The Volume trading indicator measures the total number of shares traded for a specific stock over a time period. It tells you how much activity is behind a price move, offering valuable insight into market trends and market strength. Think of trading volume like the crowd at a sporting event. If a team scores and the crowd erupts, it’s a big moment. But if the same team scores in an empty...
Keltner Channels are a volatility-based trading indicator that helps traders identify market trends and potential reversal points. The indicator consists of three separate lines: a middle line (Channel Middle Line) using an exponential moving average (EMA), and two outer bands above and below the moving average. The outer bands adjust based on the Average True Range (ATR), which measures market...
The Detrended Price Oscillator (DPO) is a technical analysis trading indicator used to remove trends from price data, helping traders focus on shorter-term cycles. Essentially, DPO attempts to remove trends by stripping away the "noise" caused by long-term price movements, allowing traders to identify cycles that might otherwise be hidden. Think of the DPO as cleaning a window: It removes...
Trading volume is often the silent companion to price trend movements, understanding it can unlock deeper insights into volume analysis, and one tool that helps traders do just that is the volume rate of change trading indicator. Think of trading volume as the engine behind the average price. When the engine revs up (high volume), the price trend moves faster and becomes stronger. The volume...
Donchian Channels, developed by Richard Donchian, are a trading indicator designed to help traders determine market volatility and identify potential entry and exit points. For systematic traders, this clarity is essential for developing consistent, rules-based strategies that reduce the emotional roller coaster often experienced in discretionary trading.Donchian Channels are made up of three...
The McClellan Oscillator is a market breadth tool that is used as a key trading indicator to analyze the overall stock market rather than individual stocks. Developed by Sherman and Marian McClellan in the 1960s, it measures market trends by evaluating the number of advancing and declining stocks. This helps traders gauge whether the market is bullish or bearish. Think of the McClellan...
The VIX (Volatility Index), often referred to as the fear index, measures the market’s expectations for volatility over the next 30 days and may be used as a powerful trading indicator. Launched by the Chicago Board Options Exchange (Cboe) in 1993, it reflects market expectations by capturing the price movement of index options on the S&P 500. To make it relatable, think of the VIX...
The Schaff Trend Cycle trading indicator (STC) is a technical analysis tool that can help stock traders identify trend changes and potential reversals. In simple terms, it’s a momentum indicator that combines moving average convergence divergence (MACD) with a cycle component to forecast when trends are likely to exhaust themselves or reverse. Imagine you're driving on a road trip, and you have...
The Darvas Box is a technical analysis trading indicator designed to help traders identify stocks that are breaking out of established price ranges. In simple terms, it’s like a "box" that forms when a stock price moves between a new high and a low price. Once it breaks above this new box, it’s time to take action. Imagine a stock trading within a trading range, bouncing between the top of the...
Williams %R, or the Williams Percent Range, is a momentum oscillator trading indicator that helps traders identify overbought and oversold conditions. It moves between 0 and -100, showing where the current price sits relative to its recent high-low range. Think of the Williams %R indicator as a fuel gauge in a car, when the indicator is near -20, the market is "full" and potentially overbought....
The Linear Regression indicator is a trading indicator that applies statistical regression analysis to price data to identify the market’s prevailing trend. It plots a straight line that best fits recent price action over a specified period, minimizing the distance between prices and the line. This provides a “fair value” or equilibrium level for the asset. Traders often use it to spot trend...
Here is what we cover in this week's stock market update: 7 Steps to Allocating Capital in a Hot Market Like Nasdaq Stock Market Update - Global Performance Roundup Wisdom from Jesse Livermore Special announcement from Enlightened Stock trading How do you allocate capital between markets / sectors / strategies when one part of the market is so strong (i.e. Tech stocks)? Should you move more...