1. In your tutorials you always talk about trends having a slope 20% one way or another. How exactly do I know in the event the market is sloping 20% one way or another? Is there a tool to help measure the slope?
Yes, there are two tools which you can use to measure the slope of a trend. Neither will give you the exact slope but both will let you know if the market is trending as well as not. The first tool you need to try is the 20 bar or 20 day exponential transferring average indicator. If you are looking for a trend moving upwards you can even examine to see if the market you happen to be analyzing is trading above this EMA. If you are trading to the short side you want to make certain that the market you are investigating is trading below the 20 time or 20 bar EMA. You can see in this example how this market is trending above the minimum 20 percent requirement each and every time the stock rallies above this 20 day EMA.
The other tool which you can use is the ADX indicator. The Average Directional Index is a bit more advanced but works very well in gauging the effectiveness of the current trend. The indicator has three different lines regarding it including: The Positive Directional Index the Negative Directional Index and the Average Directional Index. The only part you should pay attention to is the normal Directional Index which is not just a directional indicator. Meaning it will react exactly the same way whether the trend is moving up or down; the sole purpose of the ADX is to look for the strength of the trend. Monitor the ATR which is the Green line you see in this picture. Notice that every time starts to maneuver above 20 the market begins to trend. As long as the ADX is actually rising and moving above 20 you should be in a market that's beginning to trend above 20%.
In this second example you will observe how the stock rallies below the 20 bar EMA. Every time the stock rallies below this EMA the stock is sloping lowest 20 percent downwards. I would guess the slope is higher than 20% in this particular case but so long as you are above 20 either up or down you happen to be in a trending market and that's what matters the most.
2. I saw you trading tutorial online video media about ATR indicator. I don't discover how to use the ATR for both stop loss placement and earnings targets; can you give me a sample please?
The ATR stands for Average True Range and it's one of the few indicators that measures volatility properly. Since the ATR measures the normal daily movement and changes of such movements it is great for stop loss placement to avoid being stopped out prematurely due to market noise or random exchanging fluctuations. There are three steps to with all the ATR for stop loss location and profit target placement.
Identify ATR levels back then you enter the position. You can see in this specific example the ATR level is clearly identified at any given time by looking at the lower area of the chart. Once you identify the correct ATR level at the time of entry you simply multiply this by 2 and subtract it through your entry price. In this case in point the QQQ had an ATR regarding $1.05 so I could multiply that figure by 2 and subtract from my access price. You can see in this example where I enter this market and where I place this protective stop loss level also.
In this example you can see this also process applied to a brief position. I enter the position in the event the ATR is $14. 00 along with I double that amount primary. After my entry I merely add that number to our entry price.
To calculate the profit target for that long position you would merely multiply the ATR by 4 and add it for your long position. In this event we entered the QQQ from $66. 70 so we could add $4. 20 cents to the entry price and that could become our stop loss. This $4.20 was calculated by multiplying the ATR that was $1.05 by 4.
For short positions you'd probably add 4*ATR to your access price. Since Apple Computers was entered at $456 we'd add $56. 00 to our entry price and that would be our profit target level.
I hope this answers some of the questions we received during the last 30 days. If you have questions please contact us and we will do our best our best to help answer them. I hope these swing trading tips were helpful and will improve your trading.