Using Intraday Momentum
Many traders are unfamiliar with the momentum indicator or with its value as an aid in timing. Although many have heard the term, they are not aware of how it is calculated, nor are they familiar with its applications. |
Rules for Day Trading with the RSI
Using RSI as an overbought or oversold timing indicator is very simple. Select your cutoff points (as you do with stochastic). If, for example, you select 25 and 75, then your procedures would be as follows: |
Defining the First Derivative
Dont let the term first derivative scare you into thinking that complicated mathematics is involved. In fact, it is not. The first derivative of any variable is defined as |
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A Few Precautions and Suggestions on Forex Trading
Because the MAC technique I have just described is a trading method and not a system, you must be aware that it is adjustable to the needs of the trader and will not work in the same fashion for all traders who use it. Once you begin to use this technique, you will develop individual adaptation to the methodology which may suit your purposes better than what has been described herein. |
Trading within an Established Trend
Frequently the market will already be in a trend when the trading day begins. If this is the case then take your direction from the very last signal. This signal may have occurred the day before or even several days ago. Remember that |
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Determining Trend, Support, and Resistance
In order to use the MAC technique for day trading, the following rules will be used |
The Moving Average Channel
Borrowing from concepts originally introduced in the 1950s by Richard Donchian, I departed from the traditional use of moving averages. I conducted intensive research on moving average channels (MACs) which consisted of a moving average of high prices and a moving average of low prices. |
Gap Size and Penetration Size
As you know, some price gaps are relatively small while others are relatively large. In researching the gap traders Ive found that larger price gaps tend to produce more reliable (i.e., more accurate) signals. Ive also found that just a one-tick penetration is less reliable than a two- or five-tick penetration. |
Some Observations about the Gap Technique
Ive said previously that the gap technique is one of my favorite day-trading methods. I say this because I have seen many instances in which the gaps have worked extremely well and have produced very significant intraday price moves. |
Delayed Gap Open Signals (DGO)
On occasion a market will make a very large gap opening up down. The gap size (difference between previous days low or high and the open) will be much larger than usual. In such cases, the market will need to make a considerable move up in the case of a gap lower opening, |
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