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
Adaptive Moving Average (AMA)
by PRASHANT SHAH -
An indicator devised by Perry Kaufman explained in his book Trading System and Methods by Perry Kaufman. It is also known as Kaufman’s Adaptive Moving Average (KAMA).Rate of change (ROC) is a study that measures how much price moved up or down from previous bar. The daily rate of change captures the trend. When we ... Read more
Keltner Channel
by PRASHANT SHAH -
Chester W. Keltner (1909-1998) was a Chicago grain trader. He worked with successful traders who back-tested trading systems. He talked about Ten-Day Moving average trading rule in his book How to Make Money in Commodities in 1960.He did not claim that he invented the strategy so origin of this idea is uncertain. But people started ... Read more
Parabolic SAR Indicator
by PRASHANT SHAH -
PSAR indicator was developed by J. Welles Wilder.The calculation of this indicator is a bit complex, but the concept is extremely useful. I will try to simplify it and explain the logic. I will briefly explain the concept, calculation and reading.Let us think about creating an indicator that shows the trend, Using the indicator, we ... Read more
