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Accumulation/Distribution
The Accumulation/Distribution Line, developed by Marc Chaikin, attempts to measure the cumulative flow of money into and out of a security. The indicator calculates the "Close Location Value", which measures how well the stock did on the day, and shows the cumulative value of CLV*Value. More information and help on how to read this indicator from StockCharts.
Average Directional Movement Index (ADX)
Calculating ADX is a two-step process. First, the difference of +DI and -DI (see Directional Movement Index (DMI)) is divided by the sum of +DI and -DI, and the quotient is multiplied by 100; the result is known as DX. Second, ADX is calculated by taking a modified moving average of DX.
The ADX is read like an oscillator. High value commonly interpreted as bullish and low value is interpreted as bearish.
Average Directional Movement Rating (ADXR)
ADXR shows the momentum change in the value of the ADX. It is calculated by calculating the average of the two ADX values - current ADX and previous candle's ADX. Usage: the higher the ADX, the stronger the trend. ADXR was developed by J. Welles Wilder and is described in his 1978 book "New Concepts In Technical Trading Systems".
AMA - Adaptive Moving Average
Developed by Perry Kaufmann, this indicator is an EMA (exponential moving average) using an Efficiency Ratio to modify the smoothing constant, which ranges from a minimum of fast length to a maximum of slow length.
AMA Binary Wave
The Adaptive Moving Average Binary Wave was created by Perry Kaufman. The 1 on the wave is a buy signal, and the -1 is the sell signal.
Andrews Pitchfork
Andrews Pitchfork is a way of annotating the chart with lines that are designed to show the future trend of the chart. A good description can be found here. To draw the pitchfork in QuoteTracker, Click on the "Shapes" button on the chart toolbar and and pick the Pitchfork option from the dropdown menu. Then, start drawing the first line of the pitchfork.
Aroon Oscillator
This indicator is used to measure the presence and strength of trends. It was developed in 1995 by Tushar Chande
The Aroon Oscillator signals an upward trend is underway when it is above zero and a downward trend is underway when it falls below zero. The farther away the oscillator is from the zero line, the stronger the trend.
Aroon Up/Down
The up/down lines from the Aroon Oscillator. Chande states that when AroonUp and AroonDown are moving lower in close proximity, it signals a consolidation phase is under way and no strong trend is evident. When AroonUp dips below 50, it indicates that the current trend has lost its upwards momentum. Similarly, when AroonDown dips below 50, the current downtrend has lost its momentum. Values above 70 indicate a strong trend in the same direction as the Aroon (up or down) is under way. Values below 30 indicate that a strong trend in the opposite direction is underway.
ART Paintbar (TradersCoach.com)
This indicator is brought to you in cooperation with TradersCoach.com. This particular indicator can be found on that web site under "ART ColorBars". In order to use this indicator, you have to have a subscription with TradersCoach.com and be a TD AMERITRADE client.
ART Pyramids (TradersCoach)
This indicator is brought to you in cooperation with TradersCoach.com. See the tutorials on how to use this indicator on that web site. In order to use this indicator, you have to have a subscription with TradersCoach.com and be a TD AMERITRADE client.
ART Reversals (TradersCoach)
This indicator is brought to you in cooperation with TradersCoach.com. See the tutorials on how to use this indicator on that web site. In order to use this indicator, you have to have a subscription with TradersCoach.com and be a TD AMERITRADE client.
Average True Range
An SMA of the price "true range" over a number of periods. The "true range" in this case is maximum of the differences between High, Low or Close for the time period.
This indicator measures a security's volatility. It does not indicate price direction or duration, rather the degree of price movement. Average True Range can be interpreted using the same techniques that are used with the other volatility indicators.
Auto Trendlines
This indicator attempts to draw two automatic trendlines at the rightmost (current) side of the chart. The trendlines - one ascending and one descending - are supposed to be drawn between two "local peaks" with the caveat that no candle penetrates the trendline. The parameters are:
* Period - determines the period which is used to search for the anchor points for the trendlines
* Strength - the criterion for the "local peak" determination
* Start - how many candles back to start looking for the trendlines
BAV Trend - Bid/Ask Volume Trend
For each candle it shows the (Volume at Ask)-(Volume at Bid) for all the trades that constituted the candle.
Bollinger Bands
These are lines that are usually drawn two standard deviations away from a simple moving average (QuoteTracker allows you to change the "two" to any number). Bollinger Bands auto-adjust themselves to the stock volatility. When the stock becomes more volatile they widen and contract during less volatile periods. The technical rule of thumb is: the closer the prices move to the upper band, the more overbought the equity is, and the closer the prices move to the lower band, the more oversold.
Bollinger Bandwidth
This is a simple indicator based on Bollinger Bands. It is defined as the upper band minus the lower band divided by the middle band. High values of bandwidth represent regions of high volatility, while low values of bandwidth represent regions of low volatility.
Bressert DSS - Double Smoothed Stochastic
This is an Overbought/Oversold Indicator. It should be used in conjunction with a trend indicator. Values about 80 show overbought, under 20 show oversold.
Camarilla Pivots
Nick Stott's "SureFireThing Camarilla Equation" variation of the pivot lines. The formula was supplied by one of our users.
Commodity Channel Index (CCI)
Commodity Channel Index (CCI) was originally developed by Donald Lambert to identify cyclical turns in commodities. The assumption behind the indicator is that commodities (or stocks) move in cycles, with highs and lows coming at periodic intervals.
CCI fluctuates above and below zero. A good description of interpretation techniques for CCI can be found here.
Center of Gravity
COG is an oscillator based on an article by John F. Ehlers on page 20 of the May 2002 issue of Stocks and Commodities Magazine. COG has essentially zero lag and enables clear identification of turning points. This indicator is a result of Ehlers research into adaptive filters. The calculation of COG involves dividing the reverse WMA of the stock (older periods weighted more than more recent ones) by its SMA.
Chaikin Money Flow
This indicator is used to warn of breakouts and provides useful trend confirmation.
It is based on the observation that buying support is normally signaled by increased volume and frequent closes in the top half of the period's range. Likewise, selling pressure is evidenced by increased volume and frequent closes in the lower half of the period's range. It is calculated by summing Accumulation Distribution for N periods and then dividing by the total volume for those periods.
Chaikin Oscillator
This indicator is also called Volume Accumulation Oscillator and is described in some detail here and here. It compares the money flow to the price action of an issue, which in turn allows the chartist to recognize tops and bottoms in short cycles.
Chande Momentum Oscillator
CMO was created by Tushar Chande and is published in his book "The New Technical Trader". Its use is similar to RSI. Usually overbought level is at +50 and higher and oversold at -50 and lower.
Choppiness Index
Choppiness Index can be viewed as an indicator measuring the market's trendiness (the output is well below its average on the chart) versus the market's choppiness (the output is well above its average on the chart). The basic idea is that when the market is heavily trending during the past N bars, the fractal dimension is close to one and the Choppiness Index is around zero.
DEMA - Double Exponential Moving Average
A moving average indicator created by Patrick Mulloy - introduced in the February 1994 issue of Technical Analysis of Stocks & Commodities magazine.
Its formula is: (2 * EMA(N)) - (EMA(EMA(N),N)) - that is, twice the N-period EMA minus the N-period EMA of the EMA. This indicator is supposed to have less delay than the regular EMA.
DeMark Pivots
This is a variation of the Pivot Points developed by Thomas DeMark. It only provides support and resistance lines, and the calculation varies depending on whether the previous day was an up or down day. It is calculated as follows (O,H,L,C are previous day's Open, High, Low, Close)
If O=C - Support at (H+L+C*2)/2-L and Resistance at (H+L+C*2)/2-H
If O>C - Support at (H+L*2+C)/2-L and Resistance at (H+L*2+C)/2-H
If O
DeMarker
This indicator is an oscillator - between 0 and 100, and tries to predict price reversals. Bullish price revesal is indicated by the oscillator rising above 70, while bearish price revesale is indicated by the oscillator falling below 30. The formula is as follows (H,L - current candle's high/low, PH,PL - previous candle's high/low)
if H > PH then DeMax=H-PH else DeMax=0
if L < PL then DeMin=PL-L else DeMin=0
DeMark = 100*SMA(DeMax) / (SMA(DeMax) + SMA(DeMin))
Detrended Oscillator
The Detrended Oscillator is calculated by first calculating the difference between price and a user specified SMA of price. The resulting array of differences is then smoothed according to the same SMA parameter. The resulting indicator oscillates around zero. This indicator makes it easy to spot situations when an instrument is trading at extremes relative to its average price.
Directional Movement Index (DMI)
The directional movement index was developed by J. Welles Wilder for identifying whether a stock is in trend mode.
The indicator consists of two lines, +DI and -DI. Wilder defines +DI as the portion of the range that is up and -DI as the portion of the range that is down. According to Wilder, when the +DI value is greater than the -DI, a long position is indicated. Conversely, when the -DI is greater than +DI, a short position is indicated.
ECO - Ergodic Candle Oscillator
This indicator was created by William Blau and is "a double smoothed ratio of the difference between the Close and Open of each bar, and the difference between the High and Low prices for each bar".
Efficiency Ratio
Efficiency Ratio is one of the newer indicators, and was developed by Perry Kaufman. It is a measure of relative market speed to volatility, and can be used as a trading filter to avoid choppy or flat markets. Not much has been written about it yet. The rule of thumb is - the closer to 1 the Efficiency Ratio is, the more "efficient" the stock is in its price movements.
Elder Force Index
It is calculated by multiplying the volume for the current candle by the difference between current close and previous close. Investopedia has an article on this indicator.
Elder Ray
It has two components - "Bull Power" and "Bear Power". Bull Power subtracts an EMA of close from high of the candle. Bear Power subtracts an EMA of close from low of the candle. Investopedia has an article on this indicator.
Elliott Oscillator
This indicator is very simple: the main line is the difference between two EMAs. The signal line is the EMA of the main line. It indicates the "surging" if the stock - the higher the difference between the short and long term EMAs, the faster the stock is moving.
Exponential Moving Average (EMA)
Similar to SMA, but more weight is given to later time periods. It is calculated by applying a percentage of later time period's closing price to the previous EMA value.
Exponential Moving Average (EMA) Envelope
Plots a channel with two lines that are N% above and below an EMA line.
Ergodic
This indicator is also called TSI - True Strength Index.
EVWMA - Elastic Volume Weighted Moving Average
eVWMA is a statistical measure using the volume to define the period of the moving average. The eVWMA can be looked at as an approximation to the average price paid per share. The parameter can be either a "Volume Period" or a multiplier to the Average Volume. This parameter needs to be greater than any one candle's volume.
Fast, Slow and Full Stochastics
Fast Stochastic - the raw stochastic line (%K) is computed as the position of current price as a percentage of the range established by the highest high and the lowest low of the time period for %K. The raw stochastic is then smoothed exponentially using the second parameter (%D) to yield the %D line.
Slow Stochastic - the first stochastic line (%K) is computed as the smoothed raw stochastic (see in the previous paragraph) and the %D line is the smoothed %K line.
Full Stochastic - this is a general version of the Stochastic. It takes three parameters - the third parameter is the "smoothing" parameter. That parameter, if set to 1, makes the line a Fast Stochastic. If it is set to 3, it becomes a Slow Stochastic.
These indicators were developed by Dr. George Lane. There are three main methods of interpreting the indicator.
Divergences
The interpretation that Dr. Lane believes is the most important one is to look for a divergence between %D and the price. An overbought condition occurs when %D makes a series of lower highs while the price makes a series of higher highs. An oversold condition occurs when the price makes a series of lower lows while %D makes a series of higher lows.
Crossovers
When the %K line rises above the %D line it is considered bullish, and when the %K line falls below the %D line, it is considered bearish.
High/Low Crossovers
A buy signal is generated when either line dips below and then rises above 20, and a bearish signal is generated when either line rises above and then dips below 80.
Fibonacci Fans
These lines are displayed by picking two points, for example, a trough and opposing peak. Then an "invisible" vertical line is drawn through the second extreme point. Trend lines are then drawn from the first extreme point so they pass through the invisible vertical line at various Fibonacci levels, typically 38.2%, 50.0%, and 61.8%.
The general interpretation of the Fibonacci studies involves the anticipation of a change in trend as prices near the lines created by the Fibonacci studies.
Fibonacci Retracements
Fibonacci Retracements are displayed by first drawing a trend line between two extreme points, for example, a trough and opposing peak. Right-click on the trend line and pick "Set Fibonacci Retracements". You can set which Fibonacci Retracements percentages to display in Preferences/Charts panel.
After a significant move, (either up or down), prices will often retrace a significant portion (if not all) of the original move. As prices retrace, support and resistance levels often occur at or near the Fibonacci Retracement levels.
Fisher Transform
Fisher Transform assumes that while prices do not have a normal or Gaussian probability density function (the "bell-shaped curve"), you can create a nearly Gaussian probability density function by normalizing price (or an indicator such as RSI) and applying the Fisher Transform.
The signal line is the same indicator shifted back N periods. Fisher Transform has distinct turning points and a rapid response time. Use the peak swings to clearly identify price reversals.
HMA
Hull Moving Average - is a variation of the moving average that tries to eliminate the lag associated with moving averages. The formula is a bit complicated and involves stacked weighted averages of various lengths.
Horizontal Lines
These are reference lines you can add to the chart. You can either set them at certain values or make them appear at the prices for:
* Previous Close * Daily High * 52 Week High * VWAP
* Daily Open * Daily Low * 52 Week Low * VWAP +/- MDP
Inverse Fisher Transform RSI
Developed by John Ehlers, the RSI-based inverse Fisher Transform is used to help clearly define trigger points. First, a specified length RSI is computed and adjusted so that the values are centered around zero. The inverse transform is then applied to these values.
The inverse transform is effectively: (e^(2x) - 1)/(e^(2x) + 1)
Keltner Bands
The offset up and down of both lines is an multiplier of average range (H-L) over the same time period as the SMA.
LSMA - Least Squares Moving Average
Also called "moving linear regression" or "regression oscillator".
This indicator displays the statistical trend of a security's price over a specified time period. This is done by linear regression analysis. The indicator is constructed by plotting the last point a linear regression trendline for each period point.
LSMA Envelope
This indicator draws a channel of specified width around the LSMA.
MACD (with Histogram)
The MACD ("Moving Average Convergence/Divergence") is a trend following momentum indicator that shows the relationship between two moving averages of prices. It was developed by Gerald Appel.
The first line of MACD is the difference between two EMAs (the time periods of the EMAs are the first two parameters of the MACD, defaulted to 12 and 26). The second line (called the "signal" line) is the EMA of the difference (with the time period from the third parameter, defaulted to 9). The histogram drawn is the difference between the two lines. You can choose to show only the histogram.
There are three popular ways to use the MACD: crossovers, overbought/oversold conditions, and divergences.
Crossovers
The basic MACD trading rule is to sell when the MACD falls below its signal line (when histogram crosses below zero). Similarly, a buy signal occurs when the MACD rises above its signal line (histogram crosses above zero). It is also popular to buy/sell when the MACD itself goes above/below zero.
Overbought/Oversold Conditions
The MACD is also useful as an overbought/oversold indicator. When the shorter moving average pulls away dramatically from the longer moving average (i.e., the MACD rises), it is likely that the security price is overextending and will soon return to more realistic levels. MACD overbought and oversold conditions vary from security to security.
Divergences
An indication that an end to the current trend may be near occurs when the MACD diverges from the security. A bearish divergence occurs when the MACD is making new lows while prices fail to reach new lows. A bullish divergence occurs when the MACD is making new highs while prices fail to reach new highs. Both of these divergences are most significant when they occur at relatively overbought/oversold levels.
Market Facilitation Index
This indicator is calculated by dividing the candle's range (High-Low) by its volume. It was developed by Dr. Bill Williams, and is used by comparing its movements with volume movements.
McCullough Z Oscillator
The McCullough Z Oscillator is a short term overbought/oversold oscillator developed by Bob McCullough. Its best use is to reveal overbought or oversold conditions for short duration cycles. It is highly detrended and it moves up and down between very consistent limits. A period of 5 is the best setting for short duration cycles.
The tradeable is considered oversold when the Z oscillator is below -1.0. It is overbought when it is above +1.0. Usually, it is best to let the Z oscillator drop below -1.0, then move up once before taking a long position. When going short, let the Z oscillator rise above +1.0, then drop once before taking a signal to enter a short position. Some kind of trend indicator should be used in conjunction with the Z oscillator. For example, buy signals might only be taken when prices are above a 20 bar EMA.
+MDP -MDP
This is for the horizontal line option - MDP is (Day High+Day Low)/2. You can plot VVAP+MDP, VWAP-MDP, VWAP+Yesterday's MDP and VWAP-Yesterday's MDP
Medved Oscillator
A variation on Chaikin Oscillator. The difference is that the Chaikin Oscillator accumulates the values whereas Medved Oscillator just uses the current "Money Flow" value for the candle.
Medved SAR
This indicator was the earlier implementation in QT for the Parabolic SAR. It differed from the correct version of the SAR in that it never reduced the step and didn't take into account the previous candle when deciding on direction switches. Some of our users got used to it, and found it useful in their trading, so we renamed it and left it in.
Money Flow Index (MFI)
This is a momentum indicator that measures the strength of money flowing in and out of a security. It is similar to the Relative Strength Index, but while the RSI only looks at prices, the Money Flow Index incorporates volume as well.
Divergence between the indicator and the price action. If the price trends higher and the MFI trends lower (or vice versa), a reversal may be indicated.
Look for market tops to occur when the MFI is above 80. Look for market bottoms to occur when the MFI is below 20.
Momentum
The indicator is very simple. It is the difference between current price and the price N periods ago. A signal line is an EMA of the main line.
Momentum is identical to the Rate of Change indicator with the only difference in units - momentum is measured in price points whereas ROC is measured in percent. As with TRIX, the buy/sell points can be determined either by indicator tops (for sell) and bottoms (for buys) or by crossovers with the signal line. Some people use Momentum divergences as a leading indicator for trading.
Momentum Oscillator
The indicator is also very simple. It is the difference between two SMAs of different periods. The indicator is plotted as a histogram, with coloring showing the trend of the bars.
Momentum Trend
This indicator is plotted as a dot either at the top or the bottom of the chart. It compares the EMA of the difference between current close and the close N periods ago to the EMA of the difference between previous close and the close N periods ago. If the first value is above the second one, the indicator is "up". If not, it is "down".
MSROC - Moving Slope Rate of Change
MSROC displays the rate of change of the slope of the least squares line drawn through the last N candles. The advantage of MSROC over the regular ROC is that MSROC is a lot smoother and eliminates a lot of false signals.
Negative Volume Index
Calculation:
If current candle's volume is lower than previous candle's, add NVI*(C-PC)/PC (C=current close, PC=previous close, NVI=previous Negative Volume Index).
see Wikipedia (for example) for interpretation.
N-Line Break
This is an extension of the 3-Line Break charting that is described here and adopted to fit normal charts. Instead of making this a completely different chart type (and losing all the advantages of normal charts in the process), we decided to make it a top indicator on the chart instead. The boxes are stretched out to show which candles they cover.
On Balance Volume (OBV)
OBV is a simple indicator that adds a period's volume when the price goes up during the period and subtracts the period's volume when the price goes down. A cumulative total of the volume additions and subtractions forms the OBV line. This line can then be compared with the price chart of the underlying security to look for divergences or confirmations.
Parabolic SAR
The Parabolic Time/Price System, developed by J. Welles Wilder, is used to set trailing price stops and is usually referred to as the "SAR" (stop-and-reversal). This indicator is explained thoroughly in Wilder's book, New Concepts in Technical Trading Systems.
There are two variables: the increment and the maximum. The higher the increment is set, the more sensitive the indicator will be to price changes. If the increment is set too high, the indicator will fluctuate above and below the price too often, making interpretation difficult. The maximum controls the adjustment of the SAR as the price moves. The lower the maximum is set, the further the trailing stop will be from the price. Wilder recommends setting the increment at .02 and the maximum at .20.
Percent B
The Percent B indicator reflects closing price as a percentage of the lower and upper Bollinger Bands. If the closing price is the same as the upper Bollinger Band value, Percent B would be 100 (percent), if the closing price is above the upper Bollinger Band, Percent B would be greater than 100. If the close is equal to the moving average, Percent B is 50 percent, and if the close is equal to the lower Bollinger Band, Percent B would be zero. If the close is below the lower band, Percent B would be negative.
Percentage Trend / Volatility Trend
These indicators were described in the Russian "Modern Trading" magazine in 2001. There does not seem to be much written about them in English anywhere. The indicators are supposed to define trends, while filtering corrections that do not exceed a certain level and switch directions only when the overall tendency changes. As with all trend indicators, they behave best in the strongly trending market and start giving erroneous signals in a sideways-trading environment.
Pivot Points
The Pivot Point is defined as the average of the high, low and settlement price of the previous day. There are also two sets of resistance/support levels. Pivot point is considered to be the "equilibrium" point around which trading will occur if there is no pressure on the stock. The first set of support/resistance levels is usually used by daytraders to indicate short term breakouts. The second set is geared more toward position traders.
Discussion of Pivot Points
The formula for pivot points is as follows: (H,L,C are previous day's High, Low and Close)
R2 = P + (H - L) = P + (R1 - S1)
R1 = (P x 2) - L
P = (H + L + C) / 3
S1 = (P x 2) - H
S2 = P - (H - L) = P - (R1 - S1)
Pivot Point Extra - adds two more levels of support/resistance.
Positive Volume Index
Calculation:
If current candle's volume is higher than previous candle's, add PVI*(C-PC)/PC (C=current close, PC=previous close, PVI=previous Positive Volume Index).
See Wikipedia (for example) for interpretation.
PPO - Percentage Price Oscillator
An indicator based on the difference between two moving averages expressed as a percentage. The PPO is found by subtracting the longer moving average from the shorter moving average and then dividing the difference by the shorter moving average.
This indicator is very similar to MACD - the differences show up only for low-priced stocks.
Pressure
The pressure indicator shows the ratio of shares traded at or below the bid (Red) v.s. at or above the ask (Green) in the last 30 trades. It is similar to the color coding used in Raw data to show buys vs. sell (pressure). Pressure is also available as a portfolio column in Edit Views from the View Menu.
Pressure Bars
This indicator shows the ratio of the volume of trades going off at ask vs. trades going off at bid for each period of time.
Pressure Delta
This indicator is related to the other two "Pressure" indicators above. It can oscillate between -1 and 1 - and shows whether the trades at bid or trades at ask are more prevalent in the trades for the period.
Price Channel
This indicator is used to detect breakouts of significant support and resistance areas. The upper channel is drawn at the highest high of last N periods. The lower channel is drawn at the lowest low of the last N periods. A penetration of the upper channel is a sign of strength. A penetration of the lower channel is a sign of weakness.
PV Trend (Price/Volume Trend)
For each time period, add dP*dV to the value, where
dP = change in Price for the time period
dV = change in Volume for the time period
This indicator is useful in evaluating the volume strength of price moves.
Q Stick
Tushar Chande says, "Qstick extracts the essence of the candlestick approach by taking a moving average of the difference between the closing and the opening price. …It can be plotted over a candlestick chart to spot divergences. …When markets make giant price moves, a slackening of the momentum can be seen when Qstick crosses its trailing average. ………A longer term, trend following approach with Qstick is to use the zero crossing of the Qstick values."
Regression Channel
Linear Regression Channel indicator plots a straight trendline on the price chart and the two standard-deviation lines above and below the trendline.
The two parameters to the indicator control when the trendline ends and the next one is started. You can specify either or both of the two parameters: the % of the price move in the direction that is opposite to the trend or the total # of consecutive ticks in the direction that is opposite to the trend. If you enter 0 in either of the parameters, that method of switching directions will not be used.
The space inside the channel is where price equilibrium exists. The price will tend to move inside the two outside lines. When it breaks out of the channel, it's an indication that the trend has changed.
RVI - Relative Volatility Index
Stocks & Commodities, V. 11:6 (253-256): The Relative Volatility Index by Donald Dorsey
"The RVI is simply the relative strength index (RSI) with the standard deviation over the past 10 days used in place of daily price change. Because most indicators use price change for their calculations, we need a confirming indicator that uses a different measurement to interpret market strength. The RVI measures the direction of volatility on a scale of zero to 100. Readings above 50 indicate that the volatility as measured by the 10-day standard deviation of the closing prices is more to the upside. Readings below 50 indicate that the direction of volatility is to the downside. The initial testing indicates that the RVI can be used wherever you might use the RSI and in the same way, but the specific purpose of this study is to measure the RVI's performance as a confirming indicator."
Rate of Change (ROC)
This indicator is identical to the Momentum indicator - except it is in percent of price.
Relative Strength Index (RSI)
RSI is an oscillator that attempts to measure the velocity at which prices are moving, and express that velocity within a range of zero to 100. The indicator was developed by J. Welles Wilder.
Different stocks work better with different time period parameters of RSI. User should experiment to see which time period works best with what stock.
There are three popular ways to use the RSI:
Centerline Crossovers
The centerline for RSI is 50. Readings above and below can give the indicator a bullish or bearish tilt. On the whole, a reading above 50 indicates that average gains are higher than average losses and a reading below 50 indicates that losses are winning the battle. Some traders look for a move above 50 to confirm bullish signals or a move below 50 to confirm bearish signals.
Overbought/Oversold Conditions
Generally, RSI readings below 30 are considered oversold and readings above 70 considered overbought. The choice of overbought and oversold levels is discretionary and much will depend on the individual stock.
Divergences
Buy and sell signals can also be generated by looking for positive and negative divergences. A positive divergence usually forms below 50 and can form after a decline below 30. Negative divergences usually form above 50 and can form after an advance above 70. Divergences that occur after an overbought or oversold reading are considered more robust.
Single Regression Channel
Similar to the Linear Regression Channel indicator, it plots one straight trendline on the price chart and the two standard-deviation lines above and below the trendline.
The difference from the Linear Regression Channel is that for the Single channel you can specify how many periods back the channel should start, whereas for the Linear Regression Channel indicator the start points are automatically determined based on the criteria parameters.
Simple Moving Average (SMA)
A simple, sometimes called arithmetic, moving average is calculated by adding the closing price of the security for a number of time periods and then dividing this total by the number of time periods. It is basically the average price of the stock over a period of time. Equal weight is given to each time period.
Simple Moving Average (SMA) Envelope
Plots a channel with two lines that are N% above and below an SMA line.
Smoothed Moving Average (SmMA)
A Smoothed Moving Average is similar to a Simple Moving Average. However, in a smoothed moving average, rather than subtracting the oldest value from the sum, then taking the average value, the previous value of the SmMA is subtracted.
Standard Deviation
This indicator is a standard statistical measure of volatility - it shows how widely the values in the chart for the selected period differ from the average value.
Standard Error Bands
Developed by Jon Andersen and published in 1996 issue of Technical Analysis of STOCKS & COMMODITIES magazine. The construction of standard error bands is similar to that of Bollinger bands - but whereas Bollinger Bands measure the variance or degree of volatility around the average price using the standard deviation, standard error bands use the standard error offsets around an LSMA (Least Squares Moving Average) line.
STARC Bands
These bands are around an SMA line, with the width calculated as the ATR (Average True Range) for the period.
Stochastic Momentum Index
This indicator was developed by William Blau. It first appeared in the January 1993 issue of Stocks & Commodities magazine. This indicator plots how close the price is to the midpoint of the recent high/low range.
Some interpret it going above 40 as bullish and below 40 as bearish.
Stochastic Money Flow Index (MFI)
This is a stochastic of the MFI indicator.
Stochastic Relative Strength Index
This is a stochastic of the RSI study.
Stochastic Relative Volatility Index
This is a stochastic of the RVI study.
T3 - Adaptive Smoothing Indicator
T3 is an adaptive moving average. It tracks the time series more aggressively when making large moves. It is discussed in the Stocks and Commodities article "Smoothing Techniques For More Accurate Signals" V16:1 (33-37).
TEMA - Triple Exponential Moving Average
This indicator was created by Patrick Mulloy and introduced in in the January 1994 issue of Technical Analysis of Stocks & Commodities magazine. It uses a combination a single exponential moving average, a double exponential moving average, and a triple exponential moving average to create a line that has less lag than the standard moving average line.
Time Bars
This indicator only makes sense for chart types that are not time-based (like tick, range or volume charts). It shows, for each candle, how big a period of time it covers.
Time Series Forecast
This indicator attempts to forecast the price of the security using linear regression analysis. For each point in the chart it calculates the linear regression line for the last N candles, extends it forward 1 period and plots the extrapolated point at current period point.
Time Tick
This indicator only makes sense for chart types that are not time-based (like tick, range or volume charts). It draws vertical lines on the chart at equidistant time periods.
NOTE: If the total # of time tick lines is more than 1/3 the # of candles, it will not show
TRIX
This is a momentum indicator. It is the percent of the rate of change of a triple exponential smoothing of stock's price. A signal line is an EMA of the main line.
TRIX's triple smoothing is intended to filter any irregularities and spikes in the price and present a clear picture of the momentum of the stock. Buying and selling points are when the indicator changes directions. Another way of looking at TRIX is to use the signal line and generate a buy when TRIX moves above the signal line and sell when it moves below it.
TSI - True Strength Index
Best described here, this is a momentum indicator developed by William Blau. It is a cross between a relative strength indicator and a MACD indicator with many of the desirable properties from each. Blau's article describing the usage of the indicator can be found here.
Twiggs Money Flow
This indicator is created by the folks at IncredibleCharts and is derived from the Chaikin Money Flow but fixes some of the CMF's weaknesses. The main difference is the exponential smoothing of the Accumulation Distribution values from which the Money Flow is derived. More info can be found at IncredibleCharts
Ultimate Oscillator
This indicator combines a stock's price action during three different time frames into one oscillator. The three type frames can be specified by user. Typical values are 7,14 and 28. The values for the indicator range from 0 to 100 with 50 as the center line. Oversold territory is below 30 and overbought territory is above 70.
Volatility Stop
A Volatility Stop is based on the assumption that volatility in the market is "noise" and tries to create a trailing stop just outside the "noise" level. One of the parameters is the multiple of the volatility of the market, and adjusting it will adjust the sensitivity of the noise filter.
Volume (+EMA)
Stocks' trading volume bar chart is displayed. The bars can have three different colors, corresponding to the price going up for the time interval represented by the bar, price going down, and price staying the same. If the Volume+EMA indicator is chosen, an EMA of the volume is overlayed on the bar chart.
Volume by Price
This indicator is unusual because it is a histogram plotted vertically on the chart. The histogram represents the volume of trades for each price level (with the price level selection specified in parameters). User can specify either the total number of price intervals or the size of each price interval. Volume by Price can be used to see which prices invoke the most volume and activity throughout the day.
The middle highlighted bar is the biggest bar for the day. The two surrounding highlighted bars are the "range" bars. If the range is 70%, and the total of the bars above the middle one is 100,000, for example, then start counting from the middle bar adding up the bars, and the bar where the total reaches 70,000 will be highlighted. Same with the bottom half.
VWAP - Volume Weighted Average Price
VWAP is calculated by adding up the dollars traded for every transaction (price times shares traded) and then dividing by the total shares traded for the day. This calculates the average price paid per share for the whole day.
VWMA - Volume Weighted Moving Average
The VWMA weighs the price of each bar with the volume of that bar. In this way, bars with higher volume will have heavier weight in the computation of the average. An N-period VWMA first sums the product of the volume and the price for each of the last N bars. This product is then divided by the sum of the volumes to give the resulting average.
Weighted TSI - True Strength Indicator
The same as the TSI indicator, but with WMA (Weighted Moving Average) used to calculate it instead of the EMA.
Williams %R
Williams' %R (pronounced "percent R") is a momentum indicator that measures overbought/oversold levels. The indicator was developed by Larry Williams. It shows the relationship of the close relative to the high-low range over a set period of time. The nearer the close is to the top of the range, the nearer to zero (higher) the indicator will be. The nearer the close is to the bottom of the range, the nearer to -100 (lower) the indicator will be.
Readings in the range of -80 to -100 indicate that the stock is oversold while readings in the 0 to -20 range suggest that it is overbought. It is not unusual for overbought/oversold indicators to remain in an overbought/oversold condition for a long time period as the price continues to climb/fall. Selling simply because the stock appears overbought may take you out of the stock long before its price shows signs of deterioration. It is best to wait until the price changes direction and the indicator drops below -80 or goes above -20 before placing the trade.
Williams Accumulation/Distribution Index
This indicator was developed by Larry Williams. It is supposed to measure market pressure, and should be used to find divergences - that is, one should look for instances of substantial divergence between the index and the price as an indication to the future price movement.
Williams PRO-Go
This indicator calculates two lines a "Public" line and the "Professional" line. The "Public" line is calculated by using the moving average of the candle's change from previous close to open. The "Professional" line is the moving average of the change from current open to current close.
This study is used usually for historical charts, and the rule of thumb is - if the Professional line goes below the Public line it is a sell signal, and if Professional line goes above the Public line it is a buy signal.
Williams VIX Fix
When used on an S&P index, this indicator is supposed to simulate the VIX. QT allows you to apply it to any chart. The article describing it was published in December 2006 Issue of "Active Trader."
Weighted Moving Average (WMA)
With this type of moving average, the data is weighted in favor of the most recent observations. A weighted moving average has the ability to reverse direction more quickly than a simple moving average. Calculation, for example for a 5 period moving average: multiply the last period by 5; the second to last by 4, next one back by 3 etc. Then divide this sum by the sum of the weights (1+2+3+4+5). With a weighted moving average, a buy or sell signal is given when the weighted moving average changes direction.
WMA Envelope
A simple envelope around WMA plus/minus a percentage.
Woodie's Chop Zone
An implementation of Woodie's Chop Zone indicator (Woodies CCI Club).
Woodie's Pivot Points
Very similar to the standard Pivot Points. The difference is that the initial Pivot Point is defined as the average of the high, low of the previous day and double the opening price of current day (H+L+O+O)/4.
Discussion of Pivot Points
Woodie's Pivot Points Extra - an extended set of support/resistance lines
Woodie's Sidewinder
An implementation of Woodie's Sidewinder indicator (Woodies CCI Club).
Woodie's Sidewinder Curve
Woodie's Sidewinder calculates a certain formula, then uses four colors to depict whether the resulting value lies within certain limits. This indicator just exposes the value itself.
The Accumulation/Distribution Line, developed by Marc Chaikin, attempts to measure the cumulative flow of money into and out of a security. The indicator calculates the "Close Location Value", which measures how well the stock did on the day, and shows the cumulative value of CLV*Value. More information and help on how to read this indicator from StockCharts.
Average Directional Movement Index (ADX)
Calculating ADX is a two-step process. First, the difference of +DI and -DI (see Directional Movement Index (DMI)) is divided by the sum of +DI and -DI, and the quotient is multiplied by 100; the result is known as DX. Second, ADX is calculated by taking a modified moving average of DX.
The ADX is read like an oscillator. High value commonly interpreted as bullish and low value is interpreted as bearish.
Average Directional Movement Rating (ADXR)
ADXR shows the momentum change in the value of the ADX. It is calculated by calculating the average of the two ADX values - current ADX and previous candle's ADX. Usage: the higher the ADX, the stronger the trend. ADXR was developed by J. Welles Wilder and is described in his 1978 book "New Concepts In Technical Trading Systems".
AMA - Adaptive Moving Average
Developed by Perry Kaufmann, this indicator is an EMA (exponential moving average) using an Efficiency Ratio to modify the smoothing constant, which ranges from a minimum of fast length to a maximum of slow length.
AMA Binary Wave
The Adaptive Moving Average Binary Wave was created by Perry Kaufman. The 1 on the wave is a buy signal, and the -1 is the sell signal.
Andrews Pitchfork
Andrews Pitchfork is a way of annotating the chart with lines that are designed to show the future trend of the chart. A good description can be found here. To draw the pitchfork in QuoteTracker, Click on the "Shapes" button on the chart toolbar and and pick the Pitchfork option from the dropdown menu. Then, start drawing the first line of the pitchfork.
Aroon Oscillator
This indicator is used to measure the presence and strength of trends. It was developed in 1995 by Tushar Chande
The Aroon Oscillator signals an upward trend is underway when it is above zero and a downward trend is underway when it falls below zero. The farther away the oscillator is from the zero line, the stronger the trend.
Aroon Up/Down
The up/down lines from the Aroon Oscillator. Chande states that when AroonUp and AroonDown are moving lower in close proximity, it signals a consolidation phase is under way and no strong trend is evident. When AroonUp dips below 50, it indicates that the current trend has lost its upwards momentum. Similarly, when AroonDown dips below 50, the current downtrend has lost its momentum. Values above 70 indicate a strong trend in the same direction as the Aroon (up or down) is under way. Values below 30 indicate that a strong trend in the opposite direction is underway.
ART Paintbar (TradersCoach.com)
This indicator is brought to you in cooperation with TradersCoach.com. This particular indicator can be found on that web site under "ART ColorBars". In order to use this indicator, you have to have a subscription with TradersCoach.com and be a TD AMERITRADE client.
ART Pyramids (TradersCoach)
This indicator is brought to you in cooperation with TradersCoach.com. See the tutorials on how to use this indicator on that web site. In order to use this indicator, you have to have a subscription with TradersCoach.com and be a TD AMERITRADE client.
ART Reversals (TradersCoach)
This indicator is brought to you in cooperation with TradersCoach.com. See the tutorials on how to use this indicator on that web site. In order to use this indicator, you have to have a subscription with TradersCoach.com and be a TD AMERITRADE client.
Average True Range
An SMA of the price "true range" over a number of periods. The "true range" in this case is maximum of the differences between High, Low or Close for the time period.
This indicator measures a security's volatility. It does not indicate price direction or duration, rather the degree of price movement. Average True Range can be interpreted using the same techniques that are used with the other volatility indicators.
Auto Trendlines
This indicator attempts to draw two automatic trendlines at the rightmost (current) side of the chart. The trendlines - one ascending and one descending - are supposed to be drawn between two "local peaks" with the caveat that no candle penetrates the trendline. The parameters are:
* Period - determines the period which is used to search for the anchor points for the trendlines
* Strength - the criterion for the "local peak" determination
* Start - how many candles back to start looking for the trendlines
BAV Trend - Bid/Ask Volume Trend
For each candle it shows the (Volume at Ask)-(Volume at Bid) for all the trades that constituted the candle.
Bollinger Bands
These are lines that are usually drawn two standard deviations away from a simple moving average (QuoteTracker allows you to change the "two" to any number). Bollinger Bands auto-adjust themselves to the stock volatility. When the stock becomes more volatile they widen and contract during less volatile periods. The technical rule of thumb is: the closer the prices move to the upper band, the more overbought the equity is, and the closer the prices move to the lower band, the more oversold.
Bollinger Bandwidth
This is a simple indicator based on Bollinger Bands. It is defined as the upper band minus the lower band divided by the middle band. High values of bandwidth represent regions of high volatility, while low values of bandwidth represent regions of low volatility.
Bressert DSS - Double Smoothed Stochastic
This is an Overbought/Oversold Indicator. It should be used in conjunction with a trend indicator. Values about 80 show overbought, under 20 show oversold.
Camarilla Pivots
Nick Stott's "SureFireThing Camarilla Equation" variation of the pivot lines. The formula was supplied by one of our users.
Commodity Channel Index (CCI)
Commodity Channel Index (CCI) was originally developed by Donald Lambert to identify cyclical turns in commodities. The assumption behind the indicator is that commodities (or stocks) move in cycles, with highs and lows coming at periodic intervals.
CCI fluctuates above and below zero. A good description of interpretation techniques for CCI can be found here.
Center of Gravity
COG is an oscillator based on an article by John F. Ehlers on page 20 of the May 2002 issue of Stocks and Commodities Magazine. COG has essentially zero lag and enables clear identification of turning points. This indicator is a result of Ehlers research into adaptive filters. The calculation of COG involves dividing the reverse WMA of the stock (older periods weighted more than more recent ones) by its SMA.
Chaikin Money Flow
This indicator is used to warn of breakouts and provides useful trend confirmation.
It is based on the observation that buying support is normally signaled by increased volume and frequent closes in the top half of the period's range. Likewise, selling pressure is evidenced by increased volume and frequent closes in the lower half of the period's range. It is calculated by summing Accumulation Distribution for N periods and then dividing by the total volume for those periods.
Chaikin Oscillator
This indicator is also called Volume Accumulation Oscillator and is described in some detail here and here. It compares the money flow to the price action of an issue, which in turn allows the chartist to recognize tops and bottoms in short cycles.
Chande Momentum Oscillator
CMO was created by Tushar Chande and is published in his book "The New Technical Trader". Its use is similar to RSI. Usually overbought level is at +50 and higher and oversold at -50 and lower.
Choppiness Index
Choppiness Index can be viewed as an indicator measuring the market's trendiness (the output is well below its average on the chart) versus the market's choppiness (the output is well above its average on the chart). The basic idea is that when the market is heavily trending during the past N bars, the fractal dimension is close to one and the Choppiness Index is around zero.
DEMA - Double Exponential Moving Average
A moving average indicator created by Patrick Mulloy - introduced in the February 1994 issue of Technical Analysis of Stocks & Commodities magazine.
Its formula is: (2 * EMA(N)) - (EMA(EMA(N),N)) - that is, twice the N-period EMA minus the N-period EMA of the EMA. This indicator is supposed to have less delay than the regular EMA.
DeMark Pivots
This is a variation of the Pivot Points developed by Thomas DeMark. It only provides support and resistance lines, and the calculation varies depending on whether the previous day was an up or down day. It is calculated as follows (O,H,L,C are previous day's Open, High, Low, Close)
If O=C - Support at (H+L+C*2)/2-L and Resistance at (H+L+C*2)/2-H
If O>C - Support at (H+L*2+C)/2-L and Resistance at (H+L*2+C)/2-H
If O
DeMarker
This indicator is an oscillator - between 0 and 100, and tries to predict price reversals. Bullish price revesal is indicated by the oscillator rising above 70, while bearish price revesale is indicated by the oscillator falling below 30. The formula is as follows (H,L - current candle's high/low, PH,PL - previous candle's high/low)
if H > PH then DeMax=H-PH else DeMax=0
if L < PL then DeMin=PL-L else DeMin=0
DeMark = 100*SMA(DeMax) / (SMA(DeMax) + SMA(DeMin))
Detrended Oscillator
The Detrended Oscillator is calculated by first calculating the difference between price and a user specified SMA of price. The resulting array of differences is then smoothed according to the same SMA parameter. The resulting indicator oscillates around zero. This indicator makes it easy to spot situations when an instrument is trading at extremes relative to its average price.
Directional Movement Index (DMI)
The directional movement index was developed by J. Welles Wilder for identifying whether a stock is in trend mode.
The indicator consists of two lines, +DI and -DI. Wilder defines +DI as the portion of the range that is up and -DI as the portion of the range that is down. According to Wilder, when the +DI value is greater than the -DI, a long position is indicated. Conversely, when the -DI is greater than +DI, a short position is indicated.
ECO - Ergodic Candle Oscillator
This indicator was created by William Blau and is "a double smoothed ratio of the difference between the Close and Open of each bar, and the difference between the High and Low prices for each bar".
Efficiency Ratio
Efficiency Ratio is one of the newer indicators, and was developed by Perry Kaufman. It is a measure of relative market speed to volatility, and can be used as a trading filter to avoid choppy or flat markets. Not much has been written about it yet. The rule of thumb is - the closer to 1 the Efficiency Ratio is, the more "efficient" the stock is in its price movements.
Elder Force Index
It is calculated by multiplying the volume for the current candle by the difference between current close and previous close. Investopedia has an article on this indicator.
Elder Ray
It has two components - "Bull Power" and "Bear Power". Bull Power subtracts an EMA of close from high of the candle. Bear Power subtracts an EMA of close from low of the candle. Investopedia has an article on this indicator.
Elliott Oscillator
This indicator is very simple: the main line is the difference between two EMAs. The signal line is the EMA of the main line. It indicates the "surging" if the stock - the higher the difference between the short and long term EMAs, the faster the stock is moving.
Exponential Moving Average (EMA)
Similar to SMA, but more weight is given to later time periods. It is calculated by applying a percentage of later time period's closing price to the previous EMA value.
Exponential Moving Average (EMA) Envelope
Plots a channel with two lines that are N% above and below an EMA line.
Ergodic
This indicator is also called TSI - True Strength Index.
EVWMA - Elastic Volume Weighted Moving Average
eVWMA is a statistical measure using the volume to define the period of the moving average. The eVWMA can be looked at as an approximation to the average price paid per share. The parameter can be either a "Volume Period" or a multiplier to the Average Volume. This parameter needs to be greater than any one candle's volume.
Fast, Slow and Full Stochastics
Fast Stochastic - the raw stochastic line (%K) is computed as the position of current price as a percentage of the range established by the highest high and the lowest low of the time period for %K. The raw stochastic is then smoothed exponentially using the second parameter (%D) to yield the %D line.
Slow Stochastic - the first stochastic line (%K) is computed as the smoothed raw stochastic (see in the previous paragraph) and the %D line is the smoothed %K line.
Full Stochastic - this is a general version of the Stochastic. It takes three parameters - the third parameter is the "smoothing" parameter. That parameter, if set to 1, makes the line a Fast Stochastic. If it is set to 3, it becomes a Slow Stochastic.
These indicators were developed by Dr. George Lane. There are three main methods of interpreting the indicator.
Divergences
The interpretation that Dr. Lane believes is the most important one is to look for a divergence between %D and the price. An overbought condition occurs when %D makes a series of lower highs while the price makes a series of higher highs. An oversold condition occurs when the price makes a series of lower lows while %D makes a series of higher lows.
Crossovers
When the %K line rises above the %D line it is considered bullish, and when the %K line falls below the %D line, it is considered bearish.
High/Low Crossovers
A buy signal is generated when either line dips below and then rises above 20, and a bearish signal is generated when either line rises above and then dips below 80.
Fibonacci Fans
These lines are displayed by picking two points, for example, a trough and opposing peak. Then an "invisible" vertical line is drawn through the second extreme point. Trend lines are then drawn from the first extreme point so they pass through the invisible vertical line at various Fibonacci levels, typically 38.2%, 50.0%, and 61.8%.
The general interpretation of the Fibonacci studies involves the anticipation of a change in trend as prices near the lines created by the Fibonacci studies.
Fibonacci Retracements
Fibonacci Retracements are displayed by first drawing a trend line between two extreme points, for example, a trough and opposing peak. Right-click on the trend line and pick "Set Fibonacci Retracements". You can set which Fibonacci Retracements percentages to display in Preferences/Charts panel.
After a significant move, (either up or down), prices will often retrace a significant portion (if not all) of the original move. As prices retrace, support and resistance levels often occur at or near the Fibonacci Retracement levels.
Fisher Transform
Fisher Transform assumes that while prices do not have a normal or Gaussian probability density function (the "bell-shaped curve"), you can create a nearly Gaussian probability density function by normalizing price (or an indicator such as RSI) and applying the Fisher Transform.
The signal line is the same indicator shifted back N periods. Fisher Transform has distinct turning points and a rapid response time. Use the peak swings to clearly identify price reversals.
HMA
Hull Moving Average - is a variation of the moving average that tries to eliminate the lag associated with moving averages. The formula is a bit complicated and involves stacked weighted averages of various lengths.
Horizontal Lines
These are reference lines you can add to the chart. You can either set them at certain values or make them appear at the prices for:
* Previous Close * Daily High * 52 Week High * VWAP
* Daily Open * Daily Low * 52 Week Low * VWAP +/- MDP
Inverse Fisher Transform RSI
Developed by John Ehlers, the RSI-based inverse Fisher Transform is used to help clearly define trigger points. First, a specified length RSI is computed and adjusted so that the values are centered around zero. The inverse transform is then applied to these values.
The inverse transform is effectively: (e^(2x) - 1)/(e^(2x) + 1)
Keltner Bands
The offset up and down of both lines is an multiplier of average range (H-L) over the same time period as the SMA.
LSMA - Least Squares Moving Average
Also called "moving linear regression" or "regression oscillator".
This indicator displays the statistical trend of a security's price over a specified time period. This is done by linear regression analysis. The indicator is constructed by plotting the last point a linear regression trendline for each period point.
LSMA Envelope
This indicator draws a channel of specified width around the LSMA.
MACD (with Histogram)
The MACD ("Moving Average Convergence/Divergence") is a trend following momentum indicator that shows the relationship between two moving averages of prices. It was developed by Gerald Appel.
The first line of MACD is the difference between two EMAs (the time periods of the EMAs are the first two parameters of the MACD, defaulted to 12 and 26). The second line (called the "signal" line) is the EMA of the difference (with the time period from the third parameter, defaulted to 9). The histogram drawn is the difference between the two lines. You can choose to show only the histogram.
There are three popular ways to use the MACD: crossovers, overbought/oversold conditions, and divergences.
Crossovers
The basic MACD trading rule is to sell when the MACD falls below its signal line (when histogram crosses below zero). Similarly, a buy signal occurs when the MACD rises above its signal line (histogram crosses above zero). It is also popular to buy/sell when the MACD itself goes above/below zero.
Overbought/Oversold Conditions
The MACD is also useful as an overbought/oversold indicator. When the shorter moving average pulls away dramatically from the longer moving average (i.e., the MACD rises), it is likely that the security price is overextending and will soon return to more realistic levels. MACD overbought and oversold conditions vary from security to security.
Divergences
An indication that an end to the current trend may be near occurs when the MACD diverges from the security. A bearish divergence occurs when the MACD is making new lows while prices fail to reach new lows. A bullish divergence occurs when the MACD is making new highs while prices fail to reach new highs. Both of these divergences are most significant when they occur at relatively overbought/oversold levels.
Market Facilitation Index
This indicator is calculated by dividing the candle's range (High-Low) by its volume. It was developed by Dr. Bill Williams, and is used by comparing its movements with volume movements.
McCullough Z Oscillator
The McCullough Z Oscillator is a short term overbought/oversold oscillator developed by Bob McCullough. Its best use is to reveal overbought or oversold conditions for short duration cycles. It is highly detrended and it moves up and down between very consistent limits. A period of 5 is the best setting for short duration cycles.
The tradeable is considered oversold when the Z oscillator is below -1.0. It is overbought when it is above +1.0. Usually, it is best to let the Z oscillator drop below -1.0, then move up once before taking a long position. When going short, let the Z oscillator rise above +1.0, then drop once before taking a signal to enter a short position. Some kind of trend indicator should be used in conjunction with the Z oscillator. For example, buy signals might only be taken when prices are above a 20 bar EMA.
+MDP -MDP
This is for the horizontal line option - MDP is (Day High+Day Low)/2. You can plot VVAP+MDP, VWAP-MDP, VWAP+Yesterday's MDP and VWAP-Yesterday's MDP
Medved Oscillator
A variation on Chaikin Oscillator. The difference is that the Chaikin Oscillator accumulates the values whereas Medved Oscillator just uses the current "Money Flow" value for the candle.
Medved SAR
This indicator was the earlier implementation in QT for the Parabolic SAR. It differed from the correct version of the SAR in that it never reduced the step and didn't take into account the previous candle when deciding on direction switches. Some of our users got used to it, and found it useful in their trading, so we renamed it and left it in.
Money Flow Index (MFI)
This is a momentum indicator that measures the strength of money flowing in and out of a security. It is similar to the Relative Strength Index, but while the RSI only looks at prices, the Money Flow Index incorporates volume as well.
Divergence between the indicator and the price action. If the price trends higher and the MFI trends lower (or vice versa), a reversal may be indicated.
Look for market tops to occur when the MFI is above 80. Look for market bottoms to occur when the MFI is below 20.
Momentum
The indicator is very simple. It is the difference between current price and the price N periods ago. A signal line is an EMA of the main line.
Momentum is identical to the Rate of Change indicator with the only difference in units - momentum is measured in price points whereas ROC is measured in percent. As with TRIX, the buy/sell points can be determined either by indicator tops (for sell) and bottoms (for buys) or by crossovers with the signal line. Some people use Momentum divergences as a leading indicator for trading.
Momentum Oscillator
The indicator is also very simple. It is the difference between two SMAs of different periods. The indicator is plotted as a histogram, with coloring showing the trend of the bars.
Momentum Trend
This indicator is plotted as a dot either at the top or the bottom of the chart. It compares the EMA of the difference between current close and the close N periods ago to the EMA of the difference between previous close and the close N periods ago. If the first value is above the second one, the indicator is "up". If not, it is "down".
MSROC - Moving Slope Rate of Change
MSROC displays the rate of change of the slope of the least squares line drawn through the last N candles. The advantage of MSROC over the regular ROC is that MSROC is a lot smoother and eliminates a lot of false signals.
Negative Volume Index
Calculation:
If current candle's volume is lower than previous candle's, add NVI*(C-PC)/PC (C=current close, PC=previous close, NVI=previous Negative Volume Index).
see Wikipedia (for example) for interpretation.
N-Line Break
This is an extension of the 3-Line Break charting that is described here and adopted to fit normal charts. Instead of making this a completely different chart type (and losing all the advantages of normal charts in the process), we decided to make it a top indicator on the chart instead. The boxes are stretched out to show which candles they cover.
On Balance Volume (OBV)
OBV is a simple indicator that adds a period's volume when the price goes up during the period and subtracts the period's volume when the price goes down. A cumulative total of the volume additions and subtractions forms the OBV line. This line can then be compared with the price chart of the underlying security to look for divergences or confirmations.
Parabolic SAR
The Parabolic Time/Price System, developed by J. Welles Wilder, is used to set trailing price stops and is usually referred to as the "SAR" (stop-and-reversal). This indicator is explained thoroughly in Wilder's book, New Concepts in Technical Trading Systems.
There are two variables: the increment and the maximum. The higher the increment is set, the more sensitive the indicator will be to price changes. If the increment is set too high, the indicator will fluctuate above and below the price too often, making interpretation difficult. The maximum controls the adjustment of the SAR as the price moves. The lower the maximum is set, the further the trailing stop will be from the price. Wilder recommends setting the increment at .02 and the maximum at .20.
Percent B
The Percent B indicator reflects closing price as a percentage of the lower and upper Bollinger Bands. If the closing price is the same as the upper Bollinger Band value, Percent B would be 100 (percent), if the closing price is above the upper Bollinger Band, Percent B would be greater than 100. If the close is equal to the moving average, Percent B is 50 percent, and if the close is equal to the lower Bollinger Band, Percent B would be zero. If the close is below the lower band, Percent B would be negative.
Percentage Trend / Volatility Trend
These indicators were described in the Russian "Modern Trading" magazine in 2001. There does not seem to be much written about them in English anywhere. The indicators are supposed to define trends, while filtering corrections that do not exceed a certain level and switch directions only when the overall tendency changes. As with all trend indicators, they behave best in the strongly trending market and start giving erroneous signals in a sideways-trading environment.
Pivot Points
The Pivot Point is defined as the average of the high, low and settlement price of the previous day. There are also two sets of resistance/support levels. Pivot point is considered to be the "equilibrium" point around which trading will occur if there is no pressure on the stock. The first set of support/resistance levels is usually used by daytraders to indicate short term breakouts. The second set is geared more toward position traders.
Discussion of Pivot Points
The formula for pivot points is as follows: (H,L,C are previous day's High, Low and Close)
R2 = P + (H - L) = P + (R1 - S1)
R1 = (P x 2) - L
P = (H + L + C) / 3
S1 = (P x 2) - H
S2 = P - (H - L) = P - (R1 - S1)
Pivot Point Extra - adds two more levels of support/resistance.
Positive Volume Index
Calculation:
If current candle's volume is higher than previous candle's, add PVI*(C-PC)/PC (C=current close, PC=previous close, PVI=previous Positive Volume Index).
See Wikipedia (for example) for interpretation.
PPO - Percentage Price Oscillator
An indicator based on the difference between two moving averages expressed as a percentage. The PPO is found by subtracting the longer moving average from the shorter moving average and then dividing the difference by the shorter moving average.
This indicator is very similar to MACD - the differences show up only for low-priced stocks.
Pressure
The pressure indicator shows the ratio of shares traded at or below the bid (Red) v.s. at or above the ask (Green) in the last 30 trades. It is similar to the color coding used in Raw data to show buys vs. sell (pressure). Pressure is also available as a portfolio column in Edit Views from the View Menu.
Pressure Bars
This indicator shows the ratio of the volume of trades going off at ask vs. trades going off at bid for each period of time.
Pressure Delta
This indicator is related to the other two "Pressure" indicators above. It can oscillate between -1 and 1 - and shows whether the trades at bid or trades at ask are more prevalent in the trades for the period.
Price Channel
This indicator is used to detect breakouts of significant support and resistance areas. The upper channel is drawn at the highest high of last N periods. The lower channel is drawn at the lowest low of the last N periods. A penetration of the upper channel is a sign of strength. A penetration of the lower channel is a sign of weakness.
PV Trend (Price/Volume Trend)
For each time period, add dP*dV to the value, where
dP = change in Price for the time period
dV = change in Volume for the time period
This indicator is useful in evaluating the volume strength of price moves.
Q Stick
Tushar Chande says, "Qstick extracts the essence of the candlestick approach by taking a moving average of the difference between the closing and the opening price. …It can be plotted over a candlestick chart to spot divergences. …When markets make giant price moves, a slackening of the momentum can be seen when Qstick crosses its trailing average. ………A longer term, trend following approach with Qstick is to use the zero crossing of the Qstick values."
Regression Channel
Linear Regression Channel indicator plots a straight trendline on the price chart and the two standard-deviation lines above and below the trendline.
The two parameters to the indicator control when the trendline ends and the next one is started. You can specify either or both of the two parameters: the % of the price move in the direction that is opposite to the trend or the total # of consecutive ticks in the direction that is opposite to the trend. If you enter 0 in either of the parameters, that method of switching directions will not be used.
The space inside the channel is where price equilibrium exists. The price will tend to move inside the two outside lines. When it breaks out of the channel, it's an indication that the trend has changed.
RVI - Relative Volatility Index
Stocks & Commodities, V. 11:6 (253-256): The Relative Volatility Index by Donald Dorsey
"The RVI is simply the relative strength index (RSI) with the standard deviation over the past 10 days used in place of daily price change. Because most indicators use price change for their calculations, we need a confirming indicator that uses a different measurement to interpret market strength. The RVI measures the direction of volatility on a scale of zero to 100. Readings above 50 indicate that the volatility as measured by the 10-day standard deviation of the closing prices is more to the upside. Readings below 50 indicate that the direction of volatility is to the downside. The initial testing indicates that the RVI can be used wherever you might use the RSI and in the same way, but the specific purpose of this study is to measure the RVI's performance as a confirming indicator."
Rate of Change (ROC)
This indicator is identical to the Momentum indicator - except it is in percent of price.
Relative Strength Index (RSI)
RSI is an oscillator that attempts to measure the velocity at which prices are moving, and express that velocity within a range of zero to 100. The indicator was developed by J. Welles Wilder.
Different stocks work better with different time period parameters of RSI. User should experiment to see which time period works best with what stock.
There are three popular ways to use the RSI:
Centerline Crossovers
The centerline for RSI is 50. Readings above and below can give the indicator a bullish or bearish tilt. On the whole, a reading above 50 indicates that average gains are higher than average losses and a reading below 50 indicates that losses are winning the battle. Some traders look for a move above 50 to confirm bullish signals or a move below 50 to confirm bearish signals.
Overbought/Oversold Conditions
Generally, RSI readings below 30 are considered oversold and readings above 70 considered overbought. The choice of overbought and oversold levels is discretionary and much will depend on the individual stock.
Divergences
Buy and sell signals can also be generated by looking for positive and negative divergences. A positive divergence usually forms below 50 and can form after a decline below 30. Negative divergences usually form above 50 and can form after an advance above 70. Divergences that occur after an overbought or oversold reading are considered more robust.
Single Regression Channel
Similar to the Linear Regression Channel indicator, it plots one straight trendline on the price chart and the two standard-deviation lines above and below the trendline.
The difference from the Linear Regression Channel is that for the Single channel you can specify how many periods back the channel should start, whereas for the Linear Regression Channel indicator the start points are automatically determined based on the criteria parameters.
Simple Moving Average (SMA)
A simple, sometimes called arithmetic, moving average is calculated by adding the closing price of the security for a number of time periods and then dividing this total by the number of time periods. It is basically the average price of the stock over a period of time. Equal weight is given to each time period.
Simple Moving Average (SMA) Envelope
Plots a channel with two lines that are N% above and below an SMA line.
Smoothed Moving Average (SmMA)
A Smoothed Moving Average is similar to a Simple Moving Average. However, in a smoothed moving average, rather than subtracting the oldest value from the sum, then taking the average value, the previous value of the SmMA is subtracted.
Standard Deviation
This indicator is a standard statistical measure of volatility - it shows how widely the values in the chart for the selected period differ from the average value.
Standard Error Bands
Developed by Jon Andersen and published in 1996 issue of Technical Analysis of STOCKS & COMMODITIES magazine. The construction of standard error bands is similar to that of Bollinger bands - but whereas Bollinger Bands measure the variance or degree of volatility around the average price using the standard deviation, standard error bands use the standard error offsets around an LSMA (Least Squares Moving Average) line.
STARC Bands
These bands are around an SMA line, with the width calculated as the ATR (Average True Range) for the period.
Stochastic Momentum Index
This indicator was developed by William Blau. It first appeared in the January 1993 issue of Stocks & Commodities magazine. This indicator plots how close the price is to the midpoint of the recent high/low range.
Some interpret it going above 40 as bullish and below 40 as bearish.
Stochastic Money Flow Index (MFI)
This is a stochastic of the MFI indicator.
Stochastic Relative Strength Index
This is a stochastic of the RSI study.
Stochastic Relative Volatility Index
This is a stochastic of the RVI study.
T3 - Adaptive Smoothing Indicator
T3 is an adaptive moving average. It tracks the time series more aggressively when making large moves. It is discussed in the Stocks and Commodities article "Smoothing Techniques For More Accurate Signals" V16:1 (33-37).
TEMA - Triple Exponential Moving Average
This indicator was created by Patrick Mulloy and introduced in in the January 1994 issue of Technical Analysis of Stocks & Commodities magazine. It uses a combination a single exponential moving average, a double exponential moving average, and a triple exponential moving average to create a line that has less lag than the standard moving average line.
Time Bars
This indicator only makes sense for chart types that are not time-based (like tick, range or volume charts). It shows, for each candle, how big a period of time it covers.
Time Series Forecast
This indicator attempts to forecast the price of the security using linear regression analysis. For each point in the chart it calculates the linear regression line for the last N candles, extends it forward 1 period and plots the extrapolated point at current period point.
Time Tick
This indicator only makes sense for chart types that are not time-based (like tick, range or volume charts). It draws vertical lines on the chart at equidistant time periods.
NOTE: If the total # of time tick lines is more than 1/3 the # of candles, it will not show
TRIX
This is a momentum indicator. It is the percent of the rate of change of a triple exponential smoothing of stock's price. A signal line is an EMA of the main line.
TRIX's triple smoothing is intended to filter any irregularities and spikes in the price and present a clear picture of the momentum of the stock. Buying and selling points are when the indicator changes directions. Another way of looking at TRIX is to use the signal line and generate a buy when TRIX moves above the signal line and sell when it moves below it.
TSI - True Strength Index
Best described here, this is a momentum indicator developed by William Blau. It is a cross between a relative strength indicator and a MACD indicator with many of the desirable properties from each. Blau's article describing the usage of the indicator can be found here.
Twiggs Money Flow
This indicator is created by the folks at IncredibleCharts and is derived from the Chaikin Money Flow but fixes some of the CMF's weaknesses. The main difference is the exponential smoothing of the Accumulation Distribution values from which the Money Flow is derived. More info can be found at IncredibleCharts
Ultimate Oscillator
This indicator combines a stock's price action during three different time frames into one oscillator. The three type frames can be specified by user. Typical values are 7,14 and 28. The values for the indicator range from 0 to 100 with 50 as the center line. Oversold territory is below 30 and overbought territory is above 70.
Volatility Stop
A Volatility Stop is based on the assumption that volatility in the market is "noise" and tries to create a trailing stop just outside the "noise" level. One of the parameters is the multiple of the volatility of the market, and adjusting it will adjust the sensitivity of the noise filter.
Volume (+EMA)
Stocks' trading volume bar chart is displayed. The bars can have three different colors, corresponding to the price going up for the time interval represented by the bar, price going down, and price staying the same. If the Volume+EMA indicator is chosen, an EMA of the volume is overlayed on the bar chart.
Volume by Price
This indicator is unusual because it is a histogram plotted vertically on the chart. The histogram represents the volume of trades for each price level (with the price level selection specified in parameters). User can specify either the total number of price intervals or the size of each price interval. Volume by Price can be used to see which prices invoke the most volume and activity throughout the day.
The middle highlighted bar is the biggest bar for the day. The two surrounding highlighted bars are the "range" bars. If the range is 70%, and the total of the bars above the middle one is 100,000, for example, then start counting from the middle bar adding up the bars, and the bar where the total reaches 70,000 will be highlighted. Same with the bottom half.
VWAP - Volume Weighted Average Price
VWAP is calculated by adding up the dollars traded for every transaction (price times shares traded) and then dividing by the total shares traded for the day. This calculates the average price paid per share for the whole day.
VWMA - Volume Weighted Moving Average
The VWMA weighs the price of each bar with the volume of that bar. In this way, bars with higher volume will have heavier weight in the computation of the average. An N-period VWMA first sums the product of the volume and the price for each of the last N bars. This product is then divided by the sum of the volumes to give the resulting average.
Weighted TSI - True Strength Indicator
The same as the TSI indicator, but with WMA (Weighted Moving Average) used to calculate it instead of the EMA.
Williams %R
Williams' %R (pronounced "percent R") is a momentum indicator that measures overbought/oversold levels. The indicator was developed by Larry Williams. It shows the relationship of the close relative to the high-low range over a set period of time. The nearer the close is to the top of the range, the nearer to zero (higher) the indicator will be. The nearer the close is to the bottom of the range, the nearer to -100 (lower) the indicator will be.
Readings in the range of -80 to -100 indicate that the stock is oversold while readings in the 0 to -20 range suggest that it is overbought. It is not unusual for overbought/oversold indicators to remain in an overbought/oversold condition for a long time period as the price continues to climb/fall. Selling simply because the stock appears overbought may take you out of the stock long before its price shows signs of deterioration. It is best to wait until the price changes direction and the indicator drops below -80 or goes above -20 before placing the trade.
Williams Accumulation/Distribution Index
This indicator was developed by Larry Williams. It is supposed to measure market pressure, and should be used to find divergences - that is, one should look for instances of substantial divergence between the index and the price as an indication to the future price movement.
Williams PRO-Go
This indicator calculates two lines a "Public" line and the "Professional" line. The "Public" line is calculated by using the moving average of the candle's change from previous close to open. The "Professional" line is the moving average of the change from current open to current close.
This study is used usually for historical charts, and the rule of thumb is - if the Professional line goes below the Public line it is a sell signal, and if Professional line goes above the Public line it is a buy signal.
Williams VIX Fix
When used on an S&P index, this indicator is supposed to simulate the VIX. QT allows you to apply it to any chart. The article describing it was published in December 2006 Issue of "Active Trader."
Weighted Moving Average (WMA)
With this type of moving average, the data is weighted in favor of the most recent observations. A weighted moving average has the ability to reverse direction more quickly than a simple moving average. Calculation, for example for a 5 period moving average: multiply the last period by 5; the second to last by 4, next one back by 3 etc. Then divide this sum by the sum of the weights (1+2+3+4+5). With a weighted moving average, a buy or sell signal is given when the weighted moving average changes direction.
WMA Envelope
A simple envelope around WMA plus/minus a percentage.
Woodie's Chop Zone
An implementation of Woodie's Chop Zone indicator (Woodies CCI Club).
Woodie's Pivot Points
Very similar to the standard Pivot Points. The difference is that the initial Pivot Point is defined as the average of the high, low of the previous day and double the opening price of current day (H+L+O+O)/4.
Discussion of Pivot Points
Woodie's Pivot Points Extra - an extended set of support/resistance lines
Woodie's Sidewinder
An implementation of Woodie's Sidewinder indicator (Woodies CCI Club).
Woodie's Sidewinder Curve
Woodie's Sidewinder calculates a certain formula, then uses four colors to depict whether the resulting value lies within certain limits. This indicator just exposes the value itself.
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