ATR (Average True Range)
by PRASHANT SHAH -
Any candle’s range can be defined as the difference between its high and low price. True Range was a concept introduced by J. Welles Wilder. The true range is defined as the maximum of (current high – current low, current low – previous close, current high – previous close) Average True Range refers to the ... Read more
Relative Strength Index (RSI)
by PRASHANT SHAH -
Devised by J. Welles Wilder, RSI (Relative Strength Index) is one the most popular indicators in Technical analysis. Let us try to understand the underlying formula and logic behind this indicator.RSI indicator is calculated on closing price. We can define bullish and bearish price on a closing basis (Line chart) chart as follows: Now that we ... Read more
Decoding 2-period RSI
by PRASHANT SHAH -
2-period RSI is a popular concept introduced by Larry Connors. This method is used by a number of traders in their trading strategies. There are two simple rules in the strategy that Larry Connors explained. For buying: · Price should be above 200-DMA (Long-term trend is up) · 2-period RSI should be below 10 (better ... Read more
Chande Momentum Oscillator (CMO)
by PRASHANT SHAH -
Understanding of indicator with ‘averaging’ and not with ‘averaging’! We discussed the RSI indicator in my previous thread. You might have observed that RSI considers average gains and losses over last 14-days. It is a recommended parameter and widely followed. Wilder’s averaging method is used for RSI which gives comparatively less weight to recent ... Read more
Donchian Channels
by PRASHANT SHAH -
Donchian channels were invented by Richard Donchian. He is known as a father of trend following trading. He was founder of world’s first managed fund in 1949.Donchian was born in 1905, he got interested in trading after learning about story of Jesse Livermore. Donchian started relatively at young age but was not successful initially in ... Read more
Bollinger Bands
by PRASHANT SHAH -
Bollinger Bands is a wonderful invention of John Bollinger. Bollinger band calculations are based on standard deviation. Let’s understand the concept of standard deviation. Imagine there are 10 people sitting in the room. For example, their average height is 165 cm. This is the average height and there can be a few people taller or ... Read more
