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Vol.2. PRICE & TIME (health of the Stock). Trade with <CHARTS> INDICATORs. VOLUME. Indicators/Oscillators (Diagnosis). From the desk of ven KEY ……………………. Hyderabad-AP INDIA. TECHNICAL Analysis. www.forex2tradeindia.weebly.com. Trading Friend Trend Advisor.

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Presentation Transcript
slide1

Vol.2

PRICE & TIME

(health of the Stock)

Trade with

<CHARTS>

INDICATORs

VOLUME

Indicators/Oscillators

(Diagnosis)

From the desk of

venKEY

…………………….

Hyderabad-AP

INDIA

TECHNICALAnalysis

www.forex2tradeindia.weebly.com

TradingFriend

TrendAdvisor

Confirmations & Indicators

Dynamic Subject

Logical Thinking towards Price Action

forex2tradeindia

Your Success Story Begins from HERE

http://forex2tradeindia.weebly.com/

Email : - forex2tradeindia@yahoo.com

venKEY

slide2

Finding Price Action

& Confirmation

Technical Analysis - INDICATORS

Vol.2

Symptoms (on CHART)

  • Moving Averages
  • Support & Resistance (Moving Average based)
  • Bollinger Bonds
  • Parabolic SAR
  • Pivot Points
  • Fibonacci
  • HeikinAshi
  • Itchmuchi

Believe in Charts

www.forex2tradeindia.weebly.com

Confirmations & Indicators

How to win Market with(out) Technical Indicators.

Technical Analysis is the biggest aspects that influences the trader’s mind and decision when start trading.

Thousands of indicators even strategies and tricks can be easily found in many in forums but only few make money? Right.

Why do you fail using technical indicators?

Because technical indicators can not beat News or Fundamental Analysis.

From the desk of - venKEY

venKEY

slide3

PRICEACTION(without Indicators)

Vol.2

Identify Market Interpretation using PRICE & Volume

BUY on DIPS

When Market opens

GAP DOWN

(follow trend)

SHORT on HIGH

When Market opens

GAP UP (follow trend)

FLAT MARKET

Buy Above Levels

SELL- below Levels

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Price Action Formulae

www.forex2tradeindia.weebly.com

Go LONG above

If price sustains above 2nd Resistance Level

Go SHORT below

If price sustains below 2nd Support Level

All Stop Loss on Closing Basis & Also Follow Trend

venKEY

slide4

INDICATORS tries to read

Vol.2

The SAGA of an INVESTOR

Price>

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Investors Emotion – Price Action

venKEY

venKEY

www.forex2tradeindia.weebly.com

slide5

Introduction

  • - This article is designed to introduce the concept of technical indicators and explain how to use them in your analysis.
  • - We will shed light on the difference between leading and lagging indicators, as well as look into the benefits and drawbacks.
  • Many, if not most, popular indicators are shown as oscillators. With this in mind, we will also show how to read
  • oscillator and explain how signals are derived.
  • Later we will turn our focus to specific technical indicators and provide examples of signals in action.

TA - INDICATORS

Candlestick Chart

Upper

Bollinger Bond

Script / Time Frame / O H L C

----- Market Watch -----

Bear Candle

Bull Candle

Lower Time Frame

Moving Avg.

------------- Price Band --------

Lower

Bollinger Bond

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Confirmations & Indicators

Fractals

Moving Average Cross Over

----- Navigator -----

Buy Volume

Volumes

------------- Time Frame --------

A technical indicator is a series of data points that are derived by applying a formula to the price data of a security. Price data includes any combination of the open, high, low or close over a period of time. Some indicators may use only the closing prices, while others incorporate volume and open interest into their formulas. The price data is entered into the formula and a data point is produced. For example, the average of 3 closing prices is one data point ( (41+43+43) / 3 = 42.33 ).

However, one data point does not offer much information and does not an indicator make. A series of data points over a period of time is required to create valid reference points to enable analysis. By creating a time series of data points, a comparison can be made between present and past levels. For analysis purposes, technical indicators are usually shown in a graphical form above or below a security's price chart. Once shown in graphical form, an indicator can then be compared with the corresponding price chart of the security. Sometimes indicators are plotted on top of the price plot for a more direct comparison.

venKEY

moving averages 1 2
MOVING Averages (1/2)

<MA are laggard> but we shall not ignore when it gives a signal. Confirm with other Indicators

1. SMA (Simple Moving Avg.) Calculation:

Daily Closing Prices: 11,12,13,14,15,16,17 First day of 5-day SMA: (11 + 12 + 13 + 14 + 15) / 5 = 13 Second day of 5-day SMA: (12 + 13 + 14 + 15 + 16) / 5 = 14 Third day of 5-day

SMA: (13 + 14 + 15 + 16 + 17) / 5 = 15

2. EMA (Exponential Moving Avg.) Calculation:

SMA: 10 period sum / 10

Multiplier: (2 / (Time periods + 1) ) = (2 / (10 + 1) ) = 0.1818 (18.18%)

EMA: {Close - EMA(previous day)} x multiplier + EMA(previous day)}

  • Moving averages smooth the price data to form a trend following indicator (TFI)
  • They do not predict price direction, but define the current direction with a lag (because basing on past prices)
  • Despite this lag, moving averages help smooth price action and filter out the noise.
  • They also form the building blocks for many other technical indicators and overlays, such as Bollinger Bands, MACD and the McClellan Oscillator.
  • These moving averages can be used to identify the direction of the trend or define potential support and resistance levels.

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Confirmations & Indicators

http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:moving_averages

3. TMA (Tri-angler Moving Avg.)

The triangular moving average (TMA) is a weighted average of the last n prices (P), whose result is equivalent to a double smoothed simple moving average (i.e. calculated twice).

(this is not popular Technically)

Calculation:    SMA = (P1 + P2 + P3 + P4 + ... + Pn) / n    TMA = (SMA1 + SMA2 + SMA3 + SMA4 + ... SMAn) / n

venKEY

6

moving averages 2 2

Trading with Moving Averages: (Moving averages can work only when trend is there)

  • ………………………………………….…………..
  • In a perfect uptrend 13 EMA will be greater than 30 EMA where both the line continue to rise.
  • ………………………………………………..……
  • In a perfect down trend 13 EMA will be lesser then 30 EMA where both the line continues to fall.
  • ……………………………………………………..
  • When 13 EMA goes above 30 EMA known as GOLDEN cross-over/BULLISH cross-over
  • ………………………………….…………………..
  • and where 13 EMA goes below 30 EMA known as DEAD cross-over/BEARISH cross-over.
MOVING Averages (2/2)
  • Moving Average is a Trend following Indicators
  • (only TFI can generate Buy/Sell Signals)
  • Oscillators (helps analyst about the movement and trend of stock) also known Co-incidental indicators.
  • Moving average is one of the MOST TRUSTED trends following indicator.
  • It is based on closing price basis.
  • Moving average basically a mathematical device which is used to detect the UNDERLINE trend of the market.
  • There are several type of Moving averages but modern technical used Exponential moving averages.
  • Moving average as TFI always generates late signals.
  • So it is regarded as the ‘LAGGERED indicator”
  • But when moving average generate a valid signal it s so confirmed that one should not ignore it.

In the past Technical Analyst use only single moving average i.e., 13 day (13 EMA)…

But with passage of time more and more research have coming into the subject and system of Double Moving Average was introduced. Relative positioning of 13 and 30 EMA gives us BUY and SELL signals as the case may be.

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Confirmations & Indicators

Moving Average Calculation

  • Finally about MAs
  • It is a TFI
  • Not works where no trend
  • Cross over is criteria
  • Laggard Indicator
  • Valid and True Indicator

venKEY

slide8

Support / Resistance - MAs

Memories of Trades to recall /wish again

Trader type vs. Moving Averages (Sup.& Res.)

SUPPORT

RESISTANCE

  • -: Scalpers :-
  • Periods : 5/ 13 MA
  • Time Frame : M-15, M-30
  • -: Day traders :-
  • Periods :13 / 30 MA
  • Time Frame : M-15, M-30
  • -: Swing traders :-
  • Periods : 30 / 50 MA
  • Time Frame : M-15, M-30
  • : Long Term traders :-
  • Period :30 /100 / 144 /200 MA
  • Time Frame : (H4/Day/Weekly)
  • Price frequent touch the line and trades below due to lack of fresh liquidity
  • Price appears costly
  • Technical Selling
  • Low Sl. & High Tgt.
  • - Bears try hold
  • …………………………
  • Often referred to as “MA-Resistance Level". 
  • Price frequently gets fresh liquidity @ that Avg. Price.
  • Price appears cheap
  • Technical Interest
  • Risk : Reward is good.
  • Traders emotions/Short-covering can seen
  • …………………………
  • Often referred to as the “MA-Support Level“.

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Trader Vs. SUPORT & RESISTANCE

Violation of MA-Support

and Crossing below of Higher Time Frame MA gives…Technically SELL calls

Violation of MA-Resistance

and Crossing above to Higher Time Frame MA gives…Technically BUY calls

Support & Resistance

are INTER-CHANGABLE

venKEY

p MA = Period Moving Average (No. of Candles/Bars) d MA = Day Moving Averages (No. of Days

bollinger bonds

A band plotted two standard deviations(2) away from a simple moving average (20),

BOLLINGER Bonds

Periods : 20

Standard Deviation :2

Bollinger Bands -technical trading tool (John Bollinger 1980)

They arose from the need for adaptive trading bands and the observation that volatility was dynamic, not static as was widely believed at the time. Bollinger Bands is to provide a relative definition of high & low. By definition prices are high @ upper band and low @ the lower band.

This definition can aid in rigorous pattern recognition and is useful in comparing price action to the action of indicators to arrive at systematic trading decisions. 

Bollinger Bands consist of a set of three curves drawn in relation to securities prices.

The middle band is a measure of the intermediate-term trend, usually a simple moving average, that serves as the base for the upper band and lower band.

The interval between the upper and lower bands and the middle band is determined by volatility, typically the standard deviation of the same data that were used for the average.

Price Ranging – Relative HIGH/LOW

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venKEY

9

parabolic sar

It works very fine in Trending Market.

  • In a Choppy Trend it give False trade reversals – confirm with Higher Time Frames / Prime (Main) trend
PARABOLIC SAR

Parabolic = Follow; SAR=Stop And Reverse

  • Good Combination is :
  • Parabolic SAR + ADX (Trend Strength)

Trading with Parabolic SAR

trailing-stops

(Lock Profits)

  • Buy Conditions :
  • Parabolic SAR Dot below Price Candle
  • ADX is Above 20
  • Sell Conditions :
  • Parabolic SAR Dot above Price Candle
  • ADX is Below 50

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Trialing Stoploss & Trade Reverse

Parabolic SAR is an indicator that, like Bollinger Bands is plotted on price.

General idea : buy in up trends when the indicator is below price, and sell in down trends when the indicator is above price.

In positions : Parabolic SAR assists in managing the position with trailing-stop (Dots).

venKEY

10

pivot points

Pivot Support & Resistance (Daily/Weekly)

PIVOTPoints

Professional traders & market makers use pivot points to identify important support and resistance levels.

Simply put, a pivot point and its support/resistance levels are areas at which the direction of price movement can possibly change.

Pivot points useful to short-term traders who are looking to take advantage of small price movements.

Pivot points can be used by both range-bound traders and breakout traders.Range-bound traders use pivot points to identify reversal points.

Breakout traders use pivot points to recognize key levels that need to be broken for a move to be classified as a real deal breakout.

Confirm Main Trend & Overbought & Oversold Conditions

Pivot Calculation

Pivot point (PP)= (High + Low + Close) / 3

Support and resistance levels are then calculated off the pivot point like so:

First level support and resistance:

First support (S1) = (2*PP) – High

First resistance (R1) = (2*PP) – Low

Second level of support and resistance:

Second support (S2) = PP – (High – Low)Second resistance (R2) = PP + (High - Low)

Software will automatically plot it on the chart.

Day / Weekly Supp.& Res. point

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R-3

R-2

R-1

PIVOT

S-1

S-2

S3

HOW to trade with PIVOTs :

If price at PP, watch for a move back to R1 or S1.

If price is at R1, expect a move to R2 or back towards PP.

If price is at S1, expect a move to S2 or back towards PP.

If price is at R2, expect a move to R3 or back towards R1.

If price is at S2, expect a move to S3 or back towards S1.

If there is no significant news to influence the market, price will usually move from P to S1 or R1.

In a strong trend, price will blow through a pivot line and keep going.

Pivot lines work well in sideways markets as prices will most likely range between the R1 and S1 lines.

If there is significant news to influence the market price may go straight through R1 or S1 and reach R2 or S2 and even R3 or S3.

R3 and S3 are a good indication for the maximum range for extremely volatile days but can be exceeded occasionally.

venKEY

fibonacci ratios

The ratios arise from the following number series: 1, 1,1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144...

Leonardo Fibonacci,

Italianmathematician. 

FIBONACCI ratios

Compare your Body flexibility

Fibonacci ratioscorrelate two trends; (1) primary (2) secondary. 

The primary trend refers to a trending move in one direction while the secondary trend will refer to counter trend moves in the opposite direction. 

161

100

61

Whole Trend

50

38

Division of TREND in % (Candle %) {PRICE level}

0

Facts of Fibonacci Ratios (known as Fibo Trading Levels)

Common Fibonacci retracement levels are 38.2%, 50%, and 61.8% of the primary trend (Most Popular Charting Software standard levels.)

Fibonacci retracement levels act almost as magnets once the counter trend rally takes place. 

There are a few other Fibonacci levels 75%, 78.6%, 87.5%, and 88.7% that can provide resistance.

4 Thumb Rule is when the 50% retracement level is taken out, the four levels become magnets to attract price. 

Price action must be analyzed at those levels to understand if the countertrend move will cease or whether it will continue to fully retrace the primary move.

Fibonacci retracement levels are used by many floor traders and therefore become very relevant to your Fibonacci trading activities. 

These levels are so widely used now by traders, including systematic trading, that they almost become a self-fulfilling prophecy.  

Some advanced traders will take it a step further and add Fibonacci arcs and Fibonacci fans to their trading arsenal, in search of an edge.

Trend Strength & Retracement

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venKEY

heikin ashi
HEIKIN Ashi

HeikinAshiis a type of trading chart that originated in Japan (heikinashi translates as average bar).

HeikinAshi charts are similar to candlestick and bar charts in that they show similar information (the open, high, low, and close of the time frame), but HeikinAshi charts calculate the information differently.

HeikinAshicharts are usually displayed as candlestick charts (i.e. where the color of the candlestick denotes the direction), but they can just as easily be displayed as bar charts (i.e. where the location of the open and close denote the direction).

HeikinAshicharts are usually used in place of a standard candlestick or bar chart, but can also be displayed in addition to the standard chart (i.e. as an indicator). In the example chart, the standard candlestick chart is shown in the upper section, and the HeikinAshi chart is shown in the lower section

Heikinashi on Candlestick Chart

Heikinashi Chart

Buy @ green Candle,

Sell @ Red Candle

The HeikinAshi candlesticks (the lower section) change direction (i.e. color) less often, indicating that the price is still moving in the same direction.& Shows Strength

Trading Use :

HeikinAshi charts are used in trading in the same manner as standard candlestick or bar charts.

(chart patterns are used to indicate price movements).

HeikinAshicharts have an additional aspect in that the direction of the bar (in color) is supposed to indicate the overall direction of the market, while ignoring the intermediate direction.

(detects false changes of direction).

In the example chart, the standard candlesticks (the upper section) change direction (i.e. color) quite often even though the price is still moving in the same overall direction.

Different Trading Strategy

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Description:

HeikinAshi charts calculate their own open (HAO), high (HAH), low (HAL), and close (HAC), using the actual open (O), high (H), low (L), and close (C), of the time frame (e.g. the open, high, low, and close, of each five minutes).

Calculation:     HA Open = (HAO-1 + HAC-1) / 2    HA Close = (O + H + L + C) / 4    HA High = Highest(H, HAO, HAC)    HA Low = Lowest(L, HAO, HAC)

venKEY

itch moku
Itch MOKU

How to trade with this wonderful setup which is actually a combination of IchimokuKumo Breakouts and

HeikinAshi’sDoji Candle for the Exit strategy.

This strategy can be applied on any market and any timeframe.

We get better and more reliable signals on 4H

Trading Rules:1. Wait for the Candle to Close outside Kumo Cloud2. During Next Candle, place a Pending Order at the Closing Price of last candle3. Place the Initial SL below the Kumo Cloud4. Enjoy your trade as long as the price is above Kumo Cloud (for Bullish trades, price should be below Kumo Cloud for Bearish Trades)5. Watch out for HeikinAshiDoji Candle6. Once you’ve a Doij (Closed) candle, move your SL at the LOW of that Doji Candle7. If the DOJI is validated, the LOW should be taken out during the next few candles and your profits will be booked8. If the DOJI wasn’t validated (as it happened at Point 2 in our chart) your trade will continue9. Keep looking for New DOJI candles and move the SL at the LOW of new DOJI Candles (notice how our profit was booked at Point 3)10. Same procedure applies in reverse form for a

Short Selling Trade

Different Trading Strategy

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venKEY

slide15

PRICEACTION(without Indicators)

Vol.2

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Price Action Formulae

venKEY

venKEY