In this live hour long recording from a live seminar, Steve Hil, President of AIQ Systems explains how to tell when an up move in a stock is over and it’s time to exit poisitions or go short. Steve discusses exhaustion gaps, rising channel breakdowns, doji candlestick, volatility fade, volume exhaustion and more
AIQ: TREND, MOMENTUM, VOLATILITY, AND VOLUME (TMV)
A Series Of Indicators Used As One
Making good trading decisions involves finding indicators that cut through the market noise. But how do you do it without collapsing under the weight of information?
Chart analysis is a multidimensional affair; no single indicator can tell the entire story. After spending years cluttering my screen with multiple indicators, I discovered that more is not necessarily better because they sometimes present conflicting information. Often, it takes longer to analyze the information needed to make decisions.
The goal is to integrate the knowledge that indicators provide in order to evaluate the situation that leads to making good trading decisions. That means each trader needs to find those indicators that cut through the market news (and noise) in a way that makes most sense to him or her without collapsing from information overload. Here’s a method I have found useful.
The first step is to determine the categories from which to draw the indicators. For me, that includes trend, momentum, volatility, and volume (TMV). These present a multi-dimensional view of price behavior to supply a more complete picture…..excerpt of Barbara Star’s article in Stocks & Commodities, “Trade Breakouts And Retracements With TMV,”
AIQ SYSTEMS, KELTNER CHANNELS, CCI, AND COLOR-CODED PRICE BARS. Here’s a sample chart of Noble Energy with the TMV indicators.
The AIQ code and EDS file based on is provided at www.TradersEdgeSystems.com/traderstips.htm. The code is also shown below
!TRADE BREAKOUTS AND RETRACEMENTS WITH TMV
!Author: Barbara Star,PhD, TASC February 2012
!Coded by: Richard Denning 12/9/2011
!www.TradersEdgeSystems.com
!CODING ABREVIATIONS:
C is [close].
C1 is valresult(C,1).
O is [open].
H is [high].
L is [low].
H1 is valresult(H,1).
L1 is valresult(L,1).
V is [volume].
!KELTNER CHANNEL
!INPUT:
keltLen is 20.
!KELTNER CHANNEL UDFs:
typ is (H+L+C)/3.
rangeAvg is simpleavg(H-L,keltLen).
!Plot the following three functions on price chart
!as three separte indicators:
midKelt is simpleavg(typ,keltLen).
upperKelt is midKelt + rangeAvg.
lowerKelt is midKelt – rangeAvg.
!ADX
!INPUT:
WilderLen is 10.
!NOTE: Wilder to expontential averaging the formula is:
!Wilder length * 2 -1 = exponential averaging length
!USED FOR DMI, ATR, ADX, ADX RATE
avgLen is WilderLen * 2 – 1.
!AVERAGE TRUE RANGE:
TR is Max(H-L,max(abs(C1-L),abs(C1-H))).
ATR is expAvg(TR,avgLen).
ATRpct is expavg(TR / C,avgLen) * 100.
!+DM -DM CODE:
rhigh is (H-H1).
rlow is (L1-L).
DMplus is iff(rhigh > 0 and rhigh > rlow, rhigh, 0).
DMminus is iff(rlow > 0 and rlow >= rhigh, rlow, 0).
AvgPlusDM is expAvg(DMplus,avgLen).
AvgMinusDM is expavg(DMminus,avgLen).
!DMI CODE:
PlusDMI is (AvgPlusDM/ATR)*100. !PLOT (2 lines)
MinusDMI is AvgMinusDM/ATR*100. !PLOT (2 lines).
DirMov is PlusDMI – MinusDMI.
DirMovAIQ is [dirMov].
!ADX INDICATOR as defined by Wells Wilder
!PLOT DIdiff as historigram is same as DirMov (AIQ built in indicator):
DIdiff is PlusDMI-MinusDMI.
ZERO if PlusDMI = 0 and MinusDMI =0.
DIsum is PlusDMI+MinusDMI.
DX is iff(ZERO,100,abs(DIdiff)/DIsum*100).
!PLOT ADX as single line indicator with support at 24:
ADX is expavg(DX,avgLen).
!VOLUME OSCILLATOR:
!INPUTS:
volLen1 is 1.
volLen2 is 20.
pctChgLvl is 50.
!VOLUME OSCILLATOR UDFs:
volAvg1 is simpleavg(V,volLen1).
volAvg2 is simpleavg(V,volLen2).
pctChgV is (volAvg1 / volAvg2 -1) * 100.
volOsc is iff(abs(pctChgV)>pctChgLvl,1,0). !PLOT
!CCI INDICATOR:
!INPUTS:
cciLen is 13.
!CCI UDFs:
typAvg is simpleavg(typ,cciLen).
absdiff is abs(typ-typAvg).
sumD is sum(absdiff,cciLen)/ cciLen.
CCI is (typ – typAvg) / (0.015 * sumD). !PLOT WITH +100 -100 LINES
!COLOR BAR RULES:
!INPUT:
trndLen is 8.
Green if ADX > valresult(ADX,1) and C > simpleavg(C,trndLen).
Red if ADX > valresult(ADX,1) and C < simpleavg(C,trndLen).
This e-mail address is being protected from spambots. You need JavaScript enabled to view it.
for AIQ Systems
January 20, 2012 US Market Review – with Richard Muller, Reuters Equity Analyst and TradingExpert Pro user
Richard Muller has posted a video update on The Trading Prism website on the major market support and reisitance levels.
Data Driven Trading…
Steve Palmquist.Author of ‘The Timely Trades Letter’. ‘How to Take Money from the Markets’, and Money-Making Candlestick Patterns. Analyzing trading patterns is vitally important to trading. Trading without understanding the statistics of a trading pattern is just taking unknown risks, and makes little sense. The trading patterns tested and analyzed in my first two books provide the beginnings of a trading toolbox, and the knowledge of when to use each tool. Without a clear understanding of how and when different trading patterns work, it’s easy to get caught up in fear, greed, group think, etc. However these emotional and non-data driven approaches often lead to losses. Traders need to be first and foremost focused on what the market is doing, and then selecting the most appropriate trading patterns, or remaining in cash, to address the current market conditions. Without previous testing and analysis of trading tools, and how they perform in differrent market conditions, traders are just randomly using tools that may or may not be appropriate for the current market.It is also very important to have a clear exit strategy before entering any trade. If I don’t know where I want to exit a trade then I don’t take the trade in 1st place. In trading range markets most stocks tend to pop and drop, if they didn’t the market (which is the summation the large number of stocks ) would be trending. So a trading range environment tells us that stocks are not going to run very far, by definition. I use this information to drive my exit strategy which is more short term in a trading range market then it is a trending market as outlined below. In a trending market, individual stocks tend to pop and then move for a while. The market, the summation of a large number of stocks, is moving or trending because a lot of individual stocks are moving or trending. Once again observing the market conditions tells us how individual stocks are likely to behave, and that tells us how to manage our exit strategies.Trading should be data driven, not based on emotion, whishful thinking, or hot tips from TV hosts. To be data driven one needs to test and analyze trading tools and find out what really works, and when each tool should be used. Traders must understand which tool to use for a specific task, and have a clear understanding of how the tool works, and what can and cannot be done with it. I have extensively tested several trading systems, the results of this testing on specific trading trading tools are outlined in ‘How to Take Money from the Markets’, and Money-Making Candlestick Patterns. The testing process helps us understand how stocks usually behave after forming a specific pattern such as being outside the Bollinger Bands, showing strong distribution or accumulation, or pulling back or retracing during a trend. Understanding what a stock is most likely to do forms the beginning of a trading strategy. Trading without this information is taking unknown risks.
Excellent top down analysis for options trades using TradingExpert Pro
Today’s webinar by Richard Muller, Reuters Equity Analyst, senior instructor at The Trading Prism, and long time AIQ TradingExpert Pro user has been recorded. Richard covered the Expert Ratings on the US markets before moving onto group/sector rotation using AIQ Reports. His stock selection process was geared toward possible options trades. You can view this video at