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  1. Would it be possible to create tutorials or at least reference materials on the studies that are included on the charting applet?

    Thanks

    Hi Chris,

    Below are some general explanations of the studies that are included with the charting application. You will also find video links for Bollinger Bands and Moving Averages... hope to be more on the way. Let me know if I can help with anything else.

    Bollinger Bands

    *Bollinger Bands were developed by John Bollinger and presented at a TAG X Conference in Washington, DC in 1988. This is one of the more popular technical studies and here is how it works. Lines are plotted above and below a simple moving average. This is the standard deviation of closing prices for a period equal to the moving average period and this determines the band width. This causes the bands to tighten in quiet markets and widen in volatile markets. Traders use this indicator to determine overbought and oversold levels. Reversal areas, projected targets for market moves and places to place stops are all available with this indicator. Normally when a market moves outside of the bands, it is considered overbought or oversold. Many technicians use this indicator in conjunction with the RSI, MACD, CCI, and Rate of Change among others. As a general guideline, look for buying opportunities when prices are in the lower band and selling opportunities when pricing activities are in the upper band.BOLLINGER BANDS VIDEO

    Moving Averages

    The MarketClub charting applet uses three kinds of moving averages. They are a Simple Moving Average, an Exponential Moving Average and a Weighted Moving Average. Moving averages have been used for many years both in the stock market and futures market to determine trends. The Exponential Moving Average is a standard statistical analysis which can be used to identify price trends relative to a particular period. In its simplest terms, traders employ the moving average as follows: if today's closing price penetrates the moving average on the upside, a buy is placed on the opening tomorrow. If today's closing price penetrates the moving average on the downside, a sell is placed on the opening tomorrow. The Weighted Moving Average is a standard statistical analysis tool which can be used to identify price trends relative to a particular period. The Weighted Moving Average, as the name implies, puts greater emphasis on the most recent data. In its simplest terms, traders employ the moving average as follows: if today's closing price penetrates the moving average on the upside, a buy is placed on the opening tomorrow. If today's closing price penetrates the moving average on the downside, a sell is placed on the opening tomorrow. MOVING AVERAGES VIDEO

    Parabolic SAR

    The Parabolic is a Time/Price system for the automatic setting of stops. The stop is both a function of price and time. The system allows a few days for market reaction after a trade is initiated, after which stocks begin to move in more rapid incremental daily amounts in the direction the trade was initiated. For example, if a long position is taken, the stop will move up regardless of price direction; however, the distance that the stock moves up is determined by the favorable direction the stock has moved. If the price fails to move favorably within a certain period of time, the stock reverses position and begins a new time period. SAR means "Stop and Reversal". For optimum use of this analysis, you should display a bar chart on the screen. For additional information, we suggest reading 'New Concepts in Technical Trading Systems' by Wells Wilder which may be ordered by calling MarketClub at 410-867-2100.

    MACD

    (Moving Average Convergence/Divergence) - Gerald Appel is generally credited with developing this indicator. Traders use MACD to determine overbought or oversold conditions in the market. Originally written for stocks and stock indicies, MACD is now widely used in the futures markets as well. The MACD line is the difference between the long and short exponential moving averages of the chosen field. The signal line is an exponential moving average of the MACD line. Signals are generated by the relationship of the two lines. If you would like to order the "Moving Average Convergence/Divergence Method", call MarketClub at 410-867-2100.

    RSI

    (Relative Strength Indicator) - Relative Strength is often used by traders to identify price tops and bottoms by keying on specific levels (usually "30" and "70") on the RSI chart which is scaled from 0 - 100. The study can also be used to detect the following: 1) movement which might not be as readily apparent on the bar chart, 2) failure swings above 70 or below 30 which may indicate a reversal, 3) support and resistance, and 4) which we feel is the most important use of the indicator, a divergence between the RSI and price. Wells Wilder is credited with developing this indicator and is in his book "New Concepts in Technical Trading Systems" and is available by calling MarketClub at 410-867-2100.

    Momentum

    Provides an analysis of changes in prices (as opposed to changes in price levels). Changes in the rate of ascent or descent are plotted. The Momentum line is graphed positive or negative to a straight line representing time. The position of the time-line is determined by price at the beginning of the Momentum period. Traders use this analysis to determine overbought and oversold conditions. When a maximum positive point is reached, the market is said to be overbought and a downward reaction is imminent. The opposite holds true when a maximum negative point is reached.

    Stochastic / Slow Stochastic

    The Stochastic indicator was largely credited to George Lane. The process is based on the observation that as prices increase, closing prices tend to accumulate ever closer to the highs for the period. Conversely, as prices decrease, closing prices continue to accumulate ever closer to the lows for the period. Trading decisions are made with respect to divergence between the % of "D" (one of the two lines required by the study) and the item's price. For example, when a commodity or price makes a high, reacts, and subsequently moves to a higher high while corresponding peaks on the % of "D" line make a high and then a lower high, a bearish divergence is indicated. Conversely, when a commodity or stock has established a new low, reacts, and moves to a lower low while the corresponding low points on the % of "D" line makes a low and then a higher low, a bullish divergence is indicated. Traders act upon this divergence when the other line required by the study (K) crosses on the right-hand side of the peak of the % of "D" line in the case of a top, or on the right-hand side of the low point of the % of "D" line in the case of a bottom. This indicator is available in both a regular or a slow version. For more information on this indicator you can purchase a workbook, CD or tape, please call MarketClub at 410-867-2100.

    Commodity Channel Index

    This indicator is a timing system that is best applied to commodity contracts which demonstrate cyclical or seasonal characteristics. The CCI indicator does not determine the length of the cycles; it is designed to detect when such cycles begin and end through the use of a statistical analysis which incorporates a moving average and a divisor reflecting both the possible and actual trading range.

    Average True Range

    As with most other indicators, the periodic value is summed and smoothed to create the final indicator. The Average True Range operates similarly to other running averages used in technical analysis. For example, if 7 is the period chosen, the Average True Range will have no values for the first six periods. For the 7th period, the Average True Range value is calculated by summing the true range values for the first seven periods and dividing by seven.

    Rate of Change

    This study is the same as the Momentum study except that Momentum uses subtraction in its calculations while Rate of Change is a ratio, using division. The resulting lines of these two studies, operated over the same data, will look exactly the same - only the scale values will differ. See also, "Momentum" this section.

    Standard Deviation

    Calculates the Standard Deviation of price over a specified number of periods.

    Regression Line

    Linear Regression is a standard statistical analysis which measures price concentrations within an overall price range for a specific period of time. Ordinarily, the results of this analysis produces a straight line. However, in the Java charting applet within MarketClub, the option to specify a period is added and the resulting plot will not be a straight line, but will more or less follow the pattern of the field calculated, depending on the size of the period. The larger the period, the closer to a straight line the plot will be. Since regression analysis is predictive in nature the results yielded by this study for each time period is actually a projection for the next period. For example, if you enter a period value of 50 for this study, the results returned for each period will be a projection for the next period, based on the last 50 periods, including the current. Since this analysis is generally considered to operate best over the long term, you should consider using large period values.

    HILO Bands

    William %R

    Williams %R is an oscillating indicator that is similar to both the rate-of-change indicator and the relative-strength indicator. It consists of a single line that moves back and forth in a range between 0 and 100.

    This indicator compares the closing price of the most recent trading period with the trading range of the security during the past. If the most recent closing price is near the top of the security’s trading range, the Williams %R line will be near the top of its range. If the most recent closing price is near the bottom of the security’s trading range, the Williams %R line will be near the bottom of its range.

    Anytime the Williams %R line is above 80 or below 20, it is considered to be overextended. When you see these situations, you know there is a high likelihood of the price of the underlying security turning around and moving in the opposite direction. The Williams %R creates simple buy and sell signals as it moves out of these overextended areas and back into the middle of the time range—as you see on the Home Depot (HD).

    ADX

    Average Directional Movement is a momentum indicator developed by J. Welles Wilder. The ADX attempts to measure the extent to which a market is trending. This indicator measures the strength of the trend, regardless of direction; the higher the value, the stronger the trend.

    The ADX can be used in conjunction with the Direction Indicator (+DI, -DI) to produce an complete trading system. This system consist of three rules: the Crossover Rule, the Extreme Point Rule, and the Turning Point Rule.

    OBV

    On Balance Volume Technical Indicator (OBV) is a momentum technical indicator that relates volume to price change. Joseph Granville's indicator, fairly easy to understand. When the security closes higher than the previous close, all of the day’s volume is considered up-volume. When the security closes lower than the previous close, all of the day’s volume is considered down-volume. On Balance Volume analysis presumes that OBV changes precede price changes. The theory is that smart money can be seen flowing into the security by a rising OBV. When the public then moves into the security, both the security and the On Balance Volume will be ahead.

    Best,

    Lindsay Thompson
    Director of New Business Development
    INO.com & MarketClub.com

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