Percentage Price Oscillator (PPO)

Percentage Price Oscillator (PPO)

Percentage Price Oscillator (PPO) is a very close neighbor of MACD indicator.

PPO standard settings are similar to MACD settings: 12, 26, 9, and PPO, same as MACD shows the difference between the two Moving averages, with one difference, that PPO shows it in percents.

Moving Averages: EMA, SMA and WMA

Moving Averages (MAs) are among most commonly used indicators in Forex. They are easy to set and easy to interpret.

Speaking simple, moving averages simply measure the average move of the price during a given time period.

It smooths out the price data, allowing to see market trends and tendencies.

How to use Moving Averages

Moving Average is a trend indicator.

Besides its obvious simple function a Moving Average has much more to tell:

MACD

Trading with MACD indicator includes the following signals:

MACD lines crossover — a trend is changing

MACD historam staying above zero line — market is bullish, below — bearish.

MACD histogram flipping over zero line — confirmation of a strength of a current trend.

MACD histogram diverges from price on the chart — signal of an upcoming reversal.

Heiken-ashi candlesticks

Heiken-ashi candlesticks versus Japanese candlesticks

Heiken-ashi candlesticks are also called sometimes Heikin-ashi candlesticks.

Heiken-ashi candlesticks provide interpretation of market trends in a neat and descriptive way.

 Unlike regular Japanese candles, Heiken-ashi don't show open, high, low and close. Instead they calculate values of each candlestick based on the dominant forces in the market. E.g. if bears (sellers) are clearly dominating, Heiken-ashi candlesticks will be bearish (red), even if a price bar closes higher than it opened.

These Heiken-ashi candles are a perfect tool for traders who like following trends to their very extend. Heikin-ashi Candles also looks much more simplified.

The rules of reading Heiken-ashi candlesticks

Sellers are dominating, strong downtrend

Double Exponential Moving Average (DEMA)

DEMA - quick summary

Double Exponential Moving Average (DEMA) is a smoother and faster Moving average developed with the purpose of reducing the lag time found in traditional moving averages.

DEMA was first time introduced in 1994, in the article "Smoothing Data with Faster Moving Averages" by Patrick G. Mulloy in "Technical Analysis of Stocks & Commodities" magazine.

In this article Mulloy says:
"Moving averages have a detrimental lag time that increases as the moving average length increases. The solution is a modified version of exponential smoothing with less lag time.."

 

Commodity Selection Index (CSI)

Commodity Selection Index

The Commodity Selection Index (CSI) has been initially developed for stock trading, where it was used to find commodities with the highest profit potential for short-term trading.

The CSI indicator was first introduced Welles Wilder in the book called "New Concepts in Technical Trading Systems".

Average Directional Movement Index Rating (ADXR)

ADXR summary

Average Directional Movement Index Rating (ADXR) is a smoothed version of ADX indicator and is used as a rating of the Directional Movement while smoothing out ADX values.

Average Directional Index (ADX)

ADX Quick Summary

 

Trading with ADX indicator involves the following signals:

 ADX staying below 20 level — there is no trend or the trend is weak.

ADX moving above 20 level — trend is strong.

ADX passing 40 level — trend is extreme.

Advance Decline Line (ADL)

ADL Quick Summary

Trading with ADL involves the following signals:

ADL is rising and so does the price — uptrend is healthy.
ADL is falling and so does the price — downtrend is healthy.
Divergence between ADL and price - changes/pauses in the trend should be expected.

Advance Decline Line indicator

 Advance Decline Line indicator is used in Forex to identify and confirm strength of a trend, as well as its chances for reversing. ADL indicator in Forex provides a comparison between the number of market advancing and declining moments for a given period of time.

Parabolic SAR

Introduction

Developed by Welles Wilder, the Parabolic SAR refers to a price and time based trading system. Wilder called this the "Parabolic Time/Price System". SAR stands for "stop and reverse", which is the actual indicator used in the system. SAR trails price as the trend extends over time. The indicator is below prices when prices are rising and above prices when prices are falling. In this regard, the indicator stops and reverses when the price trend reverses and breaks above or below the indicator.

Wilder introduced the Parabolic Time/Price System in his 1978 book, New Concepts in Technical Trading Systems. This book also includes RSI, Average True Range and the Directional Movement Concept (ADX). Despite being developed before the computer age, Wilder's indicators have stood the test of time and remain extremely popular.