The standard deviation is a tool widely used for statistics. This indicator measures the volatility of a security. The standard deviation is generally used for the construction of other indicators (eg Bollinger Bands).
A higher standard deviation indicates that the data are scattered and therefore there is significant volatility. It shows generally a feeling of euphoria or fear in the markets. Conversely, a low standard deviation indicates a low volatility and good anticipation of investors (no surprise). Formula explanation:
More courses away from their mean is to say, the greater the difference between current and average increases, the volatility is high. The standard deviation is the square root of the variance. The variance is calculated by averaging the deviations from the mean, all squared.
The calculation can be broken down into 6 steps:
1. It calculates a simple moving average (MMS) 2. For each period, the difference between the closing and the MMS determined in step 1 3. It is squared all the results obtained in step 2 4. Summing the results of step n3 5. Divide the result by the period used (from the MMS) 6. It is the square root of the figure obtained in Step No. 5
The differences between the MMS and the fences are being put to the square to avoid having negative numbers (where a fence below the moving average) (there is subsequently a square root).
Standard deviation: Application to the trading and investment:
The standard deviation is an indicator used relatively little. It is often neglected for Bollinger Bands. We often find that the violent price changes are preceded by areas where prices are not volatile (and thus a low standard deviation).
The eToro is a special representation came from the Far East. The particularity of this type of representation is that it is not plotted as a function of time but based on price alone. The color and sense lines are connected under the contract. If prices go in the same direction as the previous line, then it will be extended. By cons, if the course turns to a predetermined amount (commonly known as rollover threshold), a new line is drawn in the opposite direction. It is a graphical representation of trend following. When prices break a higher or lower earlier, the color of the line changes. The horizontal lines that you see on the charts kagi did not really exist, they are just drawn to give continuity to the course and are called lines of inflection.
Terms of Use:
There is no magic threshold of turning running for all values, therefore, for a given value, we choose a threshold of rollover greater relevance compared to the historical record and giving fewer false signals. Kagi: Application to the trading and investment:
The first method is the most basic. It involves buying lorsq'une line turns green and sell when it turns red.
The second method is to wait for a break of several lower or higher. Indeed, the color change of the line is confirmed if we manage to break two highest or two lowest minimum.
Moving averages are probably one of the most used indicators. This indicator is widely used but it is poorly used.
The moving average is the average value of a security over a given period (n). The average is about one of the data (during opening, closing, highest, lowest) for each time unit (TU). The choice is often on the closing price. In this case, it is constructed by calculating an average closing price over the period. They say the average is moving as it changes with each UT. It includes the calculation of the average over the past UT and is removed during the calculation of the oldest.
This may be simple or weighted in this case we will assign more importance to certain courses. Thus, there are several types of moving averages:
* Simple Moving Average (or arithmetic) Exponential Moving Average * * Moving average "time series" * Triangular Moving Average * Variable Moving Average * Average adjusted by moving the volumes * Average weighted moving
The difference between these averages is only moving the weight assigned to the data over the period. We see in this form the most common: the simple moving average and exponential.
The moving average (or moving average: MA) have the advantage of Liser courses and thus help the trader to identify a trend (being above or below the MM) removing excessive fluctuations transitory market. They are often used with indicators to accompany the movements.
It may indicate that over the period considered in the calculation is more short moving average will stick to the trend. Application to the trading and investment:
There are basically two methods of using moving averages.
* The first is to identify intersections between moving average and courses. The buy signal is triggered when prices cross upward moving average. The sell signal occurs when prices move below the moving average.
The signals are symbolized by purchasing a green arrow, the signals of sales by a red arrow. The purchase is triggered whenever prices move above the simple moving average 50.
* The second mode of intervention is to identify intersections between two moving averages, a relatively short period and another longer period. The intersection of the short moving average above the long moving average trigger the buy signal. The sell signal is given when the short moving average falls below the long MM.
on the graph LAGARDERE above, the crossing of moving averages gives us good signals purchases and sales. This method is particularly interesting for an average investment / long term.
The advantage of these two methods is that they can always act in the direction of the trend.
Question: How do you determine the good times?
The most moving averages are used: The MMS 200 MME 150 MMS 50 MMS 20
The periods may be different depending on which action is based moving average. To determine the optimal period moving average, it is possible to make several tests with different periods. We observe this behavior when being faced with this moving average. The goal is to find a moving average which acts as a support / resistance.
There is another method for determining the period of our moving average. To do this we must first determine the degree in which our asset moves. It must then divide the length of this cycle by two. It adds 1 to this result.
Momentum and Rate Of Change (ROC) are two indicators that measure the speed of progression of a title. The ROC measures the percentage of increase during the day and the yan of it period. The present growth momentum in the form of a ratio (during the day compared to that of he yan period).
When the ROC and the momentum increases, the increase in security has been higher than it was yan period (the title up quickly). The title is considered overbought. Conversely, when both indicators are below the title is considered oversold.
It is important to note that the momentum term also designates a family of indicators to assess the rate of progression courses.
Application to the trading and investment:
The ROC as Momentum indicators are the family of oscillators. The ROC will oscillate around the axis 0 (0: the title has not improved compared to that of period there are n,> 0 the stock has increased, <0> 100: the closing date is later).
For the analysis it is important to observe the direction and rate of progression of these two indicators. More indicators will increase rapidly over the course of progression is rapid and strong. Unlike most indicators more quickly reduce the price to drop rapidly and sharply.
We can identify two important areas:
* The overbought zone: very high indicator
* The oversold zone: very weak indicator
Caution: for each value or index, the areas of purchase and are on sale to determine the history. Each value has a level on procurement and on specific sales.
The investor will pay particular attention to turning indicators in these areas have a high probability to indicate a change in price trends. The signal is bearish if these indicators will pass down the box on purchase. Conversely, it will be bullish when crossing the area up on sale.
Summary: How do you decide which pair of currency is suitable for range trade? Find out in this article.
A range trade is actually known as a short-term consolidation which changes from time to time. A good way to make profit in range trade is to choose non U.S dollar pairs and focus at other type of currencies.
As all of us know, the trend in forex usually follows U.S dollars. Therefore, to avoid trend bias, choose a non U.S dollars pairs and work on the ranging forex trading strategy. If you can observe clearly on what have happened in the past 6 months, all pairs involving U.S dollars did not show a long lasting range trend and this has caused losses to most of the traders.
Most of the traders like to trade using EUR/USD pair and if you study the chart closely for its past performance, you realize that the chart is either moving upwards or downwards. Unlike non U.S dollars pairs, the chart usually stays within some values of pip range and the trading is more stable and volatile.
However, not all U.S dollars pairs show a non-volatile range in forex market. As a smart trader, it is good if you can observe the trend for each currency pair for a certain period of time by looking at the chart or study the interest rate differential.
So, how does interest rate differential affects the volatility of a currency pair? Interest rate differential is the difference of bank interest rate offered by the currency pair. For example, interest rate for Australia’s bank is 3.75% and Japan’s bank is offering 0.10% and the difference (3.65%) is called the interest rate differential. Observe also the historical data back in few years ago to determine if the currency pair is a volatile pair or not.
In conclusion, there are two considerations to take note while using ranging strategy to trade. First is to choose non U.S dollars pairs to avoid bias and second is choose pairs with low interest rate differential. Always study the chart and historical data wisely before deciding to trade.
What is the FTSE 100 and how does it work? That's a question that plenty of people ask. After all, the FTSE 100 is quoted on the news and in newspapers on a daily basis but it's never actually explained. So here's an attempt at an explanation:
In the UK, shares in companies are traded on the London Stock Exchange (commonly known as the 'Stock Market'). Traders buy and sell shares on behalf of large corporate institutions and on behalf of small private investors.
The 100 companies that have the largest value on the stock market (that is the largest total value, not the largest price per share) are included in the FTSE 100. The list of 100 companies is updated on a quarterly basis to ensure that it (roughly) contains the largest 100 UK companies at any point in time.
An index is then created using the share prices of these top companies. The index can really be thought of as being representative of the average price of shares in all of the 100 companies. So, when you see it reported in the news that the FTSE 100 has gone up during the day, then what that really means is that, overall, the value of shares across the top companies has moved up that day. The reverse is also true (if the index goes down on a given day).
Since it is only a representative index, the stock market could be 'up' but some individual companies within the index may have seen their share price drop. So what use is the FTSE 100 index?
Well, it really offers little more than a guide to general trends across the stock market as a whole. There are many more specific indices that can be used to look at specific industrial sectors, but the main FTSE 100 index gives a very quick 'at a glance' view of the market's performance on a given day.
The footsie100 trading hours are between 8.00am on a morning until 4.30pm in the afternoon and this is key to ours strategy.
Here I just want to explain a little about the birth of the method we are going to use. A few months ago I realised that when the footsie100 opens on a morning (8.00) there was always some initial volatility. I also realised that if I could capture some of that volatility then surely there would be profits to be made.
I have used different methods trying to capture this but failed to make consistent profits. The reason being that I didn’t know if the market was going to shoot up or down, it was not until I stumbled on a crucial factor (the one factor that drives this method) that I realised there was a way to capture this movement consistently.
Now I have explained the Footsie100 market. The key factor that makes the footsie100 market move on a morning is that it follows the Dow Jones (the main American indices)
The Dow Jones Industrial Average also called the DJIA, Dow 30, INDP, or informally the Dow Jones or The Dow) is one of several stock market indices, created by nineteenth-century Wall Street Journal editor and Dow Jones & Company co-founder Charles Dow. It is an index that shows how certain stocks have traded. Dow compiled the index to gauge the performance of the industrial sector of the American stock market. It is the second-oldest U.S. market index, after the Dow Jones Transportation Average, which Dow also created.
The average is computed from the stock prices of 30 of the largest and most widely held public companies in the United States. The "industrial" portion of the name is largely historical. Many of the 30 components have little or nothing to do with traditional heavy industry. The average is price-weighted, and to compensate for the effects of stock splits and other adjustments, it is currently a scaled average. Not the actual average of the prices of its component stocks, but rather the sum of the component prices divided by a divisor, which changes whenever one of the component stocks has a stock split or stock dividend, so as to generate the value of the index. Since the divisor is currently less than one, the value of the index is higher than the sum of the componen
PUTTING THE PLAN INTO ACTION
Now we have established that the two markets of interest to us are the two main world Indices the FOOSTSIE100 and the DOW JONES.
The footsie100 opens at 8.00 and closes at 4.30 UK time
The Dow opens at 2.30 and closes at 9.00 UK time
It is a well known fact the Dow drives the Footsie100 i.e. the directional movement of the Dow ▲will be followed by the footsie100▲
When the London markets close at 4.30 obviously the American markets are still trading because of the time difference. The information we are interested in is the movement of the Dow after London closes.
Just say for instance that the Footsie100 closed at 4.30 and the value of the market was 4300
At 4.30 the Dow was worth 8200 and by 9.00 had closed at 8300. The Dow Jones had moved 100 points▲ whilst the Footise100 was closed in London. (note trading on the footsie continues until 9.00pm)
The gap in the market is normally made up by the footsie100 the following day.
Here is the calculation required to benefit from this information
Footsie100 closed 4300 (4.30)
Dow traded at 4.30 = 8200 and closed at 8300 (a difference of 100 points) The Dow Jones at this moment in time is worth roughly around double that of the footsie100 (8300 compared to 4300)
The market moved up 100 points this total. This must be divided by 2 (actual 1.93) to give us the probable upward movement of the footsie100 the following morning 100 divided by 2 = +50 ▲
WHERE TO ACCESS THE MARKET DATA
The best place to access the required information is the BBC teletext service. Press the red button on your remote go to the BBC index, business then markets (which I believe is on page 230)
I access this information once it is updated around 10.00pm
The page showing the footsie100 looks like this:-
Hourly Footsie100
08004286
08304305 +29
09004322 +36
10004350 +64
11004354 +68
12004355 +69
13004350 +64
14004355 +69
15004346 +60
16154330 +44
CLOSE 4350 +64
Note that it is only the closing figure that is of interest to us.
Again the Dow Jones can be accessed exactly the same on the teletext business pages and the movement is recorded in exactly the same way
Opening 8550
14.458557 +7
15008602 +52
15308608 +58
16008586 +36
16308599 +49
17008598 +48
18008577 +27
19008538 -12
20008514 -36
CLOSE8470 -80
The important figures for us here are the figures at 4.30 when the Footsie100 closed 8599
And the figure when the market closed 8470
We now perform our simple calculation to get the figure for the footsie movement the next morning
8599 – 8470 = 129 half this figure (the footsie100 being worth half the value of the Dow)
64.5 is the figure I expect the footsie100 to fall the following morning.
Rather that having to wait for the market to open at 8.00 I place an order that night
The Footsie100 closed at 4350 then I expect it to drop to 4285.5 the following day.
Note that if the gap is less than 10 points I do not bother placing a trade. The gap has to be 10+ points
Also note that all markets close Friday evening for the weekend but I still place a trade over the weekend for the footsie100 open Monday morning.
PLACING AN ORDER
Open up your trading platform
Details are on my homepage and please note that only through my site will tradefair put £70 into your account.
When you log in,the popular markets will be on display
Above is the box we use to place our order.
If buying click in the buy circle
If selling click in the sell
The example I showed from the teletext pages showed the footsie had closed at 4350 and we were backing it to go down. (sell)
Click on the circle to sell
In the box that says level it would have been a red reading click on the minus button until the box turns white. This is at the level the order can be placed (the quote in brackets would have stated not between 4352 and 4348) Note the 2 point spread.
Click on the stop box and place a stop 20 points above the level if selling or 20 points below if buying
Our stop loss would be placed at 4570 so if the market was to rise instead of our calculated fall then we would be stopped out of the trade and lose 20 points.
NOTE: ALWAYS PLACE A STOP LOSS.
We expect the market to fall by 64.5 points. So we can place a limit on the trade. The market closed at 4350 and we expect it to fall to 4285.5 so a limit order can be placed at 4286.
And that is basically the system in a nutshell. It may sound difficult placing orders but believe me it is quite simple practice will make perfect. Read the information on the tradefair site about stop losses and limit orders. They go into more detail than I have and probably explain it clearer.
But basically our example shows the market close at 4350 we place a stop 20 points above that 4370 and a limit order for it to fall 64 points to 4286. Simple!!
Note: on the results sheet the variation in the strength of bets. I normally place bigger stakes when the gap in the market is above the 40 point mark.
WATCHING TRADES
Note that it is not necessary to watch the trade. It has its advantages and disadvantages. Once you have placed your order you don’t need to do any more until the following evening.
But sometimes watching the trade you don’t have to place a limit order you can close off the trade manually. Sometimes the market will fall or rise further than the level we have placed an order for. But of course if you see the candles bobbing up and down this may cause you to jump out of a trade sooner than you should have.
An example of a candle chart below, note again I recommend you read the technical information on the tradefair site explaining candlestick movement.
Note that our order for the footsie to fall at 4350 worked a treat and the market actually fell all day long down to 4223 (127 points)
But the fact is that we had a 64 point winning minimum.
The forex market is said to be one of the largest places known to the business people. Trading has become a part of man's life since time immemorial. Needless to say, it is an opportunity that provides better earnings in relation to the released investment. Hence, it is an endeavor which requires you to gain an in-depth knowledge regarding the types of technical indicators that basically prove to be really useful. By combining two or more of them, you increase the probability of obtaining a full knowledge of the steps which you need to take on as you continue with the opportunity of earning a generous profit.
Technical Indicators and their Advantage
Many of the traders are encouraged to make use of the technical indicators. Even more, the pros still trust them. How much more for a beginner like you? They are the mathematical formulas that govern the respective indicators. Studies reveal that they are very accurate too only that they don't really come up with a complete analysis. What these tools can do is to show you the tendencies in the market.
Your mere presence in the stock market suggests that you have a perfect goal and that is to earn money and generate a great deal of profit. You should not forget though that the market is volatile. Meaning, its instability paves way to a number of changes that may occur at any time. Thus, these indicators are the perfect tools that can tell you as to whether it is good enough to buy or sell commodities or securities.
As you opt to utilize the indicators, it is likewise very pertinent to remember that many of the formulas include jotting down the derivatives. This goes to show that the data is not obviously direct. That is why it is often helpful to consult more than one indicator to be able to draw a clearer picture. After all, it will never hurt to check out the accuracy of your conclusion.
Four Basic Classifications of Technical Indicators
Whether you prefer to trade forex, stocks, or other commodities, it pays off to think about obtaining a solid foundation that may serve as your guide. Again, it is very significant to pick out those which you know are already proven to work and those that you can comfortably use.
The trend indicators. Moving averages, Parabolic SAR, and MACD are just some of those that make up this group. By looking into the movement of the trends, you can decide on the level at which you can start trading.
The momentum indicators. These are considered to be the oscillating indicators and are most clear-cut in pinpointing the overbought as well as the oversold positions. Similarly, they show the signals for any new trend. Stochastics, RSI, and CCI are just some of those momentum trend indicators.
The volume indicators. The name itself tells you that the price movement is very much dependent on the volumes of the trades. Generally, the price movement which is rooted from a high volume gathers a fairly stronger signal compared to one which is inspired by the low volume. Examples of which include the force index, money flow index, ease of movement, Chaikin money flow, and many others.
The volatility indicators. They normally look into the ranges that define the volume that lies beneath the movements and the price behavior. The common examples include the average true range, Bollinger bands, and the envelopes.
There you go with the four groups of technical indicators that will steer you as you work on achieving the best of the profits from the forex market.
rading currency can be quite profitable and sometimes quite daunting depending on your experience. Nonetheless, with the right knowledge, experience, and tools you can easily succeed and generate a lot of wealth. Understanding the trend of currency can help you extraordinarily when making a decision whether to buy or sell at any given moment.
A powerful tool that can be only beneficial to your endeavors in the forex trading world is a free tool that can help you track the trend of currency. Utilizing Forex Trend Catcher you are able to immediately track trends as they are going up or down. This can be an asset to any professional or amateur forex trader.
Understanding the trend's direction gives you an upper hand as a trader. You can identify the up and down swings and make proper buy and sell trades at the right moments. Preventing mistakes when it comes to generating money is imperative. Any mistake can cost trader money, thus an unbiased tool that immediately identifies every movement is a must for your trading arsenal.
Utilizing a forex trend indicator will only help you, there are many trend indicators on the market, some are automated and others are forums where a forex trader advises you. Regardless, there are many that cost money, and some cost a lot of money. Don't waste your money on such a simple tool there is a free solution called Forex Trend Catcher.
Not only is Forex Trend Catcher free, it works flawlessly. It is easy to setup and takes a matter of minutes, if not, seconds. It utilizes the Meta Trader platform, which is a free platform available to all traders. Once you are able to identify the trends of different currencies you will be on your way to making a profitable residual income.
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