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Advanced Technical Indicators Retail forex traders now can enjoy the same degree of technical analysis once only available to the world's largest banks and institutional traders. Advanced technical indicators come standard with DealBook®360, including Bollinger Bands, MACD, Linear Regressions, DMI, ATR and more (see indicators list below). In addition to some of the world's most popular indicators, DealBook®360 includes studies from technical analysis gurus, such Joe DiNapoli, W.D. Gann, Fibonacci as well as Global Forex Trading proprietary indicators. Apply and draw trend-lines directly on the forex charts, apply Fibonacci retracements, fans and arcs, Gann fans, DiNapoli expansions and retracements, then extend your prediction into the future by drawing the indicator into "uncharted waters." Dealbook®360 comes standard with the following indicators: Indicators DescriptionsAverage True RangeThe Average True Range is a moving average of the True Range, which is the difference between the True Range High and the True Range Low. The current True Range High is the current high or the previous close, whichever is greater. The current True Range Low is the current low or previous close, whichever is lower. These values take into account price changes during off-hours trading. The Average True Range at the beginning of the data series is not defined until there are enough values to fill the given period. The Average True Range measures the volatility of a given forex trading market. High values indicate that currency trading prices are changing a large amount during the day. Low values indicate that prices are staying relatively constant. Both trending and level prices can have high or low volatility. High volatility levels in forex can sometimes be used to time trend reversals, such as forex market tops and bottoms. Low volatility levels can sometimes be used to time the beginning of new upward currency trading price trends following periods of consolidation. Bollinger BandsBollinger Bands are a pair of values placed as an "envelope" around a data field. The values are calculated by taking the moving average of the data for the given period and adding or subtracting the specified number of standard deviations for the same period from the moving average. Bollinger Bands use a moving average; therefore, the value at the beginning of a data series is not defined until there are enough values to fill the given period. Bollinger Bands are useful for determining whether current values of a data field are behaving normally or breaking out in a new direction. For example, when the closing price of a forex market increases above its upper Bollinger Band, it will typically increase in that direction. Bollinger Bands can also be used for identifying when trend reversals may occur. A reversal is typically indicated by new highs or lows outside of the bands followed by another high/low inside the bands. Since the standard deviation can be used as a forex volatility indicator, the current width of the envelope can also be used for trend information. A narrow envelope indicates a lower amount of volatility while a wide envelope indicates a higher amount. High volatility levels can sometimes be used to time trend reversals, such as market tops and bottoms and low volatility levels are sometimes used to time the beginning of new upward price trends following periods of consolidation. A useful forecasting tool shows that moves that begin at one band tend to go all the way to the other band. Bollinger Bands are similar to Trading Bands and share many of their characteristics, except trading bands do not vary in width based on volatility. Dynamic MomentumThe Dynamic Momentum Index (DMI) is quite similar to the Relative Strength Index. The difference is that the DMI uses variable time periods (from 3 to 30) versus the RSI's fixed periods. The variability of the time periods used in the DMI is controlled by the recent volatility of currency trading prices. The more volatile the forex prices, the more sensitive the DMI is to price changes. During quiet forex market conditions, the DMI will use more time periods while less are used during more active forex trading markets. As a result, the DMI is more sensitive to fluctuations in the forex market and displays changes more rapidly than the RSI can. Linear RegressionThe Linear Regression indicator is calculated by fitting a linear regression line over the values for the given period, and then determining the current value for that line. A linear regression line is a straight line which is as close to all of the given values as possible. The linear regression indicator at the beginning
of a data series is not defined until there are enough values to
fill the given period. MACDThe Moving Average Convergence/Divergence (MACD) is calculated by subtracting the value of a 26-day exponential moving average from the value of a 12-day exponential moving average. The value of the MACD at the beginning of a data series is considered to be zero. Because the MACD uses exponential moving averages, its initial values will include the zero value in its calculation. Therefore, you may want to ignore the values before the 26th value, when the effect on the longer moving average is no longer significant. The MACD is a specific instance of a Value Oscillator and is typically used on the closing price of a forex market to detect price trends. When the MACD increases, the prices are trending higher, and the prices are trending lower when the MACD is decreasing. The MACD is traditionally traded against a 9-day exponential average of its value, called its signal line. The MACD Signal Line function is provided to generate this value. When the MACD increases above its signal line, a buy signal is generated. When the MACD decreases below its signal line, a sell signal is generated. Accumulation SwingThe Accumulation Swing indicator is an oscillator-based on the swing index (S"). A currency trading price buying signal is generated when the daily high exceeds the previous SI significant high, and a currency trading price selling signal occurs when the daily low dips under the significant SI low. With the Accumulation Swing Index attempting to show the real forex trading market, it closely resembles actual prices. This allows usage of classic support/resistance analysis on the Index. Typical analysis involves looking for breakouts, new highs and lows, and divergences. Try our Forex Trading Platform RISK FREE for 30 days. With a demo account and our DealBook®360 software, you can practice currency trading at your own pace, using the same real-time data and quotes available to Live Account holders. AroonThe Aroon indicator is used to determine if a currency trading price is moving in a trend or sideways as well as how strong the trend is. If the price of a currency trading price is rising, the close for the period will be closer to the end of the period, and vice versa. The Aroon indicator shows how much time passed between the highest (up) or lowest (down) close since the beginning of a period (in percents). When Aroon (up) and Aroon (down) are moving
together, there is no clear trend (the price is moving sideways, or
about to move sideways). When the Aroon (up) is below 50, it is an
indication that the uptrend is losing its momentum, while when the
Aroon (down) is below 50; it is an indication that the downtrend is
losing its momentum. When the Aroon (up) or Aroon (down) are above
70, it indicate a strong trend in the same direction, while when the
value is below 30, it indicates a trend coming in an opposite
direction. Chande MomentumThe Chande Momentum indicator is a momentum oscillator. There are two different ways this oscillator is used as a trading signal. The first is to measure overbought or oversold levels for a given currency. The second method is to buy when the oscillator crosses above its moving average line and to sell when the oscillator crosses below its moving average line. The Chande Momentum indicator is constructed using the sum over a given period of price changes on up days, sum (high-low) up, and the sum over the same period of prices on down days, sum (high-low), down. An exponential moving average of this line is then overlaid upon the oscillator as a signal line. The oscillator requires two parameters: the period over which the price ranges will be summed, and the period for the moving average. Chinkou SpanPlease see Ichimoku. Commodity Channel IndexThe Commodity Channel Index (CCI) determines how far the current price has been from the recent average. High values indicate multiple days with higher than average prices, while low values indicate multiple days with lower than average prices. The CCI is not defined until there are enough values to fill the given period. The CCI can be used as an overbought/oversold indicator or for detecting divergences from the price trend. When watching the CCI in relation to the current price, it is useful to watch for new highs and lows. If the price of the forex trading market is reaching new highs and the CCI is not reaching new highs, a price correction may be coming. The CCI typically ranges in value-100 to +100. Values above this range indicate that the particular forex market may be becoming overbought; values below this range indicate it may be becoming oversold. As with other overbought/oversold indicators, this can often mean the price will correct to more typical levels. Commodity Selection IndexThe Commodity Selection Index ("CSI")
is a momentum indicator which helps to select commodities suitable
for short-term trading. DEMADouble Exponential Moving Average ("DEMA") is a unique composite of a single exponential moving average and a double exponential moving average that provides less lag than either of the two components individually. DEMA can be used in place of trading traditional moving averages. Detrended Price OscillatorThe Detrended Price Oscillator ("DPO") attempts to eliminate the trend in prices. Detrended prices allow you to more easily identify cycles and overbought/oversold levels. Long-term cycles are made up of a series of short-term cycles. Analyzing these shorter term components of the long-term cycles can be helpful in identifying major turning points in the longer term cycle. The DPO helps you remove these longer-term cycles from prices. To calculate the DPO, create an n-period simple moving average (where "n" is the number of periods in the moving average). Then, subtract the moving average "(n / 2) + 1" days ago from the closing price. The result is the DPO. Directional Movement - ADXRThe ADXR takes the ADX value of a bar and averages it with the ADX value of a recent, trailing bar. This has the effect of smoothing the ADX values. As with the ADX, a rising ADXR might indicate a strong underlying trend while a falling ADXR suggests a weakening trend subject to a reversal. ADXR can also identify non-trending markets or the deterioration of an ongoing trend. Although forex market direction is important in its calculation, the ADXR is not a directional indicator. The ADXR differs from ADX in that it is less sensitive to short, quick reversals because it results in a 'smoother' calculation. It was developed to compensate for the variance of excessive tops and bottoms and is especially helpful when used in conjunction with trend-following strategies. Strategies that rely on volatility as an indication of movement may not take into account that movement does not necessarily indicate volatility. ADXR provides information pertaining to the strength of a trend, helping you to manage the risk of trading in volatile markets that fluctuate between trending and non-trending. Directional Movement - DXThe Directional Movement Index ("DMI") is designed to highlight the strength of any upward or downward trend in the forex trading market. It is composed of DI+ and DI- which show the strength of the increasing and decreasing prices respectively and Average Directional Index ("ADX"), which determines the strength of the trend. ADX is a moving average of Directional Index ("DX") with a smoothing constant double the size of the time period selected for measuring upward and downward movements. In a trading system based on DMI, a buy signal is given when the DI+ value becomes greater than the DI -. For a sell signal, look for the point where DI becomes greater than DI+. In both cases, FX trading signals are only generated if the presence of a relatively strong trend is detected, for example, in the case that the value of ADX is higher than 25%. EnvelopeEnvelopes are used to indicate the fx trading range of a given forex trading market above and below an average price. In this case, an exponential moving average is taken against the forex market, and then a trading band is applied by adding and subtracting a fixed percentage of the average on that day. This will calculate the price 5% above and 5% below the average. Fast StochasticsThe Fast Stochastic indicator calculates the location of a current price in relation to its range over a period of bars. The default settings are to use the most recent 14 bars (input Length), the high and low of that period to establish a range (input HighValue and LowValue) and the close as the current price (input CloseValue). This calculation is then indexed and plotted as FastK. A smoothed average of FastK, known as FastD, is also plotted. FastK and FastD plot as oscillators with values from 0 to 100. The direction of the Stochastics should confirm price movement. For example, rising Stochastics confirm rising prices. Stochastics can also help identify turning points when there are non-confirmations or divergences. For example, a new high in price without a new high in Stochastics may indicate a false breakout. Stochastics are also used to identify overbought and oversold conditions when the Stochastics reach extreme highs or lows. Additionally, FastK crossing above the smoother FastD can be a buy signal and vice versa. Forecast OscillatorThe Forecast Oscillator is an extension of the linear regression-based indicators. It is a percentage comparison of the price of an issue and the price as indicated by the Time Series Forecast Oscillator. The oscillator is above zero when the forecast price is greater than the actual price. Conversely, it's less than zero if it's below. When the forecast price and the actual price are the same, the oscillator would plot as zero. Prices that are persistently below the forecast price suggest lower prices ahead. Actual prices that are persistently above the forecast price suggest higher prices ahead. InertiaThe Inertia indicator is used to measure the momentum of a currency trading price based on its volatility. An outgrowth of the Relative Volatility Index, Inertia is simply a smoothed RVI. Inertia is measured on a scale from 0 to 100. Negative Inertia is seen if the indicator is below 50. If the indicator is above 50, it is said to have positive Inertia. Signs of positive Inertia are indicative of a long-term upward trend. Signs of negative Inertia illustrate long-term downtrends. Intraday MomentumThe Intraday Momentum Index ("IMI") is a combination of the Relative Strength Index and Candlestick Analysis. The IMI is calculated like the RSI but uses the relationship between the intraday opening and closing prices to determine whether the day is up or down. When the close is above the open, it is an up day. If the close is below the open, it is a down day. White candlesticks signify an up day, black candlesticks used for down days. As with the RSI, overbought conditions (and lower prices ahead) are indicated when the index rises above 70. Values below 30 indicate a potential oversold situation and higher price ahead. Remember, as with all overbought/oversold indicators, you should first quantify the trendiness of the forex market before acting on any signals. Try our Forex Trading Platform RISK FREE for 30 days. With a demo account and our DealBook®360 software, you can practice currency trading at your own pace, using the same real-time data and quotes available to Live Account holders. IchimokuThe Ichimoku Kingo Hyo indicator determines forex market trends, levels of support and resistance, and generates buy and sell signals. This indicator works best on the week and day time forex charts. When assigning a dimension of parameters, four time frames of different extent are used. The significances of the separate lines that make up this indicator are based on these intervals:
If the price is found above a cloud, its upper line will derivate the first level of support, and second - second level of support. If the price is found under a cloud, the lower line will derivate the first level of resistance, in upper - second. If the line, Chinkou Span, intersects the chart
of the price bottom-up, it is a signal to buy. If it intersects
top-down, it is a signal to sell. An alternative version of usage for the Kijun-sen is the submission of signals. The buy signal is generated when the line Tenkan-sen intersects Kijun-sen bottom-up and a sell signal is generated when the Tenkan-sen intersects Kijun-sen top-down. Tenkan-sen is used as the indicator of a forex market trend. If this line grows or drops, the trend exists. When it goes horizontally, the forex market has come into the channel. KairiThe Kairi indicator charts the percentage difference between the current closing value and its simple moving average. It can be used either as a trend indicator or as an overbought/oversold signal. Keltner ChannelThe Keltner Channel is based on the Average True Range and is sensitive to volatility. It may be used in place of standard deviation (Bollinger) bands or percentage envelopes. The Keltner Channel is made up of two bands plotted around an Exponential Moving Average ("EMA") usually the 20-day EMA. Price breaking through the bands often produce buy and sell signals. As with all envelope or band systems, the probability is that price will remain within the envelope and that if the price breaks through the envelope, it can be taken as a signal to buy or sell. When prices close above the top band, this often means a breakout in upward volatility to be followed by higher prices. When prices close below the bottom band, prices are expected to move lower. In a rising forex market, the middle line, or 20-day EMA, should provide support. Conversely, in a falling forex market, it tends to provide resistance. As with all trend-following systems, the Keltner Channel works well in up trends or down trends, but does not work well in a sideways channel. It is not meant to catch tops or bottoms. Keltner Channels should be used in combination with other indicators, such as RSI or MACD, to provide confirmation of the strength of a forex market. An exit strategy utilizing trendlines and other indicators can be particularly important. Waiting for the price to close below the lower band often erodes much of the potential profits from a good move. The calculation for the Keltner Channel, based on ATR, is as follows: For the top, or plus, band, the ATR is calculated
over 10 periods, doubled, then added to a 20 period exponential
moving average. When the prices close above the plus band, it is a signal of strength and rising prices. When the prices close below the minus band, a signal that prices will drop is indicated. Signals stay in effect until the prices close across the opposite band. Kijun SenPlease see Ichimoku. Linear Regression SlopeLinear regression is a statistical tool used to predict future forex market values relative to their past values, and is normally plotted on a price chart as a straight line like a trend line. The Linear Regression indicator, however, does not plot a straight line - when it is plotted, it curves through price activity. Its curve is a result of plotting a line through each end point of invisible linear regression trend lines. Each invisible trend line plots the minimal distance between closing prices, using the 'least squares' method, over the number of bars defined in the input, LENGTH. The indicator helps to determine where a forex market's price might be in the near future using current and past price history. If prices are trending up, linear regression attempts to logically determine what the upward bias of the price may be relative to the current price. If prices are trending down, it will attempt to determine the downward bias of the price. Some analysts believe that when prices rise above or fall below the linear regression line; they are overextended and will begin to move back towards the line. Thus, the line is used to monitor when a price move may change direction. Try our Forex Trading Platform RISK FREE for 30 days. With a demo account and our DealBook®360 software, you can practice currency trading at your own pace, using the same real-time data and quotes available to Live Account holders. Mass IndexThe Mass Index uses the range of the bars to calculate several values, including exponential averages of the ranges. It then calculates and plots an index of these calculations. The Mass Index is used in trending markets to monitor direction and warn of potential changes in forex market direction. The Mass Index signals a possible price reversal when the Mass Index line crosses above the setup line and subsequently falls below the trigger line. This is known as a reversal bulge. The Mass Index does not identify the trend direction, but rather warns of possible reversals. Median PriceThe Median Price function calculates the midpoint between the high and low prices for the day. Sometimes it is also referred to as the mean or average price. The median price provides a simplified view of
the currency trading prices for the day. It can be used to smooth
out some of the volatility of the closing price since it includes
information for the entire trading day rather than specifically the
end of the day. MomentumThe Momentum indicator calculates and plots the net change, expressed in points, between each bar's price, as specified by the input Price, and that price the number of bars ago specified in the input Length. The default settings calculate and plot the net change between the close of a bar and the close ten bars earlier. Measuring current prices versus earlier prices sheds light on the pace of a trend and possible trend reversals. It may also be useful in identifying overbought and oversold conditions when the Momentum becomes extremely strong or weak. Moving Average ExponentialAn exponential moving average is calculated by combining a certain percentage of the current value with an inverse percentage of the previous value of the exponential moving average. For example, if 25% weight is being given to the current value, 25% of the current value is added to 75% of the previous moving average to get the current moving average. The period is used to determine the relative weight which previous values should be given. The formula 2/ (period+1) is used to determine the percentage. For example, a period of 7 would cause 25% (2/ (7+1)) of the current value and 75% of the previous exponential moving average value to be used. NOTE: All previous values are used to make up a current exponential moving average, even values from before the period. The period is used as a rough estimate of how long new values will remain significant in calculation. The value at the beginning of a data series is considered to be zero. Therefore, you may want to ignore the values before the period has completed. Moving Averages are useful for smoothing raw, noisy data, such as daily prices. Price data can vary greatly from day-to-day, obscuring whether the price is going up or down over time. By looking at the moving average of the price, a more general picture of the underlying trends can be seen. Since moving averages can be used to see trends, they can also be used to see whether data is bucking the trend. Entry/exit systems often compare data to a moving average to determine whether it is supporting a trend or starting a new one. Moving Average ModifiedThe Modified Moving Average ("MMA") is an algebraic technique which makes averages more responsive to price movements. The average includes a sloping factor to help it catch up with the rising or falling value of the currency trading price. Modified moving Averages are similar to simple moving averages. The first point of the modified moving average is calculated the same way the first point of the simple moving average is calculated. However, all subsequent points are calculated by first adding the new price and then subtracting the last average from the resulting sum. The difference is the new point, or MMA. Moving Average SimpleThe Simple Moving Average ("SMA") indicator is calculated by summing the closing prices of the currency for a period of time and then dividing this total by the number of time periods. Sometimes called an arithmetic moving average, the SMA is basically the average price over a period of time. Because the Simple Moving Average gives equal weight to each daily price, the longer the time period studied, the greater the smoothing out of recent forex market volatility. Long-term moving averages smooth out all the minor fluctuations showing only longer-term trends. Shorter-term moving averages will show shorter term trends but at the expense of the long term. Most of the time, prices are on one side or the other of the moving average. As trends develop, the moving average will slope in the direction of the trend, showing the trend direction and some indication of its strength based on the steepness of the slope. Moving Average TriangularThe Moving Average Triangular indicator calculates a simple arithmetic average of prices, specified by the input Price. It then calculates and plots a simple arithmetic average of this average. The length of each of these averages is one more than half the value specified in the input Length, rounded to a whole number. This uses all the price data from the most recent number of bars specified by the input Length, but with the smoothing effect of 'averaging the average'. A moving average is generally used for trend identification. Attention is given to the direction in which the average is moving and to the relative position of prices and the moving average. Rising moving average values (direction) and prices above the moving average (position) would indicate an uptrend. Declining moving average values and prices below the moving average would indicate a downtrend. A displaced moving average plots the moving average value of a previous bar or later bar on the current bar. Moving Average WeightedThe weighted moving average is calculated by averaging together the previous values over the given period, including the current value. These values are weighted linearly, with the oldest value receiving a weight of 1, the next value receiving a weight of 2, and so on up to the current value, which receives a weight equal to the period. The moving average at the beginning of a data series is not defined until there are enough values to fill the given period. NOTE: For more exaggerated weighting on the current values, you may want to use an exponential moving average. You could also average two or more weighted moving averages together. Moving Averages are useful for smoothing raw, noisy data, such as daily prices. Price data can vary greatly from day-to-day, obscuring whether the price is going up or down over time. By looking at the moving average of the price, a more general picture of the underlying trends can be seen. Since moving averages can be used to see trends, they can also be used to see whether data is bucking the trend. Entry/exit systems often compare data to a moving average to determine whether it is supporting a trend or starting a new one. Parabolic SARThe Parabolic SAR ("PSAR") indicator is based on the relationship between a forex market's price and time. It is used to determine when to stop and reverse ("SAR") a position utilizing time/price based stops. Once a Parabolic SAR is reached, the current position is exited and a new position in the opposite direction is taken. It is primarily used in trending markets and is based on always having a position in the forex market. The indicator may also be used to determine stop points and estimating when you would reverse a position and take a trade the opposite direction. The indicator derives its name from the fact that when charted, the pattern resembles a parabola or French curve. Percent ChangeThe Percent Change indicator calculates and plots the net change, expressed as a percent, between a bar's price, as specified by the input Price, and that price the number of bars ago specified in the input Length. The default settings plot the percent change for the close of each bar compared to the bar before it. This indicator is a quick and easy method of viewing price swings on a bar-by-bar basis illustrating price volatility. The default settings will automatically plot the indicator in dark green when the Percent Change is positive and in red when the Percent Change is negative. Percent of ResistanceThe Percent of Resistance ("PCR") indicator is an oscillator that compares a currency's closing price to its price range over a given time period. Percent RThe Percent R indicator is an overbought / oversold oscillator that is best applied to choppy markets and markets locked in a sideways price pattern or trading range. It can also be used to indicate when to buy on troughs in bull markets and sell on rallies in bear markets. In general, this indicator can help you take advantage of shorter-term countertrend moves occurring within longer-term trends as well as indicate the best time to exit or enter a particular forex market. An oversold market is believed to occur when the Percent R line is less than the buy zone line. Conversely, an overbought market is believed to occur when the Percent R line is greater than the sell zone line. Price ChannelThe Price Channel indicator calculates the highest high and lowest low of the trailing number of bars specified by the input Length. Lines representing the trailing highs and the trailing lows are then plotted. When a forex market moves above the upper band, it is a sign of forex market strength. Conversely, when a forex market moves below the lower band, it is a sign of forex market weakness. A sustained move above or below the channel lines may indicate a significant breakout. This indicator is NOT displaced by default. Changing the input Displace to a positive number displaces the plot to the left. Changing the input Displace to a negative number displaces the plot to the right. Price OscillatorThe Price Oscillator indicator calculates a fast, or short, moving average and a long, or slow, moving average. The difference between these two values is then plotted. The moving averages are not plotted. One approach to analyzing moving averages is to note the relative position of the 2 averages: the short moving average above the long moving average would yield a positive Price Oscillator value and be bullish; the short moving average below the long moving average would yield a negative Price Oscillator value and be bearish. Calculating the difference between the two averages and plotting this as an oscillator makes extreme positive and negative values stand out as possible overbought and oversold conditions. Relative Strength IndexThe Relative Strength Index ("RSI") is based on a ratio of the average upward changes to the average downward changes over a given period of time. It has a range of 0 to 100, with values typically remaining between 30 and 70. Lower values indicate oversold conditions while higher values indicate overbought conditions. The RSI at the beginning of a data series is not defined until there are enough values to fill the given period. In addition, the value is defined as 100 when no downward changes occur during the given period. The RSI is typically used with a 9, 14, or 25 calendar day (7, 10, or 20 trading day) period against the closing price of a forex market or commodity. The more days that are included in the calculation, the less volatile the value. The Relative Momentum Index ("RMI") is an extension of the RSI which provides an additional smoothing parameter. The RSI usually leads the price by forming peaks and valleys before the price data, especially around the values of 30 and 70. In addition, when the RSI diverges from the price, the price will eventually correct to the direction of the index. Relative VolatilityThe Relative Volatility Index ("RVI") is the RSI, only with the standard deviation over the past 10 days used in place of daily price change. Use the RVI as a confirming indicator, as it makes use of a measurement other than price as a means to interpret forex market strength. The RVI measures the direction of volatility on a scale from zero to 100. Readings greater than 50 indicate that the volatility is more to the upside. Readings less than 50 indicate that the direction of volatility is to the downside. Rate of ChangeThe Rate of Change indicator is technically the same as the Change in Value function or the Percent Change in Value function, depending on whether the As Percent parameter is selected. In either case, the function returns the amount by which the data has changed over the given period. The Percent Rate of Change value is traditionally multiplied by 100 for easier graphing. The Rate of Change indicator at the beginning of a data series is not defined until there are enough values to fill the given period. Senkou SpanPlease see Ichimoku. Slow StochasticThe Slow Stochastic indicator calculates the location of a current price in relation to its range over a period of bars. The default settings are to use the most recent 14 bars (input Length), the high and low of that period to establish a range (input HighValue and LowValue) and the close as the current price (input CloseValue). This calculation is then indexed, smoothed and plotted as SlowK. A smoothed average of SlowK, known as SlowD, is also plotted. SlowK and SlowD plot as oscillators with values from 0 to 100. The direction of the Stochastics should confirm price movement. For example, rising Stochastics confirm rising prices. Stochastics can also help identify turning points when there are non-confirmations or divergences. For example, a new high in price without a new high in Stochastics may indicate a false breakout. Stochastics are also used to identify overbought and oversold conditions when the Stochastics reach extreme highs or lows. Additionally, SlowK crossing above the smoother SlowD can be a buy signal and vice versa. Standard DeviationThe Standard Deviation indicator provides a good indication of volatility. It measures how widely values are dispersed from the average. Dispersion is the difference between the actual value and the average value. The larger the difference between the actual and average prices, the higher the standard deviation will be and the higher the volatility. The closer the actual value is to the average value, the lower the standard deviation and the lower the volatility. Try our Forex Trading Platform RISK FREE for 30 days. With a demo account and our DealBook®360 software, you can practice currency trading at your own pace, using the same real-time data and quotes available to Live Account holders. Standard Error BandsThe Standard Error Bands indicator is an attempt to show the trend and the volatility around the trend. Three plots are produced by this indicator. The middle plot is the ending value of a 21-period linear regression line. The upper plot, the upper standard error band, is the result of adding two standard errors to the ending value of the regression line. The lower plot, the lower standard error band, is a result of subtracting two standard errors from the end value of the linear regression line. Since large changes in the closing price can greatly affect the values of the line and error bands, a three period (bar) simple moving average of the ending value of the regression line and the standard errors are plotted. Although the Standard Error Bands are similar to
Bollinger bands they are interpreted differently. Standard Error
Bands show the direction of the current trend and the volatility
around it. Bollinger bands show the volatility around the average of
the plotted price. STARC BandsStoller Average Range Channels ("STARC") Bands create a channel surrounding a simple moving average. The width of the created channel varies with a period of the average range. The width of the created channel varies with a period of the average range; thus the name ("ST" for Stoller, plus "ARC" for Average Range Channel). STARC Bands, in a fashion similar to Bollinger Bands, will tighten in steady markets and loosen in volatile markets. However, rather than being based on closes, the STARC Bands are based on the average true range, thus giving a more in-depth picture of forex market volatility. While the penetration of a Bollinger Band may indicate a continuation of a price move, the STARC Bands define upper and lower limits for normal price action. Swing IndexThe Swing Index indicator assigns a Swing Index value from 0 to 100 for an up bar and 0 to -100 for a down bar. This indicator uses the current bar's Open, High, Low, and Close as well as the previous bar's Open and Close to calculate the Swing Index values. If the Swing Index crosses over 0, a short-term price increase is likely. Conversely, a cross below 0 suggests a decline in forex market price. A larger or smaller swing index value indicates the severity of the forex market's increase or decline in price. TEMAThe Triple Exponential Moving Average ("TEMA") is a bit misleading in that it is not simply a moving average of a moving average of a moving average. It is a unique composite of a single exponential moving average, a double exponential moving average, and a triple exponential moving average that provides less lag than any of the three components individually. TEMA can be used in place of traditional moving averages and can be used to smooth price data or other indicators. Tenkan SenPlease see Ichimoku. Time Series ForecastThe Time Series Forecast ("TSF") indicator is based on linear regression calculations using the Least Squares method. Linear regression is a statistical tool used to predict future forex market values relative to past values. TSF attempts to 'predict' the future value of a forex market by determining the upward or downward bias of a trend and extending that calculation into the future. For example, if prices are trending up, TSF attempts to logically determine the upward bias of the price relative to the current price and extend that calculation forward. When the forex market price is above the indicator, the trend is considered up. When the forex market price is below the indicator, the trend is considered down. Additionally, many analysts believe when prices rise above or fall below the indicator line; prices will likely pull back to the line. The TSF indicator also monitors the current trend to determine if a change in direction occurred. The Time Series Forecast indicator is similar to the Linear Regression indicator with the exception of two significant differences. The first difference is that TSF plots its line forward (to the right of the chart) by the number of bars specified by the BarsPlus input. The second difference is the default Length input value used for the TSF is much shorter because the plot line is extended forward. A larger Length input would create a grossly exaggerated plot and would not be as reliable as a shorter-term length when analyzing trends and price activity. TRIXThe TRIX indicator is an oscillator used to identify oversold and overbought forex markets and it can also be used as a momentum indicator. As is common with many oscillators, TRIX oscillates around a zero line. When used as an oscillator, a positive value indicates an overbought forex market while a negative value indicates an oversold forex market. As a momentum indicator, a positive value suggests momentum is increasing while a negative value suggests momentum is decreasing. Many analysts believe the TRIX crossing above the zero line is a buy signal while closing below the zero line is a sell signal. Also, divergences between price and TRIX can indicate significant turning points in the forex market. TRIX calculates a triple exponential moving average of the log of the Price input over the period of time specified by the Length input for the current bar. The current bar's value is subtracted by the previous bar's value. This prevents cycles shorter than the period defined by Length input from being considered by the indicator. Two main advantages of TRIX compared to other trend-following indicators are its excellent filtration of forex market noise as well as its tendency to be a leading rather than a lagging indicator. It filters out forex market noise using the triple exponential average calculation thus eliminating minor short term cycles that may otherwise signal a change in forex market direction. Its ability to lead a forex market stems from its measurement of the difference between each bar's smoothed versions of the price information. When interpreted as a leading indicator, TRIX is best used in conjunction with another forex market timing indicator to minimize the effect of false indications. Typical PriceThe Typical Price for each bar is calculated as an average of 3 values: high, low and close. This value is then plotted on the chart. An average of the Typical Price from the most recent number of bars specified by the input Length is also plotted. Using the Typical Price instead of the close in calculating and plotting, say, a moving average weighs the high and low into the calculation. Try our Forex Trading Platform RISK FREE for 30 days. With a demo account and our DealBook®360 software, you can practice currency trading at your own pace, using the same real-time data and quotes available to Live Account holders. Ultimate OscillatorThe Ultimate Oscillator indicator calculates the sums of the True Ranges of the number of bars specified by the inputs Avg1Len, Avg2Len and Avg3Len. These sums are divided into the sums of the distance from the close to the low. This value is weighted for the three lengths and plotted on the chart. Many analysts believe divergences between the Ultimate Oscillator as well as a breakout in the trend of the indicator are significant signals. For example, a bullish divergence is said to occur if forex market prices reach a new low but the indicator does not follow. Conversely, a bearish divergence is said to occur if forex market prices reach a new high but the indicator does not follow. Volatility Chaikin'sThe Volatility Chaikin's indicator measures the difference between high and low prices. This formula is used to indicate the top or bottom of the forex market. There are two ways to interpret this measure of volatility. One method assumes that forex market tops are generally accompanied by increased volatility and that the latter stages of a forex market bottom are generally accompanied by decreased volatility. Another method assumes that an increase in the volatility indicator over a relatively short time period indicates that a bottom is near and that a decrease in volatility over a longer time period indicates an approaching top. Weighted CloseThe Weighted Close for each bar is calculated as an average of the high, low and close, with the close getting twice the weight of the high and low. This value is then plotted on the chart. An average of the Weighted Close from the most recent number of bars specified by the input Length is also plotted. Using the Weighted Close instead of the close in calculating and plotting, say, a moving average weighs the high and low into the calculation. Williams Accumulation/DistributionThe Williams' Accumulation/ Distribution indicator is used to determine if the forex forex trading market is controlled by buyers (accumulation) or by sellers (distribution); and trading when there is divergence between price and the A/D indicator. The Williams A/D indicator recommends buying when prices fall to a new low, yet the A/D indicator fails to reach a new low. Likewise, sell when the price makes a new high and the indicator fails to follow suit. Zig ZagThe Zig Zag indicator shows past performance trends and only the most significant changes. It does this by filtering out any changes less than a specified amount. The Zig Zag indicator is used primarily to help you see changes by highlighting the most significant reversals. Understand that the last segment in a Zig Zag chart can change based on changes in the underlying plot, price being only one example. That is, a change in a currency's price can change a previous value of the indicator. Since the Zig Zag indicator adjusts its values based on subsequent changes, it has perfect hindsight into what prices have done.
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