CFD Marketmaker v5.0 New Charting User Guide 7 th June 2005 v1.2
Contents Page Introduction...3 Charting...4 How to View a Chart... 4 Main Chart Window... 6 Date/Time & Value where the mouse is... 6 Value on the Chart... 6 Current Value... 6 Dragging the Chart... 6 Properties Panel... 7 Properties Window... 7 Date Interval... 8 Time Interval... 8 Add Indicator Button... 8 Toolbox... 8 Save/Load/Remove, Personalise & Print...10 Load/Save/Remove Chart Layouts...10 Personalise the Chart...11 Print the Chart...12 Change Chart Colours, Default View, Zoom Out & Zoom In...12 Change the chart s background a foreground colours, show/hide the grid and display/hide indicator titles...12 Reset the chart view back to its default size...12 Zoom out of the chart...12 Zoom into the chart...12 Chart Options in the Menu...13 Cursor...13 Value Boxes...13 Switch to Cursor Mode after each Drawing...14 Drawing Assistance...14 Transfer lines to smaller views...14 Contextual Help...14 Display Objects...14 Chart Types...15 Add an Overlay or Indicator...15 Remove an Overlay/Indicator...15 Descriptions of Each Chart Type...16 Page 2 of 37
Introduction **Please note that charting prices are indicative only** The Charting functionality in CFD Marketmaker v5 has been completely re-vamped to improve the service and level of reliability to you, the user. Some of the new features include: There are now 42 different kinds of indicators and overlays that you display. Create your own indicators. New charting style including Points, Histogram and Mountain. Greater number of intervals to choose from. Improved drawing tools. You can even paste your own text messages and lines with arrow heads on the charts as well. Intuitive scrolling. Saving an image of the chart to keep on file has been introduced. And much, much more Page 3 of 37
Charting The use of charts is a very important tool to many investors. Marketmaker offers a wide range of functions to make the charting experience as useful as possible. How to View a Chart There are two different ways to open a chart for an instrument: From Price Windows Right click on an instrument in a Single or Group Price window, then Left click on Display Chart. The chart will then open. From the Instrument Tree Right click on an instrument in the Instrument Tree, then Left click on Display Chart. The chart will then open. Page 4 of 37
Example of a 5 minute bid chart opened under default settings. The chart window consists of a number of parts. 1. Main Chart Window: The most obvious is the main chart window itself where the data is displayed. 2. Properties Panel: When you hover the mouse over the chart area, these icons appear, which let you add properties to the chart, maximise the chart size and close the chart. 3. Date Interval: This drop down box lets you specify the date range to view. 4. Time Interval: This drop down box lets you specify the time interval to display. 5. Add Indicator button: This lets you add additional indicators and overlays to the main chart, giving you a richer picture of the data. 6. Toolbox: The Toolbox gives you access to the most commonly used features. 7. Save & Print Charts: These three icons allow you to save your chart designs and print them. 8. Change Chart Colours, Default View, Zoom Out & Zoom In: These buttons allow you zoom in and out of the chart to really focus in close or get a wider overall picture of the instrument s history. Page 5 of 37
Main Chart Window The first thing you will notice when you drag your mouse around the chart is that the mouse pointer is constantly being tracked on the X and Y columns, displaying the date/time and the value. This makes it very easy to find out the value of the instrument as a precise time, simply by hovering over that period. Date/Time & Value where the mouse is The yellow boxes on the X and Y axis (23 Sep 12:50 and 1.2279) indicate the value and time where the mouse pointer current hovers. Value on the Chart As you move the point around the chart, you will also see a tiny circle on the chart that follows the mouse pointer horizontally, but keeps to the line of the chart vertically. This makes it very easy find the value at a specific time without having to hover directly over the target area. The value is shown next on the Y-axis next to the black triangle. Current Value The final value indicator is the box on the Y-axis coloured orange (1.2303). This shows the current value of the instrument. When this screenshot was taken the Euro vs. US Dollar stood at 1 : $1.2303. Dragging the Chart You can drag the chart around as well. Simply left click anywhere on top of the chart itself, hold down the left-mouse button, drag your mouse around and watch the chart follow you. Page 6 of 37
Properties Panel The Panel appears in the top left corner of the chart whenever the mouse pointer is hovering over the chart. There are three icons within it: The Spanner icon launches the Properties window. The Maximise icon makes the chart fit the maximum size window possible. The Close icon removes indicators and overlays from the chart. o If you remove the price chart by mistake, don t worry, left click the Add Indicators button, select Price from the top of the list, click the OK button, then click the Close button. The most important of the three is the Properties window icon. Properties Window The properties window lets you add, edit and remove the lines and overlays on the chart. This is where you change the colour and style of the charts you display. In the example shown, the Add drop-down box has been clicked to reveal all the overlays that can be attached to the Price chart. To access the full list of overlays and indicators, is it better to click on the Add Indicator button on the chart window. You can also see that you can change the colours of the chart, width of the line and the style of the chart. There are ten different styles of line charts available; A solid thin line A long hashed thin line A short hashed thin line A tiny hashed thin line Histogram: A series of columns Points: Each chart value is signified by a dot. Invisible: Makes the chart invisible useful if you want to hide it but not delete it. Bar Chart: Each interval is shown as a vertical line representing the range the price moved, a line to the left indicating the price it was when it began each interval and a horizontal line to the right indicating the price it was at when it reached the end of the interval. Candlestick: Traditional candlestick chart with the box showing the change from the opening and closing prices represented by different colours depending on whether the price rose or fell. Mountain: The value of each point on the chart is plotted and the area beneath the line of peaks is coloured in, to make it look like a mountain range. Depending on which chart type you select, you can also change the set of data it displays, such as opening, closing price, highest and lowest price, etc. Page 7 of 37
Date Interval The Date Interval button is a simple drop down box that lets you change the date range you want to display. The values range from 1 minute to weekly. Time Interval The Time Interval button lets you alter the timing interval of the date range you have chosen to display. It s a simple drop down box that lets you change the date range you want to display, ranging from 1 day to greater than 30 years. The lower the time interval, the more data points will be displayed on the chart. Add Indicator Button The Add Indicator button is the place to go to, to add additional overlays and complimentary charts to your main view. See the section below for an in-depth description of each of the chart types. Toolbox The Toolbox is a set of controls that you can use to manually add customisation to your chart, such as adding your own trendlines, adding text labels and editing and modifying the objects on the chart. The toolbox icon is used to show and hide the toolbox panel. Cursor Mode: o Use this mode to transform the price chart or the indicator charts. Zoom Mode: o This function allows you to zoom the chart. o Click the left mouse button to set the first date. o Move the mouse and click again on the left button to set the second date. o You can cancel the zoom process at any time by clicking the right mouse button. Draw Segments: o Segments can be useful for drawing trend, support and resistance lines. o Click on the left mouse button to define the first point of your segment. o Move the mouse curser then left click again to set the end of the segment. The segment will be drawn continuously. o Right click the mouse to end this process. Draw Lines: o This buttons allows you to draw trend lines, supports and resistances. o Click the left mouse button to define the first point of your line. o Move the mouse cursor and then left click to define the end of the line. o Click the right mouse button to end this process. Page 8 of 37
Draw Horizontal Lines: o This button allows you to draw perfectly horizontal lines on the chart. o Click the left button to set the beginning of the horizontal line. o Move the mouse then left click the mouse to define the end of the horizontal line. o Right click the mouse to end this process. Draw Vertical Lines: o Vertical lines allow you to delimit some periods. o Click on the left button to start the line. o Move the mouse. o Then left click to define the end of the line. o Click the right mouse button to end this process. Fibonacci Retracements: o Fibonacci Retracements are calculated by first drawing a trendline between 2 extreme points. A series of horizontal lines are drawn at the Fibonacci levels of 0.0%, 23.6%, 38.2%, 50%, 61% and 100% of the emphasised trendline. The possible correction after an upward or downward movement may finish near the horizontal support or resistance drawn using the Fibonacci Retracements of this trend. o To draw the Fibonacci Retracement, move the mouse pointer to one extreme of your trendline. o Left click the mouse to set the first point. o Move the mouse to the other extreme of your trendline o Left click again to set the end of the trendline o Right click your mouse to end this process. Text Mode: o This function allows you to add text to the charts. o You can define the font, size, style, underline, colour and outline. o To insert text, click the text icon. o Left click on the chart where you want the text to appear. o A window will appear where you can type in the text and select the style you want. o Click OK to have the text pasted onto the chart. Copy Objects: o This function allows you to copy objects. o Left click on the Copy Objects button. o Move the mouse cursor near an object so that it changes colour to indicate it is highlighted. o Left click the mouse to select that highlighted object. o Move the cursor to where you want the duplicated object to go o Left click to paste it onto the chart. o Right click your mouse to end this process. Move Objects: o Click on the Move Objects button. o Move the mouse near to an item so that it changes colour to indicate it is highlighted. o Left click the mouse to grab that highlighted item. o Move the object to where you want it to be placed. o Left click the mouse to drop it back onto the chart. o Right click the mouse to end this process. Page 9 of 37
Delete Objects: o Click the icon, then move next to the item you wish to delete. o The object will change colour to signify it has been highlighted. o Left click to delete the object. o You can keep in deleting more objects by moving close to highlight them and then left clicking to delete them. o Right click the mouse to end this process. Modify Objects: o This icon is used to edit and modify the properties of a selected object. o Press the button to start then move the mouse next to the object to be modified so that it changes colour to indicate it has been highlighted. o Left click to display the properties window for that object. Object Colour: o The rectangle with the coloured bar (black by default) is how you choose which colour the objects are that you insert onto your chart. o To change the default colour, simply left click on the colour drop down box and left click on a new colour that you want. o All new objects will then use your new colour choice. Save/Load/Remove, Personalise & Print The three icons in the bottom left corner of the chart window allow you open, save and remove chart layouts, personalise your chart and print your chart. Load/Save/Remove Chart Layouts Personalise the Chart Print the Chart Load/Save/Remove Chart Layouts Click on this option to load previously saved charts or save your current chart to file. What you are saving is the chart layout, much like you do when you save the MarketMaker layout. To save a chart layout Click on the icon and select the Save/Remove option. In the windows that then appears, in the box labelled Templates to be saved or deleted, type in the name you want to give your chart layout. Click the Save button to save the Chart Layout. To load an existing chart layout Click on the icon. In the list that appears, you will see the names of your current chart layouts. Left click on the one you want to load. To remove a chart layout Click on the icon and select the Save/Remove option. In the window that appears, left click on the chart layout name that appears in the list that you want to remove. Left click on the Delete button. Click the next Delete button to confirm the deletion. Page 10 of 37
You can customise how your charts appear, and then you can use this option to save the chart layouts so you can easily re-load it or apply it to a new chart. Personalise the Chart To personalise your chart, hover your mouse pointer over the then left click your mouse. icon and A menu of options will then appear. Move to the one you want and left click again to select it. To insert the object you chose onto the chart. Move the mouse pointer to the area of the chart where you want the item you chose to begin. Click the left mouse button just once to anchor it at that point. Without clicking any of the mouse buttons, drag your mouse to where you want the object to end. You will see it move as you drag the mouse. Once you have positioned your mouse pointer where you want the object to end, click the left mouse button to anchor it to that point on the chart. The object you chose is still in play so if you can repeat the steps above to produce another object. You can keep doing this forever. To discard the chosen object from the mouse pointer s focus, click the right mouse button just once. The mouse pointer will now return to its normal state where left click and dragging the mouse pointer drags the chart around. If you make mistake whilst plotting your objects on the chart, you can easily remove them by, Left click on the delete object icon in to the tool bar at the top Hover the mouse over the item you wish to remove and you will see it turn a different colour to indicate it is highlighted. Left click your mouse to delete that item. Repeat this step for each item you wish to remove. When you have deleted all the objects you want, left click on the mouse pointer icon to stop the delete function. Page 11 of 37
Print the Chart The print option is slightly different in this application. When you select to print the chart, it actually saves it as a file on your computer and then opens up that file in an application capable of printing. To print the chart, simply left click on the Print icon A window will then appear asking you to confirm the dimensions you wish to print. Unless you have any desire to change them, just click the Save button. A window will appear entitled Processing Image. Select a different folder or accept the default folder it has chosen, click the Save button. The image the chart should then appear in an application like Internet Browser, or a picture viewer. Use that application to print your chart in the normal way, of clicking a printer icon or by going to File and then Print in the menu. Change Chart Colours, Default View, Zoom Out & Zoom In This final set of icon allows you to Change the chart s background a foreground colours, show/hide the grid and display/hide indicator titles Reset the chart view back to its default size Zoom out of the chart Zoom into the chart Change the chart s background a foreground colours, show/hide the grid and display/hide indicator titles Left click on the icon and a window will appear. Click on the coloured bars to select new colours and tick or untick the boxes to set their values. Click the OK button to return to the chart once you are satisfied. Reset the chart view back to its default size Left click the icon will reset the view of the chart back to its default size and range. Zoom out of the chart Left click on the icon to zoom out of the chart so you can see a wider view date range. Zoom into the chart Left click on the icon to zoom closer into the chart to amplify the detail in a smaller date range. Page 12 of 37
Chart Options in the Menu As well as the various options and functions on every chart, there are 6 options available in the CFD Marketmaker v5.0 menu. In the Menu, click on Options Then click on Chart Options. Six features will then be displayed: Cursor Value Boxes Switch to Cursor Mode after each Drawing Drawing Assistance Transfer lines to smaller views Contextual Help Display Objects Cursor There are four cursor types to choose from; Circles, Line, Cross and None Circles Line Cursor circle is here Cross None Value Boxes To see the instrument s value, like open, close, high and low, just let the mouse point sit stationery anywhere on the chart for a few seconds. Page 13 of 37
Switch to Cursor Mode after each Drawing When this option is turned on, every time you draw a new object to a chart, the cursor goes back to the normal pointer. This means if you want to draw multiple objects, you have to keep selecting the object tool after inserting each one. When this option is turned off you can add unlimited numbers of objects to the chart, without any interference, but you will have to manually select the cursor pointer to deactivate the object drawing, either by clicking on the mouse pointer icon or by clicking the right mouse button. Drawing Assistance This feature is like Snap to Grid in Microsoft Windows and Microsoft Word. As you draw a new object on the chart, the start and end points are anchored to the nearest point on an invisible grid that divides up the chart. It can make it easier if you are trying to draw lines at various angles. However, to draw perfectly horizontal or vertical lines, you are best using the Draw Horizontal Lines and Draw Vertical Lines buttons rather than the Draw Segments or Draw Lines buttons. Transfer lines to smaller views This feature is particularly useful if you draw trendlines over a long period of time. When you select a smaller time scale, if you turn this option on and the applicable portion of the bigger trendline will appear on the chart. Contextual Help This is a useful option to leave turned on. If you hover the mouse over one of the buttons, after 2-3 seconds, a useful description pops-up telling you what the button does, e.g. Display Objects If this option is turned off, it will hide all the objects you have manually added to the chart, like your own trendlines, text boxes, etc. All chart indicators and overlays will remain visible. This is a useful tool if you just want to hide the objects temporarily without having to delete them. Page 14 of 37
Chart Types There are forty two differing overlays and indicators you can add to your charts and you can customise each one to suit your specific needs. Add an Overlay or Indicator Click the Add Indicator button on the chart window. A window will appear listing all the different types of overlays and indicators you can choose from with a description telling you all about each chart type. Left click on the one you want, and then click the OK button. If applicable, a new window will automatically appear, giving you the chance to customise the settings. Choose your settings, and then click the Close button. The new overlay/indicator will now appear on your chart. Remove an Overlay/Indicator To remove an overlay or indicator If it s an overlay that sits on top of the price chart Hover your mouse over the price chart so that the Properties Panel appears, then left click the icon. You will see the list of overlays and indicators appear on the left. Left click on the one you want to remove in the list. Then, left click on the Delete button to remove it. Then, click the Close button to finish. If it s an indicator and sits in its own chart box above or below the price chart Hover your mouse over the indicators own chart bow, so that the Properties Panel appears. Left click on the icon to remove it. Page 15 of 37
Descriptions of Each Chart Type Price The price represents the movement of the instrument s price and can be displayed in various forms, like curve, bar chart, candlestick mountain and histogram. Price is the default indicator that is loaded when you open a new chart. Moving averages are one of the most popular technical analysis tools. They are useful in highlighting a trend because they display the average picture of a security at a given time. When the short moving average rises above the long moving average there is an upward trend and when the short moving average falls below the long moving average there is a downward trend. You could equally use only one moving average and compare it with the price. Page 16 of 37
ADX (Average Directional Index) The Average Directional Index chart indicates the strength of a current trend, be it up or down and can be used to identify potential changes in a market from trending to nontrending. The ADX fluctuates between 0 and 100. Readings above 60 are rare. Low readings, below 20, indicate a week trend and high readings, above 40, indicate a strong trend. The indicator does not grade the trend as bullish or bearish, but merely assesses the strength of the current trend. A reading above 40 can indicate a strong downtrend as well as a strong uptrend. Aroon This indicator can help to detect trends. Up uptrend can be detected when the Aroon Up stays above 70 while the Aroon Down is below 30 and vice-versa for a downtrend. The crossover of both lines can also be a signal of a new trend. Page 17 of 37
Average True Range This indicator of volatility measures selling and buying pressure. When the ATR rises there is more and more and a strong volatility to the stock. When the ATR decreases there is less and less pressure and a low volatility. Bollinger (on Price) 95% of the prices must be inside the bands if one can presume that prices follow a normal Gaussian distribution (bell curve). The bands thus constitute strong zones of support and resistance when the market is without clear trend. When the difference between the two envelopes drops after having increased, the trend loses its force. Page 18 of 37
Bollinger Bandwidth This helps indicate if the market is in a strong trend or not. If the indicator rises, the market forms a trend and if the indicator declines, the trend is almost over. In a market without a trend, you can refer to the Bollinger bands. You can use the lower band as a support and the upper band as a resistance. Chaikin Volatility Chaikin s Volatility compares the spread between a stock s high and low prices. When the volatility is high a top might appear and when the volatility is low a bottom might appear. Page 19 of 37
Chande Kroll Stop (on Price) This indicator indicates the stop for a position (short or long). It is calibrated on the true range and beyond the security s volatility. Hence, the stops are placed under (and on) the high (low) of the p last bars. The different is proportional to the average True Range on P bars. The stops displayed on the chart are obtained with the first stops 9high and low) on the last q bars. Chande Momentum Oscillator This indicator is similar to the RSI indicator. Buy signals occur generally when crossing the -50 level and sell signals when crossing the +50 level. Change is always scaled between -100 and + 100. It also gives good divergence signals. A bullish divergence occurs when the stock price makes new lows while the Chande fails to make new lows. A bearish divergence occurs when the stock price makes new highs while the Chande fails to make new highs. We can apply a moving average on this indicator to smooth it. Page 20 of 37
Change This indicator displays the percentage variation between the close and yesterday s close. One can apply a moving average to this indicator. Commodity Channel Index CCI is a speedometer of the market which gives indications of an overbought condition (>100) or an oversold condition (<100) as well as indications of divergence with prices. Page 21 of 37
Cycle The analysis of cycles is also employed to determine the reversal of trends. DEMA (on Price) This indicator is faster and more smoothed than a standard moving average. Dema can be used with other indicators (MACD, stochastic oscillator). Page 22 of 37
Detrended Price Oscillator This indicator reduces the price trend and cycles as they become more visible. While visualising the tops and bottoms, the DPO emphasises the cycles. Directional Movement The DI+ measures upward movement. The DI- measures downward movement. A buy opportunity may appear when the DI+ crosses above the DI- and a sell signal when the DI+ cross below DI-. These signals are mostly valid when there is a trend. ADX should this be higher than a certain figure. Page 23 of 37
Dynamic Line (on Price) This indicator allows us to know the last price level. It is useful for seeing if that level is a possible support or resistance. In this way you can know if prices are at a strategic point (reversal points, zone of accumulation). Envelopes (on Price) In a market without trend, the lower and upper bans are used as support and resistance. Page 24 of 37
Historic Volatility When volatility is important, a trend reversal could be taking place. Horizontal Line (on Price) This chart allows you to manually add horizontal lines to the price chart. In this example, the value was set to 1.2260. Page 25 of 37
Linear Regression (on Price) This indicator represents buyers and sellers who trade away from the equilibrium price. The equilibrium price could be compared to this linear regression line. In order to limit extreme prices relative to this equilibrium price it is worth plotting the raff channel which will represent the straight linear regression line and two supposed extreme lines to represent maximum variations. Linear Regression Slope This indicator represents the direction of the trend. If the indicator rises above the 0 level, then we are in an uptrend and when the indicator falls below the 0 level, then we are in a downtrend. The higher the indicator is, the more the trend is important. With this indicator you can use the R Squared indicator to confirm the trend. Page 26 of 37
MACD A buy opportunity appears when the blue or yellow line crosses below the red line. A sell opportunity appears when the blue or yellow lines crosses above the red line. The divergences between the MACD histogram and the price quote identify major reversal points and give strong buy/sell signals. A bullish divergence occurs when the stock prices make new lows while the MACD histogram fails to make new lows. A bearish divergence occurs when the stock prices makes new highs while the MACD histogram fails to make new highs. The bullish and bearish divergences are more significant when the MACD is in an overbought or oversold level. The opportunities appearing in longer time horizons (weekly, monthly ) generate larger price movements. MACD Simplified See MACD for explanation. Page 27 of 37
Mass Index This indicator can detect trend reversals. It is based on the difference of the high and low. When volatility increases the MASS INDEX increases and when volatility decreases the MASS INDEX decreases too. To use this indicator it is worth plotting an (9 days) exponential moving average on the price. A (25- period) Indicator MASS INDEX becomes interesting when it rises above the 27 level. In this case, one should wait until the indicator falls below the 26.5 level. Then observer the behaviour of the moving average. If the moving average rises, a sell signal is produced. If the moving average decreases, then it is a buy signal. Momentum The oscillator has an unlimited range. It is this not a good overbought/undersold indicator. However, cross the 0 level gives good buy/sell opportunities. It also gives good divergence signals. A bullish divergence occurs when the stock price makes new lows while the Momentum fails to make new lows. A bearish divergence occurs when the stock price makes new highs while the Momentum fails to make new highs. Page 28 of 37
Parabolic SAR (on Price) Stop and Reverse points are useful to detect trends as they follow the price direction. SAR direction is always the same during a trend. The trend continues while the points stay above or below the prices. When prices penetrate a stop and reverse point, a signal is given for you to liquidate your current position and maybe take the opposite position. Pivot Points (on Price) This indicator represents the pivot point and two levels of support and resistance. The indicator enables you to know if the price is close to strategic levels and encourages you to take positions in the market. Page 29 of 37
Price Oscillator Buy/Sell opportunities occur when the oscillator cross the 0 level. Price Rate of Change The Rate of change is similar to Momentum. It is an overbought/oversold indicator measured according to its position relative to 100. It also gives good divergence signals. A bullish divergence occurs when the stock price makes new lows while the Rate of Change fails to make new lows. A bearish divergence occurs when the stock price makes new highs while the Rate of Change fails to make new highs. Page 30 of 37
R 2 This indicator is able to confirm the trend. It is good to use this indicator with the linear regression slope which specifies the direction of the trend. According to the period used, R 2 is compared with a certain level N. When the slope of the linear regression rises above the 0 level (and there is an uptrend) and R 2 rises above this level, the trend is confirmed. The R 2 could confirm the trend displayed by the linear regression slope. It can also be used with other indicators. Relative Strength Index RSI is an overbought/oversold indicator. Buy signals occur generally when crossing the 30 level and sell signals when crossing the 70 level. RSI is always scaled between 0 and 100. It also gives good divergence signals. A bullish divergence occurs when the stock price makes new lows while the RSI fails to make new lows. A bearish divergence occurs when the stock prices makes new highs while the RSI fails to make new highs. Page 31 of 37
Repulse Repulse measures and represents in the form of a curve the push contained in each candlestick. It is a complementary indicator which has not relevance unless compared with the price movement. However, its main usefulness is not related to price movement in the same way as an RSI, a MACD or a Stochastic Indicator. Instead, it offers invaluable additional information on the feeling and confidence that trades have about the markets. Smoothed Stochastic The SMI gives good divergence signals. A sell signal is given when a bearish divergence appears. A bearish divergence occurs when the stock price makes new highs while the Smoothed Stochastic fails to make new highs. A buy signal is given when a bullish divergence appears. A bullish divergence occurs when the stock price makes new lows while the Smoothed Stochastic fails to make new lows. When %k and %d are under the 20 level, there is a bullish signal when the %k rises above the %d and when the two indicators rise above the 20 level. When the %k and %d are above the 80 level, it is a bearish signal when %k falls below %d and when the two indicators falls below the 80 level. Page 32 of 37
Standard Deviation Standard deviation measures the volatility of prices. It is often used in relation to some indicators. For example, the Bollinger bands are calculated from an arithmetic moving average. To plot an upper and lower band, add and subtract 2 * (standard deviation), Standard Error This indicator allows us to know if prices are close to the linear regression or not. The closer you are, the more the trend is reliable. On the other hand, the further away you are the less reliable is the trend. This indicator is often used in relation to R 2 as to interpret trend reversals more easily. We can observe that when the two indicators start from opposite levels and converge, there is usually a change of trend taking place either a new phase of consolidation and /or possible a phase of reversal. Page 33 of 37
Stochastic It is an overbought/oversold indicator depending on its position relative to the 0 level. It also gives good divergence signals. A bullish divergence occurs when the stock price makes new lows while the Stochastic fails to make new lows. Stochastic Momentum Index This indicator represents the position of the close, relative to the median point, whereas the traditional stochastic represents the position of the close relative to the highest and lowest points. We use a double smoothing with an exponential moving average so that the signals are more consistent The SMI gives good divergence signals. A sell signal is given when a bearish divergence appears. A bearish divergence occurs when the stock price makes new highs while the SMI fails to make new highs. A buy signal is given when a bullish divergence appears. A bullish divergence occurs when the stock price makes new lows while the SMI fails to make new lows. Page 34 of 37
SuperTrend (on Price) The SuperTrend indicator lets you manually insert a trendline onto the chart. TEMA (on Price) This indicator is faster and more smoothed than a standard moving average. TEMA can be used with other indicators (MACD, Stochastic oscillator ) Page 35 of 37
TRIX It is often used with a (9 day) moving average of smoothing. When the TRIX rises above its moving average a buy signal is announced. When the TRIX falls below its moving average it s a sell signal. The TRIX is very valuable when there is a clear trend. The TRIX gives good divergence signals. A sell signal is given when a bearish divergence appears. A bearish divergence occurs when the stock price makes new highs while the TRIX fails to make new highs. A buy signal is given when a bullish divergence appears. A bullish divergence occurs when the stock price makes new lows while the TRIX fails to make new lows. Williams %R Williams %R is an overbought/oversold indicator. Values -80 and -20 can be used as limits to detect overbought/oversold situations. Nevertheless, it is better to wait for a change in the price direction, which can be detected for instance through MACD indicator analysis, before buying and selling. Note that when Williams %R makes a peak and reverses, a price declined often takes place. Page 36 of 37
ZigZag (on Price) The advantage of this indicator is that it displays the most relevant price movements by eliminating the smaller movements. The sensitivity of representation of these fluctuations is determined by a percentage or by a number of points which can be applied to the price (open, high, low, close). This indicator is very visual and can be useful in breaking down the Elliot Wave evolution of a security. Page 37 of 37