Monday, February 4, 2013

Hybrid Indicators

MetaStock SPRS Series - Week 104 - TechniTrader® Stock Discussion for MetaStock Users - Hybrid Indicators - February 4, 2013
By: Martha Stokes C.M.T.
I have been asked to give some instruction on how to interpret and use the TechniTrader® Indicators written specifically for MetaStock Software Users.

First let me explain our methodology for the use of stock indicators. We group indicators together based on obtaining a complete and thorough analysis of all the market data available. These are typically 5 hybrid indicators we have created. Each group is called a TechniCator™ and there are TechniCators™ for each trading style based on market conditions.

Most traders use price and time indicators such as MACD, Bollinger Bands® or Stochastic, and other price/time indicators.

This leaves a gigantic hole in their analysis because they are only analyzing half of the data necessary to be consistently successful. TechniTrader® education focuses on consistent success and you will hear that theme throughout our training. This is totally contrarian to most systems and strategies that preach you can be successful taking a zero sum game attitude. The fact is that a 50% success rate won’t give you consistent monthly income you can rely upon.

Therefore our indicators include all of the analysis needed to select only the optimal and most ideal picks for that MARKET CONDITION.

There are 6 Primary Market Conditions which tell you:
  1. How price will behave
  2. How fast price will move
  3. What entry signals will work best
  4. What exit signals to use
  5. What indicators to use
  6. What trading style will reap the highest profits
Market Condition Analysis comes from the TechniTrader® Scans. These are part of your TechniTrader® Tools for MetaStock.

In order to have a complete analysis of a stock for short term trading or even long term investing you must in addition to price, trend, and pattern analyze the following:
  1. Volume Hybrid: in relation to recent volume activity comparing the upside volume and the downside volume. That is why we use color coded volume bars with a special moving average for the various market conditions, speed of price action and volume action.
  2. TTQA Quiet Accumulation Hybrid: The secretive incremental buying patterns of Dark Pool institutional investors. Dark Pools have grown in popularity and this behind the scenes huge lot action affects price in ways not easily seen with mere price/time indicators.
  3. TTFF Flow of Funds Hybrid: to tell you if money is flowing into or out of the stock. Mutual Funds buy and sell stocks based on charter requirements, but are also based upon new Mutual Fund investors buying into the fund OR as we saw in July and August, huge redemption demand by Mutual Fund investors which forces the Funds to sell stock.
  4. TTVA Volume Accumulation Hybrid: again we are tracking the institutional activity: Dark Pool versus HTFs High Frequency Trading Firms as well as Professional Traders trading for the buy side market participant or the sell side market participant. This is an oscillator but it is unique as it is not based on price but on volume.
  5. TT RSI/RSI Hybrid: Many of you use MACD or stochastic or Bollinger Bands and there is nothing wrong with these indicators UNLESS you use them in the wrong market conditions and then you will get false exits, false entry signals, and poor profit results. Our RSI/RSI is a hybrid indicator that can be used in more market conditions than the other indicators and exposes strength or weakness in price BEFORE a major gap, rundown or shift of trend.
  6. PRC/ROC Hybrid is another indicator developed by TechniTrader® which is a hybrid indicator designed to be used in market conditions where MACD and stochastic tend to fail. It is easy to use and interpret, and many traders prefer it because of its flexibility with a variety of trading styles.
All of our indicators are available in the Tools for MetaStock.

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
©2013 Decisions Unlimited, Inc.

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