Monday, April 22, 2013

Hybrid Indicators


MetaStock SPRS Series - Week 115 - TechniTrader® Stock Discussion for MetaStock Users - Hybrid Indicators - April 22, 2013
By: Martha Stokes C.M.T.
I am often asked about Hybrid Indicators™ which are a new type of indicator designed for the modern automated marketplace. The modern market is vastly different than the markets of the 90’s and early years of the first decade of this century.

Major changes to the market structure, how and where the institutions transact their orders, and a more diverse Market Participant Group cycle has created a need for more sophisticated indicators for the retail trader.

If you are going to compete in this complex, dynamic, institution automated order marketplace, you need to be able to track the institutions quickly and easily.

The major shift that most retail traders are unaware of is how the Dark Pools have altered price patterns. Dark Pools are not a new transaction platform but the growth of these has accelerated, and this is causing major changes to technical patterns and candlestick patterns.

If a retail trader continues to use only what they learned in the 90’s and early 2000-2006, then they are going to be trading blindfolded and severely handicapped. Some retail traders have learned to use the new Hybrid Indicators™ that expose where the Dark Pool huge share lots are accumulating while other retail traders are still stuck using outdated, antiquated, and useless price indicators.

The huge difference that automated giant and large lot orders create for technical traders, is that these giant funds who purchase millions of shares incrementally DO NOT MOVE PRICE.

If you are using price indicators for entries and trading then you are always going to be entering late. This puts the retail trader at a huge disadvantage and causes whipsaw trades and chronic losses.

Hybrid Indicators™ such as TechniTrader® Quiet Accumulation TTQA and TechniTrader® Volume Accumulation TTVA are designed to expose where giant funds are accumulating via the Dark Pools. Using Hybrid Indicators™ their buying patterns are unmistakable and clearly defined.

The Hybrid Indicator™ uses all 3 pieces of data from the ticker tape, price, time and QUANTITY. By differentiating large lot from small lot, the footprint of the Dark Pools is revealed. Giant funds tend to buy in incrementally, over time, and they always use bracketed orders to control their price into a tight range. So if you are using price indicators, you totally miss their entries.

Most retail traders using price indicators are chasing High Frequency Traders HTFs price speculation and this causes chronic losses. HFTs trigger on the millisecond, and can be in and out of a trade 60,000 times to the retail traders 1 trade. Retail traders can only trade on the minute scale. So while your order is heading to execution in those 60 seconds, the HFTs are firing off sixty thousand orders which can and does move price hugely.

If you are struggling in these markets, the real problem is you are using outdated, antiquated technical analysis, indicators, and candlestick patterns. If you want to be consistently successful, you have got to buckle down and adapt to the market structure that exists today rather than clinging to strategies, indicators, and technical patterns that no longer work.If you are struggling in these markets, the real problem is you are using outdated, antiquated technical analysis, indicators, and candlestick patterns. If you want to be consistently successful, you have got to buckle down and adapt to the market structure that exists today rather than clinging to strategies, indicators, and technical patterns that no longer work.

The market has changed more in the past few years than it did in the prior 100 years. Think of it this way, if you were manufacturer who wanted to get your products to market and you used a horse and buggy nowadays, would you be able to compete with another manufacturer who used airplanes and trucks to deliver their products to market?

Outdated technical tools thwart retail trading success. Stop using a horse and buggy, and start using the modern technical tools for the automated marketplace.

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
http://technitrader.com
MetaStock Partner
©2013 Decisions Unlimited, Inc.

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