Traders have been searching for reliable trend reversal indicators for as long as technical analysis has been around. While the directional movement index (DMI) predicts trend direction or significant price moves, the vortex indicator incorporates the concept of flow and vortex motions in the market to yield a more accurate prediction.
Newton’s first law states that an object at rest stays at rest and an object in motion stays in motion unless acted upon by an unbalanced force. Similarly, stocks need an unbalanced force—momentum or liquidity—to push them to move and produce the kinds of outsized returns that active traders seek.
Volume drives the momentum that pushes prices higher or lower. While there are many different volume indicators, such as on-balance volume (OBV), the volume-weighted average price (VWAP) is one of the few that combines price and volume to show you who’s in control of the market at a given point in time.
Let’s take a closer look at the VWAP and some interesting strategies that you can put into use to improve your risk-adjusted returns.
In this week’s Strategy Guide blog post, we revisit the brand new “Alert Sensitivity” feature that was introduced last week. Users now have the ability to trade price channels without having to stare at the screen and worry about missing the top or bottom by a few cents. This feature allows the ability to increase or decrease the area in which traders want to be alerted about price action. Make sure to check out the video and graphics to get a full understanding of how this works.
In this week’s strategy guide blog post, we tackle head on one of the biggest misconceptions about the TrendSpider platform, which is that the system only shows trendlines that the system is programmed to find. In reality, TrendSpider is a customizable tool and the settings on the system can be completely customizable and configured to look for trendlines however you prefer. As everyone’s trading strategy and technical analysis strategy is a little different, each trader may find their ideal settings to be slightly (or even completely) different than what we show in this video.
When most traders think of moving average confirmation strategies, they may immediately think of the generic and most widely used ones such as the 50-day Simple Moving Average vs. the 200-day Simple Moving Average. However, even though these can be very useful, especially as many traders become educated and are looking at the same thing creating self-fulfilling moves, there are other moving average relationships that backtest very well.