then followed by a large up candle representing buyers taking control of the market.
Unlike the Hammer and Hanging Man which we learned about in our last lesson, as the Morning Star is a 3 candle pattern traders often times will not wait for confirmation from the 4th candle before entering the trade. Like those patterns however traders will look to volume on the third day for confirmation. In addition traders will look to the size of the size of the candles for indication on how big the reversal potential is. The larger the white and black candle and the further that the white candle moves up into the black candle the larger the reversal potential.
Chart
The Evening Star
The Evening Star Candlestick Pattern is a mirror image of the Morning Star, and is a reversal pattern when seen as part of an uptrend. The pattern is made up of three candles the first being a long white candle representing buyers driving the prices up, then a short white or black second candle representing indecision in the market, which is followed by a third black candle down which represents sellers taking control of the market.
The close of the third candle needs to be at least half way down the body of the first candle and as with the Morning Star most traders will not wait for confirmation from the 4th period's candle to consider the pattern valid. Traders will look for increased volume on the third period's candle for confirmation, the larger the black and white candles are and the further the black candle moves down the body of the white candle the more powerful the reversal is expected to be.
Chart Example
That's our lesson for today. In our next lesson we are going to finish up our series on Candlestick patterns with a look at the Shooting Star and Inverted Hammer Candlestick Patterns. (less)
**HOT TOPIC** Using Craigslist to drive traffic to YouTube
Produced By:
ocollier on 29 May 2008
Tags: craigslistcomcraigslists(more...)freeclassifiedsclassifiedadsforsaleworkfromhomeonlinemoney
ebaysell(less)
Description: http://www.otiscollier.com/theplan
In (more...) this video, I want to share with you an idea about driving traffic from Craigslist to your YouTube video. Craigslist is a great way to drive traffic because there is no cost to you.
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pdx (less)
25. How to Trade Bollinger Bands - Stocks, Futures, Forex
Produced By:
InformedTrades on 20 Dec 2007
Tags: howtotradebollingerbandsdaytrade(more...)investingmoneyfinancebusinessforexfuturesstockmarket
informedtrades(less)
Description: http://www.informedtrades.com/
A (more...) Lesson on Bollinger Bands for active traders and investors using technical analysis in the forex, futures, and stock markets.
The link that I refer to on Standard Deviation is here: http://en.wikipedia.org/wiki/Standard_deviation
The link that I refer to with more resources on Bollinger Bands is here:
http://www.informedtrades.com/tags/index.php/bollinger%20bands/
In our last lesson we learned about the Stochastic Oscillator and how traders use this in their trading. In today's lesson we are going to learn about an indicator which helps traders gauge the volatility and how current prices compare to past prices.
Bollinger Bands are comprised of three bands which are referred to as the upper band, the lower band, and the center band. The middle band is a simple moving average which is normally set at 20 periods, and the upper band and lower band represent chart points that are two standard deviations away from that moving average.
Example of Bollinger Bands:
Bollinger bands are designed to give traders a feel for what the volatility is in the market and how high or low prices are relative to the recent past. The basic premise of Bollinger bands is that price should normally fall within two standard deviations (represented by the upper and lower band) of the mean which is the center line moving average. If you are unfamiliar with what a standard deviation is you can read about it here http://en.wikipedia.org/wiki/Standard_deviation. As this is the case trend reversals often occur near the upper and lower bands. As the center line is a moving average which represents the trend in the market, it will also frequently act as support or resistance.
The first way that traders use the indicator is to identify potential overbought and oversold places in the market. Although some traders will take a close outside the upper or lower bands as buy and sell signals, John Bollinger who developed the indicator recommends that this method should only be traded with the confirmation of other indicators. Outside of the fact that most traders would recommend confirming signals with more than one method, with Bollinger bands prices which stay outside or remain close to the upper or lower band can indicate a strong trend, a situation that you do not want to be trading reversals in. For this reason selling at the upper band and buying at the lower is a technique that is best served in range bound markets.
Example of Buying and Selling at the Upper and Lower Band:
Large breakouts often occur after periods of low volatility when the bands contract. As this is the case traders will often position for a trend trade on a break of the upper or lower Bollinger band after a period of contraction or low volatility. Be careful when using this strategy as the first move is often a fake out.
Example
As Bollinger bands paint a good picture directly on the price chart of how high or low price is relative to historical prices, this is a good indicator to use in conjunction with other methods such as some of the chart patterns that we have learned so far and some of the candlestick patterns which we will learn in future lessons. Below is one such example:
As Bollinger Bands are one of the most popular indicators around I have created a special page on InformedTrades.com which lists multiple resources for those looking for more information on trading Bollinger Bands.
That's our lesson for today. You should now have a good understanding of Bollinger bands and how traders use these in their trading. In our next lesson we are going to go over the Average Directional Index or ADX, which helps traders identify the strength or weakness of a trend so we hope to see you in that lesson.
As always if you have any questions or comments please feel free to have them in the comments section below, and have a great day! (less)
22.How to Trade the Relative Strength Index (RSI) Like a Pro
Produced By:
InformedTrades on 17 Dec 2007
Tags: tradinginvestingmoneyfinance(more...)forexmarketstockmarketdaytradefuturesmarketRSIinformedtrades(less)
Description: http://www.informedtrades.com/
A (more...) lesson on how to trade the RSI for traders and investors using technical analysis in the stock market, futures market and forex market.
In our last lesson we looked at 3 different ways that the MACD indicator can be traded. In today's lesson we are going to look at a class of indicators which are known as Oscillators with a look at how to trade one of the more popular Oscillators the Relative Strength Index (RSI).
An oscillator is a leading technical indicator which fluctuates above and below a center line and normally has upper and lower bands which indicate overbought and oversold conditions in the market (an exception to this would be the MACD which is an Oscillator as well). One of the most popular Oscillators outside of the MACD which we have already gone over is the Relative Strength Index (RSI) which is where we will start our discussion.
The RSI is best described as an indicator which represents the momentum in a particular financial instrument as well as when it is reaching extreme levels to the upside (referred to as overbought) or downside (referred to as oversold) and is therefore due for a reversal. The indicator accomplishes this through a formula which compares the size of recent gains for a particular financial instrument to the size of recent losses, the results of which are plotted as a line which fluctuates between 0 and 100. Bands are then placed at 70 which is considered an extreme level to the upside, and 30 which is considered an extreme level to the downside.
Example of the RSI
The first and most popular way that traders use the RSI is to identify and potentially trade overbought and oversold areas in the market. Because of the way the RSI is constructed a reading of 100 would indicate zero losses in the dataset that you are analyzing, and a reading of zero would indicate zero gains, both of which would be a very rare occurrence. As such James Wilder who developed the indicator chose the levels of 70 to identify overbought conditions and 30 to identify oversold conditions. When the RSI line trades above the 70 line this is seen by traders as a sign the market is becoming overextended to the upside. Conversely when the market trades below the 30 line this is seen by traders as a sign that the market is becoming over extended to the downside. As such traders will look for opportunities to go long when the RSI is below 30 and opportunities to go short when it is above 70. As with all indicators however this is best done when other parts of a trader's analysis line up with the indicator.
Example of RSI Showing Overbought and Oversold:
A second way that traders look to use the RSI is to look for divergences between the RSI and the financial instrument that they are analyzing, particularly when these divergences occur after overbought or oversold conditions in the market. These divergences can act as a sign that a move is loosing momentum and often occur before reversals in the market. As such traders will watch for divergences as a potential opportunity to trade a reversal in the stock, futures or forex markets or to enter in the direction of a trend on a pullback.
Example of RSI Divergence:
The third way that traders look to use the RSI is to identify bullish and bearish changes in the market by watching the RSI line for when it crosses above or below the center line. Although traders will not normally look to trade the crossover it can be used as confirmation for trades based on other methods.
Example of the RSI Centerline Crossover:
That's our lesson for today. You should now have a good understanding of the RSI and how traders use this indicator in their trading. In tomorrows lesson we will look at another Oscillator which is known as the Stochastic Oscillator so we hope to see you in that lesson.
As always if you have any questions please feel free to leave them in the comments section below, and have a great day! (less)
Domain Name System (DNS) | Tutorial #3
Produced By:
ocollier on 19 Mar 2008
Tags: dnsdomainnamesystem(more...)internetaddressnamesprotocoluniformresourcelocatorURLwebotiscollier(less)
Description: http://www.otisteaches.com/tutorials/update-domain-name-system-dns-tutorial-3/
In (more...) the last two videos, you learned how to get a free domain at Register.com and then you learned where to get free web hosting. In this video, I will teach you how to connect the two together. Currently your domain name is hosted somewhere different from your hosting account. The goal is to have visitors directed to your site where your files are hosted when they type in your domain name. Currently this can not be accomplished until you first update your domain name system (DNS).More...
The domain name system (DNS) is the way that Internet domain names are located and translated into Internet Protocol addresses. A domain name is a meaningful and easy-to-remember 'handle' for an Internet address.
Otis Collier
Personal Success Coach (less)
Views: 303
Comments: 0
Duration: 08:29
Register Domain Name FREE! | Tutorial #1
Produced By:
ocollier on 19 Mar 2008
Tags: cheapdomainnamesname(more...)registrationgodaddyicannnetworksolutionsregisterregister.comotis
collier(less)
Description: http://www.otisteaches.com/tutorials/register-your-domain-name-free-wp-tutorial-1/
or (more...) a limited time, you can register a new domain name for your small business and get it FREE for the first year with no further obligation.
Domain names are unique names that identify an internet site. For example: www.google.com identifies the search engine site Google.
Having a domain name is the first step in the process for building your presence online with a website.
Coming pup with a good domain name that matches your website concept can be very difficult. There are over 46 million active domain names registered and even when you do come up with a great domain name, you will ofter find that it is already taken.
In this video, not only will you learn how to get a domain name for free, but you will also learn about a website that offers a powerful name-spinning technology that can suggest up to 100 domain names using keywords that you provide the tool with that describe your project.
Note: You will find that Register.com is the website that is currently offering business owners one domain name free for the first year. There after, the domain name fee is $35.00.
I warn you that this is not the industry average for the cost of domain names. The average cost is $9.00. I strongly recommend that you do not automatically renew after your first year. In fact, 30 days prior to your domain name expiring, I would recommend that you transfer you domain registrar from Register.com to GoDaddy.com.
Currently, GoDaddy charges $6.99 for domain name transfers.
otis collier (less)
How To Make YouTube Videos WITHOUT A Camera
Produced By:
ocollier on 20 May 2008
Tags: youtubeutubeyoutube(more...)videocamcordercamera(less)
Description: http://www.otiscollier.com/theplan
Have (more...) you ever thought that you could not create a YouTube video just because you didn't own a camcorder? Well in this tutorial I will show you how to create a video without the use of a camcorder.
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Views: 220
Comments: 0
Duration: 09:59
Free Web Hosting | Tutorial #2
Produced By:
ocollier on 19 Mar 2008
Tags: bandwidthcheapwebhosting(more...)cpanelemailfreeftpgodaddymysqlnetworksolutionsphpregister.com
otiscollier(less)
Description: http://www.otisteaches.com/tutorials/free-web-hosting-tutorial-2/
In (more...) the last tutorial, you learned how to get a free domain name. In this lesson, you will learn how to get free hosting to go with that domain name. Before I actually show you the video, I want you to know that this is just not any ordinary, run of the mill type hosting account.More...
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cPanel is the most popular panel among paid hosting providers, but you get it absolutely free! cPanel is a fully featured graphical web-based web-hosting control panel, designed to make administration of websites easy. cPanel handles all aspects of website administration in its interface.The idea is to transfer as much of the control and responsibility of managing your web site to you. You have the ability to manage all aspects of e-mail, files, backup, FTP, CGI scripts, and web site statistics.
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You will not be left alone. If you have any questions or need help with your website there is a help submit ticket system. They are there to help you 24/7. Also if something happens with server where your account is hosted, they guarantee not leave you uninformed. In the members area you will see a status report on what exactly is happening with server.
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Otis Collier
Personal Success Coach (less)
21. How to Trade the MACD Indicator Like a Pro Part 2
Produced By:
InformedTrades on 17 Dec 2007
Tags: tradeinvesthowtoforexmarket(more...)stockmarketfuturesmarkettechnicalanalysisMACDinformedtrades(less)
Description: http://www.informedtrades.com/
The (more...) second lesson of two on how to trade the moving average convergence divergence (MACD) for day traders and investors using technical analysis in the stock market, futures market, and forex market.
The link that I reference in my video is here: http://www.informedtrades.com/tags/index.php/macd/
In addition to being able to tell if the stock, futures contract, or currency you are analyzing is trending or not from simply looking at its price action on the chart, you can also use the MACD indicator. Very simply if the MACD line is at or close to the zero line, this indicates that the financial instrument you are analyzing is not exhibiting strong trending characteristics, and thus should not be traded using the MACD.
Example of Trending and Non Trending Markets
Once it is determined that the financial instrument you are analyzing is exhibiting trending characteristics, there are three ways that you can trade the MACD.
1. Positive and Negative Divergence
2. The MACD/Signal Line Crossover
3. The zero line crossover
Trading the MACD Divergence:
Divergence occurs when the direction of the MACD is not moving in the same direction of the financial instrument you are analyzing. This can be seen as an indication that the upward or downward momentum in the market is failing. Traders will thus look to trade the reversal of the trend and consider this signal particularly strong when the market is making a new high or low and the MACD is not.
Example of Negative Divergence:
Trading the MACD/Signal Crossover:
This is the simplest way to trade the MACD as it involves simply watching the MACD line and going long when the MACD line crosses below the signal line and going short when the MACD line crosses above the signal line. As this strategy generates the most signals, it also generates the most false signals, and the potential to get into a bad trade using just this method is high. For this reason traders will confirm the signals with other methods such as the chart patterns we have learned so far, volume etc.
Example of Using the MACD Crossover as Buy and Sell Signals
The MACD Zero Line Crossover:
The MACD zero line cross over occurs when the MACD crosses above or below the line plotted at point zero on the indicator. When this occurs it is an indication that market momentum has reversed direction. The strength of the move that can be expected as a result of this depends on what has been happening in the market, and what has been happening with the indicator. If the market and the MACD are both coming off of recent new highs then this could be considered a strong signal. If the market is simply trading in a weak trend or range and the MACD has simply crossed from just above to just below the zero line, then this would be considered a weak signal.
Example of a Bullish and Bearish Signal Line Cross:
As with all of the indicators that we are learning about in this series it is normally better to trade the MACD along with other confirming signals such some of the things we have learned so far like trend lines, chart patterns, and breaks of significant support resistance levels.
That completes our lesson for today. You should now have a good understanding of the MACD and situations where it helps traders predict future price action and how it can be used to place trades.
As always I encourage your questions and comments so please leave them in the comments section below, and have a great day! (less)
Views: 205
Comments: 0
Duration: 04:51
File Transfer Protocol (FTP) | Tutorial #5
Produced By:
ocollier on 19 Mar 2008
Tags: coreftpfiletransfer(more...)protocolfilezilladownloadsmartftptcp/ipotiscollier(less)
Description: http://www.otisteaches.com/tutorials/file-transfer-protocol-ftp-tutorial-5/
Okay, (more...) have you ever wondered how people get their web files from their computer hard drive to the web? It's called file transfer protocol or ftp for short. Basically, ftp is a network protocol used to transfer data from one computer to another through a network, such as over the Internet.
There are several different ftp clients that help you achieve your task of uploading your files. One such popular ftp client is called FileZilla. More...
In this video, we will teach you how to find FileZilla and download it to your computer. Once it is downloaded we will give you a virtual tour of the software. Did I mention that the software is absolutely FREE!
Otis Collier
Personal Success Coach (less)
Views: 203
Comments: 0
Duration: 05:38
23. How to Trade Stochastics Like the Pro's Do
Produced By:
InformedTrades on 18 Dec 2007
Tags: daytradeforexfuturesstocks(more...)technicalanalysistradinginvestingfinancialmoneyfinance
informedtrades(less)
Description: http://www.informedtrades.com/
A (more...) lesson on how to trade the stochastic oscillator for active day traders and investors using technical analysis in the stock market, forex market. and futures market.
In our last lesson we learned about the RSI indicator and some of the different ways traders of the stock, futures, and forex markets use this in their trading. In today's lesson we are going to look at another momentum oscillator which is similar to the RSI and is called the Stochastic.
Let me start by saying that there are 3 different types of stochastic oscillators: the fast, slow, and full stochastic. All of them operate in a similar manner however when most traders refer to trading using the stochastic indicator they are referring to the slow stochastic which is going to be the focus of this lesson.
The basic premise of the stochastic is that prices tend to close in the upper end of their trading range when the financial instrument you are analyzing is in an uptrend and in the lower end of their trading range when the financial instrument that you are analyzing is in a downtrend. When prices close in the upper end of their range in an uptrend this is a sign that the momentum of the trend is strong and vice versa for a downtrend.
The Stochastic Oscillator contains two lines which are plotted below the price chart and are known as the %K and %D lines. Like the RSI, the Stochastic is a banded oscillator so the %K and %D lines fluctuate between zero and 100, and has lines plotted at 20 and 80 which represent the high and low ends of the range.
Example of a Stochastic Oscillator:
Whatever charting package you use will calculate the lines for you automatically but you should know that the data points which form the %K line are basically a representation of where the market has closed for each period in relation to the trading range for the 14 periods used in the indicator. In simple terms it is a measure of momentum in the market.
The %D line is very simply a 5 period simple moving average of the %K line. Lastly you should know that you can change the inputs for the indicator and use for example a 3 period moving average of the %K line to get faster signals, however as this is an introduction to the indicator and because most traders I know do not change the standard inputs, I do not recommend changing them at this point.
Like the RSI the first way that traders use the stochastic oscillator is to identify overbought and oversold levels in the market. When the lines that make up the indicator are above 80 this represents a market that is potentially overbought and when they are below 20 this represents a market that is potentially oversold. The developer of the indicator George Lane recommended waiting for the %K line to trade back below or above the 80 or 20 line as this gives a better signal that the momentum in the market is reversing.
Example of Overbought and Oversold Trading Signals:
The second way that traders use this indicator to generate signals is by watching for a crossover of the %K line and the %D line. When the faster %K line crosses the slower %D line this is a sign that the market may be heading up and when the %K line crosses below the %D line this is a sign that the market may be heading down. As with the RSI however this strategy results in many false signals so most traders will use this strategy only in conjunction with others for confirmation.
Example of the Crossover
The third way that traders will use this indicator is to watch for divergences where the Stochastic trends in the opposite direction of price. As with the RSI this is an indication that the momentum in the market is waning and a reversal may be in the making. For further confirmation many traders will wait for the cross below the 80 or above the 20 line before entering a trade on divergence.
Example of Divergence:
As the RSI and Stochastic are similar in nature many traders will use them in conjunction with one another to confirm signals.
That's our lesson for today. You should now have a good understanding of the Stochastic Oscillator and some of the different ways that traders use this in their trading. In tomorrow's lesson we are going to look at an indicator which allows us to gauge the volatility of a financial instrument over a given time called Bollinger Bands.
As always if you have any questions or comments I encourage you to leave them in the comments section below, and have a great day! (less)
44. How Successful Traders Use Indicators to Place Stops
Produced By:
InformedTrades on 16 Jan 2008
Tags: howtotradesettingstopsdaytrade(more...)investingmoneyfinancebusinessforexfuturesstockmarket
informedtrades(less)
Description: http://www.informedtrades.com/
A lesson (more...) on how to incorporate the use of technical indicators when placing stops in the forex, futures, and stock market.
In our last lesson we learned how many successful traders look for entry opportunities which allow them to set their stop so that there are multiple support or resistance points between their entry point and stop level, and few if any support or resistance points between their entry price and their target. In today's lesson we are going to look at another factor that many traders use when deciding where to place their stops, the use of technical indicators.
As you hopefully remember from watching my previous lessons we have already covered two indicators and gone over specific strategies on how they can be used to set stops which are the Average True Range and the Parabolic SAR. While these indicators were designed specifically to help traders gauge where to place their stops, many of the other indicators which we have looked at using to pick trade entry points can also be used to decide when to exit a trade.
With this in mind the question then becomes, with all the options available how do you choose which indicator if any to look at when deciding when to exit a trade. Which indicator if any you choose to include in your money management strategy for setting stops is going to depend largely on the type of strategy that you are trading. As a general rule however if you use an indicator to signal for example a buy entry on a trade most traders will keep an eye on that same indicator and take into account when that same indicator signals to exit a trade.
As an example of this, lets say that your analysis of the ADX shows that the chart of x is about to start a nice trend and you decide to place a trade on that analysis. Using the knowledge you have gleaned from our lessons on stops so far you also pick a level for your stop which has some nice protection and is close enough that it fits within your two percent loss limit. During this trade however if the ADX which is the indicator you used primarily to enter the trade begins to signal that the trend is weakening and the market is about to range, should you remain in that trade? The answer to that question is going to depend on the strategy and what other things are going on in the market at the time, but I would say at minimum most successful traders would take this into account when deciding whether or not to continue with the position, regardless of whether their stop had been hit or not.
Lastly on this point there is one indicator that so many traders watch that many traders will at least keep an eye on what happens with this indicator and that is the 50 and the 200 day moving average. These indicators are in general thought to be representative of the overall trend in the market and a break above or below these levels and/or a crossing of the 50 day moving average above/below the 200 day moving average is normally seen as significant for a market and as such many traders will take this into account and place their stops accordingly.
As you probably have noticed when thinking about placing stops using indicators, as you don't know where price is going to be when your indicator signals for a trade exit, you do not have a hard stop in the market, are in the very bad position of not being protected in your trade. This is why, as we have talked about many times in our other lessons, that if this method for setting stops is used it should always be used in conjunction with another method which allows you to set a hard stop and stays within the 2% loss limit rule we have established.
This concept of the stop being a sort of 'moving target' is a nice lead in to our next concept and lesson where we are going to be talking about what is known as a trailing stop. (less)
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Duration: 07:30
26. How to Trade the Average Directional Index (ADX)
Produced By:
InformedTrades on 24 Dec 2007
Tags: tradinginvestingmoneyfinance(more...)forexmarketstockmarketdaytradefuturesmarketADXinformedtrades(less)
Description: http://www.informedtrades.com/
A (more...) lesson on how to trade the ADX for traders of the stock, futures, and forex markets.
Link to the formulas behind the ADX: http://hubpages.com/hub/ADX
Link to Additional Resources on Trading the ADX: http://www.informedtrades.com/4529-six-resources-help-you-trade-adx.html
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, when the market is ranging, when the market may be about to change from trending to ranging or vice versa, and to gauge the strength of the trend in the market.
When plotted below the chart the ADX Line is normally accompanied by two other lines which are known as the +DI and --DI Lines.
Example of the ADX:
I am not going to go into the formulas for the Indicator here however you do need to know that:
• The ADX line is composed of two other indicators which are known as the Positive Directional Index (+DI Line) and the Negative Directional Index (-DI Line).
• 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: http://hubpages.com/hub/ADX
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.
Example:
Another way that traders use this indicator is to identify the potential start of a new trend in the market. Very simply here they will look from below the 20 line to above the 20 line as a signal that the market may be beginning a new trend. The longer the market has been ranging, the greater the weight that most traders will give this signal
Example:
Another way traders use the ADX is as a signal of trend reversals. When the ADX is trading above both the +DI line and the --DI line and then turns lower this is often a signal that the current trend in the market is reversing and traders will position themselves accordingly:
Example:
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.
Example:
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 tomorrow's 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. (less)
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Duration: 08:13
29. How to Trade Spinning Tops and Doji Candlestick Patterns
Produced By:
InformedTrades on 27 Dec 2007
Tags: howtotradecandlestickcharts(more...)dojispinningtopdaytradeinvestingmoneyforexfuturesstockmarket
informedtrades(less)
Description: http://www.informedtrades.com/
A (more...) lesson on how to trade the Spinning top and Doji Candle Stick Chart Patterns for traders of the stock, futures, and forex markets.
In our last lesson we learned how different candlestick formations can tell us different things about whether the buyers or the sellers won out in a particular time period. In today's lesson we are going to look at some of the basic candlestick patterns and what they mean when looked at in the context of recent price action in the market.
The Spinning Top
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When a candlestick with a short body in the middle of two long wicks forms in the market this is indicative of a situation where neither the buyers nor the sellers have won for that time period as the market has closed relatively unchanged from where it opened. The upper and lower long wicks however tell us that both the buyers and the sellers had the upper hand at some point during the time period the candle represents. When you see this type of candlestick form after a runup or run down in the market it can be an indication of a pending reversal as the indescision in the market is representative of the buyers loosing momentum when this occurs after an uptrend and the sellers loosing momentum after a downtrend.
The Doji
Like the Spinning Top the Doji Represents indecision in the market but is normally considered a stronger signal because unlike the spinning top the open and the close that form the Doji Candle are at the same level. If a Doji forms in sideways market action this is not significant as the sideways market action is already indicative of indecision in the market. If the Doji forms in an uptrend or downtrend this is normally seen as significant as this is a signal that the buyers are loosing conviction when formed in an uptrend and a signal that sellers are loosing conviction if seen in a downtrend. Most traders will place greater significance on the Doji when it forms in a market that is in overbought or oversold territory.
The Bullish Engulfing Pattern
The Bullish Engulfing pattern is another candlestick formation which represents a potential reversal in the market when seen in a downtrend. The pattern is made up of a white and black candle where the latest candle (the white candle) opens lower than the previous candle's (the black candle) close and closes higher than the previous candle's open. When this happens the current period's white candle completely engulfs the previous period's black candle.
When thinking about this from a buyer/seller perspective, you can understand that the long body of the current candle engulfing completely the body of the previous candle to the upside is representative that the buyers have not only taken control but have taken control with force. When this white engulfing candle occurs after a small black candle the formation is given even more significance as the small black candle is already indicative of a trend that is running low on steam.
The Bullish Engulfing Pattern
The same things apply when the pattern forms in an uptrend simply in reverse as shown in the image above.
That completes our lesson for today. In our next lesson we are going to look at several more candlestick formation and how traders use these in their trading so we hope to see you in that lesson. As always if you have any questions or comments please feel free to leave them in the comments section below, and have a great day! (less)