What is Stochastics? Stochastics attempt to indicate where the current price is as a percentage value in relation to the high and low extremes of price swings during a set time period. In this set time period the stochastics work on the assumption that an overbought condition exists when the indicator value is in the
Category: Technical Analysis
Relative Strength Indicator
The Relative Strength Indicator (RSI) was developed by J. Welles Wilder in 1978. This indicator is one of a family of indicators called oscillators because it varies (oscillates) between fixed upper and lower bounds. This particular indicator is supposed to track price momentum. Wilkder’s relative strength indicator is based on the observation that a stock
On Balance Volume
On Balance Volume is a momentum indicator that relates volume to price changes. It is calculated by adding the day’s volume to the cumulative total when the security’s price closes up, and subtracting the day’s volume when the price closes down. The scale is not of any value; only the slope (i.e., the direction) of
McClellan Oscillator and Summation Index
In 1969, Sherman and Marian McClellan developed the McClellan Oscillator and its companion tool the McClellan Summation Index to gain an advantage in selecting the better times to enter and exit the stock market. This article gives a brief overview of the McClellan Oscillator and Summation Index. Every day that stocks are traded, financial publications
Moving Average Convergence/Divergence (MACD)
The Moving Average Convergence/Divergence (MACD) was invented by Gerald Appel sometime in the sixties and comes in various flavors, but most are based on a technique developed by McClellan (which he based on a technique developed by Haurlan). The technique is to take the difference between two exponential moving averages (EMA’s) with different periods. This
Investing Information Sources
This article lists some sources of information for technical analysis, including books, magazines, and courses. Books on Technical Analysis: Design, Testing, and Optimization of Trading Systems by Robert Pardo. Published by John Wiley & Sons, Inc. The Disciplined Trader by Mark Douglas of NYIF – 1990. ISBN 0-13-215757-8 Elliott Wave Principle by A. J. Frost
Elliott Wave Theory
What is the Elliott Wave Theory? R. N. Elliott developed his wave theory in the early 1934. It is a method for explaining stock market movements. Actually, Elliott wave theory helps explain economics in general, but the stock market tends to have three attributes that make it quite applicable: It is a true free market
Investing Data Sources
This article lists some sources of historical data. Note that currencies are traded over-the-counter, there are no central exchanges or market makers. Thus, currency closing prices are really just noisy, “best guesses” collected from a number of different exchanges and transactions. Yahoo has a fair amount of data, both for individual issues and for indexes.
Charting Services
Thanks to the many free quote servers on the net, you don’t need to subscribe to a data service or charting service just to get basic charts. The following sites offer a whole range of charts for a particular stock, as well as a lot of other information. Yahoo! Quotes at http://quote.yahoo.com Offers 3-month, 1-year, 2-year
Commodity Channel Index
The Commodity Channel Index (CCI) is a timing tool that works best with seasonal or cyclical contracts. It keeps trades neutral in a sideways moving market, and helps get in the market when a breakout occurs. A moving average of the CCI can also be displayed. A constant number is entered in the parameter screen