Kingston

October 22, 2007

Posted by Kingston

Which is your favorite Momentum Indicator and Why?

Rate of Change (Price)
Smoothed Rate of Change
Relative Strength Index
TRIX Indicator
Closing Price relative to Range
Stochastic
Slow Stochastic
Williams %R
Elder Ray

How many days indicator do you use in your trading strategy plan?

Do you use different indicators for each market (stocks, bonds, currency and commodities?)

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mWm22

October 22, 2007

Posted by mWm22

4 stars ( 2 ratings )

I use both the Exponential moving average (EMA) and the moving-average-convergence-divergence (MACD) histogram. I use both these indicators in the impulse system, which is a system designed by Dr. Alexander Elder for use in identifying acceptable entry points for trading on momentum.

The Impulse System uses an EMA for finding uptrends and downtrends. When the EMA rises, the inertia favors the bulls, and when EMA falls, inertia favors the bears.

To measure market momentum you should use the MACD histogram, which displays a slope reflecting the changes of the power among the bulls and bears. When it falls, the bears are gaining strength over the bulls.

Comments

  1. bookme07: Elder's systems are interesting starting points. It is important to use his systems as jumping points, which is even what he tells you to do! Are you doing that mWm22?

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bookme07

October 22, 2007

Posted by bookme07

4 stars ( 1 rating )

I prefer the rate of change indicator:

The formula for rate of change is: ((Today’s Close - Close n periods ago)/ Close n periods ago) x 100
where n = number of periods

Any questions?

Comments

  1. bookme07: When the ROC indicator is heading up, and the price is heading down, we have positive divergence. This can be a sign for a sharp bull market. Any reading above the zero line is considered to have more buying pressure, while anything below zero has more selling pressure.

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