Thursday, March 29, 2012

Swing Trade

MetaStock SPRS Series - Week 61 - TechniTrader® Stock Discussion for MetaStock Users - Swing Trade - March 26, 2012
By: Martha Stokes C.M.T.

Small details make all the difference between highly profitable swing trading and mediocre results or worse, intermittent profitable trades followed by chronic losses.

Swing trading requires considerable attention to details and focus to maintain highly profitable trades. One area that most swing traders need more work on is reading candlestick charts. Often traders will depend far too much on indicators rather than the pure price action.

Candlesticks are far superior to bar charts for today’s automated marketplace because they are easier to read, offer a far more graphic and detailed account of price action and provide a stronger image of price over time.

SMG is an excellent example of 2 velocity runs within a range-bound price pattern. Many traders do not see the significant difference between a momentum run and a velocity run.

Chart 1

A momentum run has resting days, minor profit-taking, and pauses within the run. A velocity run, as is shown above at the end of January and in early March, is a unique candlestick pattern. Price not only moves up, each day the candles lengthen. In addition volume increases during the velocity run. A velocity run doesn’t pause or rest; it doesn’t form stair step patterns or create any kind of day by day support.

This means swing traders need to recognize that this is not a momentum pattern but a velocity pattern. Velocity analysis is slightly different from momentum analysis. Stops need to be placed intraday at times rather than at the weak support levels of a momentum action.

Velocity runs also tell the trader that many market participant groups are buying this stock and that word is spreading about the run. The run also goes vertical much faster than a momentum run so the number of days a velocity pattern can sustain is far more limited than on a momentum run which can at times last for many days.

This means that when you are in a velocity run, you must continually move up stops and prepare to exit before the stock reverses. If you wait for the stock to start the profit-taking, you are likely to lose more profits and/or have your stop jumped over as HFTs sell down so quickly your order to sell is missed in the thousands of HFT orders.

Swing trading can be a lot of fun and highly profitable but it requires substantially more technical skills than position trading.

Trade wisely,

Martha Stokes, C.M.T.
Member of Market Technicians Association
Master Rated Technical Analyst: Decisions Unlimited, Inc.
Instructor and Developer of TechniTrader® Stock Market Courses
MetaStock Partner

©2012 Decisions Unlimited, Inc.

Disclaimer: All statements, whether expressed verbally or in writing are the opinions of TechniTrader, its instructors and or employees, and are not to be construed as anything more than an opinion. Student/subscribers are responsible for making their own choices and decisions regarding all purchases or sales of stocks or issues. At no time is any stock or issue on any list written or sent to a student/subscriber by TechniTrader and its employees to be construed as a recommendation to buy or sell any stock or issue. TechniTrader is not a broker or an investment advisor it is strictly an educational service.

Monday, March 19, 2012

RSI vs. Stochastic

MetaStock SPRS Series - Week 60 - TechniTrader® Stock Discussion for MetaStock Users: RSI vs. Stochastic - March 19, 2012
By: Martha Stokes C.M.T.

Today we are going to return to RSI versus Stochastic.

Both Wilder’s Relative Strength and Stochastic are price oscillators. Both have formulas that use only price and time with no volume analysis. Which should you use in the current market conditions? We are in a platform market condition. This market condition has many stocks moving in tighter price ranges for several days to several weeks then a sudden large move, either a gap or a big run, occurs and then the sideways action continues.

This type of market condition can frustrate swing and day traders who don’t understand the mechanisms behind this type of price action. Also, trying to swing trade a tight sideways price action can be hazardous to your capital base and monthly income.

In a platform market condition, RSI is the better choice. Here’s why:

The Stochastic formula is designed to identify overbought or oversold conditions as stocks move in a WIDE sideways pattern or within a trading range pattern. The overbought and oversold signals work ideally in Trading Range Market Conditions and at times Topping Market Conditions. Stochastic fails dismally during a Platform Market Condition.

Switching to RSI during platform market conditions can improve your profitability dramatically while reducing whipsaw trades.

Below, in October, Stochastic begins to fail to signal properly. A trough failure pattern occurs on Stochastic. RSI meanwhile is showing that an upside is underway. It correctly patterns upward as the stock moves up.

Chart 1

Stochastic continues to oscillate, signaling an overbought condition during a platform building sideways pattern. So many traders would attempt to either sell short or exit their trades on the buy side only to watch the stock continue to climb upward. RSI is working properly on this chart. Stochastic is giving false exit oversold signals.

It is critical that you use the proper indicators for the current market conditions. The Platform Market Condition is one of the most common and tends to last months at a time. Platforms are ideal for position trading and some specific swing style strategies.

SAR strategies fail during platform markets because the markets are not oscillating, the price action is a tight consolidation or platform. The platform is not a wide enough price range to net good consistent profits. Hence most platform markets create whipsaw trades for both swing and intraday traders. Understanding the phenomenon beyond the price action can help.

A platform market condition occurs during periods when the economy is recovering and stock investors are more cautious. Institutional investors are only buying stocks that have strong fundamentals and financial growth expectations.

Small lot traders, small lot investors, small fund managers are all buying speculatively. They rush in as a stock is moving, pushing price upward due to their lack of controlled order entries. I am not talking about a simple limit order which is a risky order to use in most market conditions. A controlled bracketed order is required in our modern electronic order system markets.

“Buy at Market” orders create market open gaps, fast runs on stocks intraday, and sudden profit-taking by pro traders who know how to trade against the smaller lots.


Use the proper indicator for the current market conditions. If you do not adapt your indicators to the changing market conditions, your profits will diminish and you will experience more whipsaw trades. Those trades are NOT caused by market makers who have less and less activity due to HFT action. Whipsaws are caused by improper stock analysis and incorrect indicator usage.

Trade wisely,

Martha Stokes, C.M.T.
Member of Market Technicians Association
Master Rated Technical Analyst: Decisions Unlimited, Inc.
Instructor and Developer of TechniTrader® Stock Market Courses
MetaStock Partner

©2012 Decisions Unlimited, Inc.

Disclaimer: All statements, whether expressed verbally or in writing are the opinions of TechniTrader, its instructors and or employees, and are not to be construed as anything more than an opinion. Student/subscribers are responsible for making their own choices and decisions regarding all purchases or sales of stocks or issues. At no time is any stock or issue on any list written or sent to a student/subscriber by TechniTrader and its employees to be construed as a recommendation to buy or sell any stock or issue. TechniTrader is not a broker or an investment advisor it is strictly an educational service.

Thursday, March 15, 2012

Power Candlestick Reversal Signals - The Shooting Star

Power Candlestick Reversal Signals - The Shooting Star - March 15, 2012
By: Stephen Bigalow

Candlestick signals have two powerful implications. Candlestick analysis has demonstrated proven its ability to detect trend reversals with a high degree of accuracy. Today's investor has the benefit of centuries of research and analysis from the Japanese rice traders. This analysis has led to the illustration of formations proving to be high probability reversals of a trend. The Japanese rice traders also added a very powerful benefit. They provide the description of the investor sentiment that caused a reversal signal. This produces an extremely powerful and functional investment perspective. It provides the same investment perspective as a highly seasoned trader.

Another major attribute of candlestick signals not only is illustrating formations that represent a change of investor sentiment but also where the signals occur allow for a much more accurate reading of a price trend. For example, one of the major candlestick reversal signals is a shooting star. This sell signal occurs at the top of a trend. It is a clear demonstration of the bulls losing steam and the bears taking control. This becomes a very high probability reversal signal when a trend is in the overbought conditions.

Chart 1

After the appearance of a shooting star, a lower open is the confirmation needed to show the bears have taken control. This is when profit should be taken and/or short positions should be established. The signal becomes more compelling when just touching a resistance level or moving too far away from trend support indicators. Candlestick signals are fractal. They work equally well on a 1, 5, or 30 minute chart as they do on a daily, weekly, or monthly chart. Understanding the characteristics of a shooting star signal makes for highly profitable daytrading. For the swing trader or long-term investor, the shooting star signal is a clear illustration that an uptrend is over, at least for the short term.

Chart 2

Chart 3

Understanding the characteristics of a shooting star signal also allow for a much more clear reading of the market trends. As illustrated in the Dow chart, candlestick analysis can be applied to the recent price trend to produce a viable trade strategy. As seen in the Dow chart, an uptrend had been in progress, staying consistently above the T line and the 20 day simple moving average. As long as those two conditions were maintained, the uptrend could comfortably be assessed. However, a small shooting star occurred on March 1, followed by a Doji, then a hanging man, did not alter the uptrend because there was not a close below the T line or the 20 day moving average. The large breakdown after the hanging man illustrated a new dynamic in investor sentiment.

Chart 4

The last three days of trading brought the Dow back up through the T line and the 20 day moving average. This would be considered bullish had not the final trading day resulted in another shooting star signal. This produces the potential warning for a failed bounce. It is not uncommon for a sustained uptrend to see a sell signal but then try to bounce back up. The bounce of the trend is going to have one of two expected results: Either the Dow is going to move to new highs upon breaking out above the previous high of two weeks ago, or a failure to reach a new high is more than likely going to start a downtrend. Utilizing candlestick signals at times gives a high probability expectation of the direction of the market/price trend. At other times, it provides a directional forecast based upon how prices open during the following time frame. In the case of the Dow chart, a positive open followed by continued bullish trading would keep the uptrend scenario in place. A lower open on the following trading day after the shooting star signal would be a good indication the uptrend balance had failed. The candlestick investor would immediately close out long positions that had weak charts and/or start shorting positions to put in the portfolio. MetaStock software has simple scanning techniques identifying the best trades for the next trend in less than twenty minutes each day.

Candlestick analysis is merely common sense investment practices put into a graphic depiction. The signals themselves have investor sentiment built into them that can be extrapolated into what should occur over the next few trading time frames. The accumulation of candlestick signals can result in a candlestick pattern. Patterns, just like candlestick signals, are the reoccurring thought processes from investors. Specific patterns have expected results, of which most include extremely strong price moves. Take the time to learn how to use candlestick analysis correctly and you will dramatically improve your investment perspectives for the rest of your trading career. Candlestick signals incorporating common sense investment perspectives, overlaid onto an existing relatively successful trading programs will dramatically improve the results.

Happy Trading,

Stephen Bigalow

About the Author
Stephen W. Bigalow is author of Profitable Candlestick Investing, Pinpointing Market Turns to Maximize Profits, High Profit Candlestick Patterns and Candlestick Profits, Eliminating Emotions is also principal of the, the leading website provider of information and educational material about Japanese Candlestick investing on the internet. Over 28 years of extensive study and utilization of candlestick analysis has produced an array of easy-to-learn educational material about Candlesticks. As one of the leading Candlestick experts in the nation, Mr. Bigalow, through consulting with major trading firms, has developed multiple successful trading programs from the day-trader to the long-term hold investor.

Tuesday, March 13, 2012

MetaStock Monitor MAR - APR 12: Power User Tip

Want to find stocks that are moving?

Contributed by Breakaway Training Solutions

In this short four minute video, you’ll learn how to use a scan that you already have to quickly find those stocks on the move. Take a look!

For more MetaStock training, make sure to visit us at or email us at

About Kevin Nelson

Kevin Nelson is the founder of Breakaway Training Solutions, Inc. He has spent the last 17 years becoming an expert on MetaStock software and a serious student of technical analysis while working for MetaStock. Prior to joining MetaStock in 1993, Kevin was a stockbroker for a well-known NYSE firm. In his role as Sales Manager at MetaStock, Kevin interacted extensively with MetaStock customers via phone, webinars, and public appearances. His experiences while working at MetaStock have enabled him to gain a keen understanding of the needs of technical analysts worldwide. While with MetaStock, Mr. Nelson was a featured presenter for four years. During this time, he traveled the U.S. introducing the MetaStock program to thousands of people and teaching them how to use its many features. His easy-to-understand approach is considered by many to be the best in the industry.

©Breakaway Training Solutions, Inc. 2012

MetaStock Monitor MAR - APR 12: Support Tip

How do I add new Data on Demand symbol to MetaStock?
Contributed by MetaStock Support
Are you trading a security, stock, commodity, etc. that is not included with the thousands of symbols that come with MetaStock's data feed? This happens from time to time but it is very easy to add the symbol to your MetaStock data feed. For Data on Demand symbols, remember to enter ALL symbols in upper case. Here's how:
1) Start MetaStock.

2) Click "File", then "Open".

3)Click "Tools", then "New Symbol".

4) Type the name of the symbol into the name field. Type the desired symbol into the symbol field. Select the proper exchange; if you are not sure this option can be left blank. For this example, we will add the USD - Gold Spot Price. You can add the type field and the start and end times of when the security trades, but it is not necessary. If you do, make sure the hours listed are in your time zone. The Type field tells you what folder structure in the symbol database the security will be added. We recommend leaving this as "Other". Once you have filled out all of the applicable fields, click "OK" to continue.

5) After clicking "OK", you can search for the symbol you created.

6) Here is a screenshot of the security we just added to our data base.

Helpful Hint: If you are adding a futures symbol that includes the specific month and year code for a specific contract make sure to select the TYPE as "OTHER".

MetaStock Monitor MAR - APR 12: Main Article

Creating and Compounding Wealth via Trend Following
Contributed by Andrew Abraham

I started trading (in particular trend following) in 1994. I was overwhelmed with all the books and courses offering so called “magical success” and millionaire traders who really weren’t. I wanted to know who was succeeding and what they were doing. My broker told me the most successful client of his company was a dentist. He was not a Harvard graduate nor a partner in Morgan Stanley. Yes, he was a dentist! I was told he invested $200,000 in a robust trend following concept in 1979. He let that money compound over time. He currently has an account of $5,000,000 plus he has made over $12,000,000 from trading the markets over the years.

The dentist was the exception. Most clients of the brokerage did not make money. Most clients actually lost money. The difference between the majority of the clients that lost money and the dentist was he had a trading plan with risk management and he followed it with patience and discipline. Even with his plan he always had numerous loses, went through drawdowns and even long periods of time when he did not make money. However, he did not give up or start to look for a new methodology.

He did not have any magical holy grail formula. He is a trend follower who had a simple robust methodology and, more importantly, knew how to properly condition his thought processes to get through all the tough drawdowns and long periods when he was not making money. What encouraged me over the years was if the dentist can do this, so can I. Another example to me was Richard Donchian who traded his trend following breakout strategy into his 90’s. If the dentist can do this and Richard Donchian can do this, so can you!

There is nothing perfect in this world. There are no perfect systems or even traders. Every system and methodology has drawdowns and losses. Traders need to accept losses as a natural process of trading. Those that cannot accept losses jump from one system or one indicator to the next seeking the elusive holy grail. Traders need to realize success in trading is a process and takes time. They need to have patience with themselves and apply themselves to a methodology fitting their personality. Doctors do not become proficient overnight. Neither do lawyers.

I want to share with you one of the methodologies I have traded over the last 18 years. Trend following can be simple, but don’t make the mistake of thinking it is easy! We seem to convolute it via our fear and greed. There are countless websites and late night infomercials trying to tell you differently. They make you think you just have to read a few pages or attend an online class, and then, magically you’ll become a successful trader.

Don’t be misled!

Trend following is not retirement in a box! You need to do your work!

One of my methodologies is very simple and robust. It works on all platforms, time frames and markets. It is one of two general approaches in order to attempt to catch and ride trends I utilize. They both attempt to put on low risk trades in the direction of a trend and have various similarities.

Trend Break Out and Trend Retracement

For the sake of this article I am going to focus on one issue: Trend Retracement. The concept of trend retracement is that we are already witnessing a trend and we are looking for a low risk method in order to participate and enter in the direction of the trend. I believe in keeping things very simple as when we are trading we know what we must do and we have a well thought out plan in advance. Do not confuse the word simple with unsophisticated or not possible to generate money. This methodology is used by many successful traders.

This Trend Retracement is a four bar setup:

1. Identify a strong trend either by a high RSI or an ADX which is above 30.
2. We want to see a retracement against that trend where we have 3 lower lows.
3. On Bar 4 we will simply buy a breakout of the Bar 3 high.
4. If we do not have a breakout buy on Bar 3 – Buy the breakout of Bar 4 as demonstrated below.

As you can see in this hypothetical example one would have bought the breakout of Bar 4.

There is more to just the Trend Retracement Entry. One needs to think of how many shares to put on. What I suggest is looking at the range from the high to the low of the 4th bar to determine how many shares we can put on. The high of the 4th bar was $610.01 and the low was $607.68. The difference is $2.33. What one needs to do is look at their account size and how much of that account size are they willing to risk on anyone trade. For example if I was trading a $30,000 account and wanted to risk 1% on any trade I could risk and potentially lose $300 on a trade. If I wanted to risk 2% on a trade I could risk and potentially lose $600. The more risk per trade the more potential profit as well as the more potential loss. Let’s examine what would have transpired in this hypothetical example with Google running to its high of $619.77. (Clearly we would not have gotten out at the top, but we can use it as a reference to just highlight the difference in position sizing and position percentage risk).

Entry $610.01 to $619.77; difference is $9.76.

1. Risking 1% of $30,000 was $300 risk allowed us to purchase 128 shares X $9.76 = $1249.28.
2. Risking 2% of $30,000 was $600 risk allowed us to purchase 257 shares x $9.76 = $2508.32.

As you can clearly see there is more entailed than just using a specific setup. One needs to think about risk per trade.

Please also realize any trade is 50/50. After this nice trade there could have been another trade as there were 4 down bars with a breakout that did not work as this trade did.

There are only four potential out comes when we trade.

1. Big losses - however we had an immediate stop placed to prevent.
2. Small losses - these will happen all the time.
3. Small profits - these also will happen all the time and cancel out the small losses.
4. Big profits - These are rare and make up for all the small losses are small profits do not offset.

Too many times system sellers & promoters just give you a setup. It is paramount to know where to exit either with a loss or a profit. Too much emphasis is placed on setups, patterns, and entries. In order for trading success one needs a complete trading plan that states when to enter, how much to buy/sell, when to exit with a profit and loss. On a slightly more deep level one also needs to know what to trade which I detail in my courses.

I like to keep my exit rules simple. An easy exit rule in where you lock in profits when trades work and exit you when trades do not work is a trailing 3 bar low as an exit when you buy and a 3 bar high when you go short.

Trend followers do not worry what the markets are going to do tomorrow. They have an exact plan with all contingencies thought out ahead of time. Trend followers are like surfers and look to ride the waves.

Trend followers have an exact plan. This plan is based on objective and automated set of rules.

Trend followers follow their plan without second guessing it. A trading plan makes life easier by eliminating emotions from trading decisions. A trading plan forces discipline. If you do not follow the trading plan you will not succeed. Do not even start if you cannot follow the plan. The above examples are not complicated yet they are an effective way of taking money out of the markets.

Trend following entails having a defined plan and strategy to put money into trade to achieve one and only goal: PROFIT!

About Andrew Abraham

Andrew Abraham has been investing in commodities and managed futures since 1994. He adheres to the philosophy of trend following. Trend following stresses a disciplined approach to commodity/futures trading. Successful trend following and commodity futures investing requires patience, discipline and actively managing the risk. What sets Andrew's strategy apart from other traders is that he is not only concerned about the return on investment but also with how much risk should be tolerated to achieve goals. For more information, contact Andrew via his website (, email, or Skype: Abraham Investment Management.

***Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts, commodity options or forex can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results. You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources.




A Subordinate Indicator You Should Take Advantage Of

MetaStock SPRS Series - Week 59 - TechniTrader® Stock Discussion for MetaStock Users: A Subordinate Indicator You Should Take Advantage Of - March 12, 2012
By: Martha Stokes C.M.T.

This week we are going to discuss a subordinate indicator that many traders do not take advantage of but should.

The Linear Regression Line subordinate indicator can be an extremely useful indicator for traders who struggle with angle of ascent or descent analysis and identifying topping, bottoming, and early stages of sideways patterns.

TechniTrader® employs 2 Linear Regression Lines on its chart.

These are designed to be used with short term trading styles such as intraday, day, swing, and position trading. They are not as useful for intermediate or long term analysis.

The LRL is applied directly onto the candlestick chart so that it is easy to read and interpret.

Chart 1

The Linear Regression line indicator is a totally different way to study price action, trends, trendline patterns, etc.

Where the Moving Average smooths the price action to create a line that floats above, below, or in the middle of the candlesticks depending upon whether price is moving up, moving down or moving sideways, the Linear Regression Line is a straight line from point A to point B. The length of the line is dependent upon the period settings. The line always starts at the current day and moves backward X number of days.

In this instance, we are using a 35/75 LRL. The reason we use these periods is that it includes slightly more than 1 month of data, and slightly more than 3 months of data, which is ideal for short term trading.

The Moving Average below shows trend but lags price action. All moving averages, regardless of whether they are simple, front-weighted, weighted, or exponential, lag to some degree.

The Linear Regression Lines do not lag but reflect the current price angles that are present at that moment in time.

Chart 2

When a moving average is in the center of the candles or price, this means the moving average has failed because the action is sideways. When they are working properly, Moving Averages are either above for a downtrending stock, or below for an uptrending stocks. When the moving average is in the middle of the candles, it has formed a failure pattern, meaning it is no longer defining uptrends or downtrends. Moving averages are basically worthless during sideways price action.

The Linear Regression lines however are very useful in defining how price is behaving in sideways patterns.

On the chart below, the longer regression line is telling us that the angle of ascent is heading up at a reasonable angle. The angle is clearly defined and easy to interpret. There is no indication yet of a severe angle.

The shorter Linear Regression Line has dropped below the longer one. This is a weakening of the shorter term trend. What this tells us immediately is that the price has shifted sideways or is about to shift sideways. The shorter Linear Regression Line shows us quickly and decisively that the shorter term price action is not keeping up with the longer Linear Regression line price.

Chart 3

On the Chart below, the short linear regression line is above the longer regression line indicating that the most recent price action is gaining and moving up despite the fact that the candles look quite sideways. Price is moving up. The longer regression line shows that the price over the past couple of months has been quite flat and sideways. This early tip up of the shorter regression line helps identify quickly and easily that price is starting to move out of the sideways pattern.

Chart 4

If you have never used linear regression lines, try them out. The LRLs give a different view and perspective than moving averages and can help traders decipher more complicated or ambiguous candlestick price patterns sooner.

Since Linear Regression Lines do not smooth or average price, the stark view tends to lead price.

Trade wisely,

Martha Stokes, C.M.T.
Member of Market Technicians Association
Master Rated Technical Analyst: Decisions Unlimited, Inc.
Instructor and Developer of TechniTrader® Stock Market Courses
MetaStock Partner

©2012 Decisions Unlimited, Inc.

Disclaimer: All statements, whether expressed verbally or in writing are the opinions of TechniTrader, its instructors and or employees, and are not to be construed as anything more than an opinion. Student/subscribers are responsible for making their own choices and decisions regarding all purchases or sales of stocks or issues. At no time is any stock or issue on any list written or sent to a student/subscriber by TechniTrader and its employees to be construed as a recommendation to buy or sell any stock or issue. TechniTrader is not a broker or an investment advisor it is strictly an educational service.

Monday, March 5, 2012

Finding a Better Oscillator for the Current Market Condition

MetaStock SPRS Series - Week 58 - TechniTrader® Stock Discussion for MetaStock Users: Finding a Better Oscillator for the Current Market Condition - March 5, 2012
By: Martha Stokes C.M.T.

There are innumerable price/time Oscillators, some are ideal for Trading Range market conditions, such as Stochastic and Price Rate of Change, while others are better suited to Platform Market Conditions.

Wilder’s RSI is an under used Oscillator Indicator. Few retail traders employ this powerful oscillator in their trading. Stochastic has a larger active user group, but it is not ideal for many market conditions. In fact, Wilder’s RSI tends to work better in more Market Conditions more of the time.

Since we are in a value oriented Platform Building Market, with indexes stuck at the fundamental and technical resistance levels, using Wilder’s RSI instead of stochastic will net higher profitability due to earlier entry patterns, and better analysis of narrow sideways action.

Chart 1

Staff at TechniTrader® have modified Wilder’s RSI so that there is a floating center line RSI and a shorter RSI that creates the converging diverging patterns, to help chartists see what is going on with price better.

With Stochastic, the overbought patters in October and November would be a signal to exit just as the stock moved up further. Clearly in the stair stepping out of a bottom with gaps patterns for this stock, Stochastic doesn’t work properly.

Stochastic was designed to be used in Trading Range markets with wider price action. If you attempted to trade this stock with stochastic signals would have you exit prior to the gaps. This would cause you to miss out on the gaps and runs of this trade.

TechniTrader® TT RSI/RSI

By using a slower, smoother RSI to create a center line, the RSI indicator now has more information and better cross overs, for traders to take advantage of the gaps and runs of a stair stepping trend line pattern moving quickly out of a bottom low.

The rule for trading is: Wait for the short TT RSI to cross over the long TT RSI center line for confirmation of the competed bottom. Then continue to hold as the stock moves up, even if the short TT RSI rises into the traditional RSI overbought line. As long as the long TT RSI is slowly moving upward, and the short TT RSI remains angling upward the stock is held. This allows traders to remain in a stock that is moving out of a bottom with gaps and faster runs.

Instead of using RSI as an Overbought/Oversold Oscillator, using it as a Momentum Oscillator allows you to enter stocks sooner and hold as they move up.

TT RSI is ideal as a Momentum Oscillator because it compares current price to past price based upon the period used. Each trader can adjust the settings to suit their own trading style, hold periods, and exit strategies. This provides maximum flexibility with TT RSI.

During bottoming Market Conditions, Stochastic tends to force a trader out prematurely before the run has begun. Instead using the TT RSI as a Momentum Oscillator with the center line cross over TT RSI pattern, traders are able to enter before stocks gap and run.

Trade wisely,

Martha Stokes, C.M.T.
Member of Market Technicians Association
Master Rated Technical Analyst: Decisions Unlimited, Inc.
Instructor and Developer of TechniTrader® Stock Market Courses
MetaStock Partner

©2012 Decisions Unlimited, Inc.

Disclaimer: All statements, whether expressed verbally or in writing are the opinions of TechniTrader, its instructors and or employees, and are not to be construed as anything more than an opinion. Student/subscribers are responsible for making their own choices and decisions regarding all purchases or sales of stocks or issues. At no time is any stock or issue on any list written or sent to a student/subscriber by TechniTrader and its employees to be construed as a recommendation to buy or sell any stock or issue. TechniTrader is not a broker or an investment advisor it is strictly an educational service.