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Keltner Channel Trading Strategy Video Tutorial

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Keltner Channel Trading Strategy
Keltner Channel Trading Strategy

Welcome to this tutorial on Keltner Channel Trading Strategy and the keltner channel breakout system Bollinger Band and the Squeeze. See the 10 minute video below for the full tutorial.

We’re going to do a little comparison between these two types of envelopes. They are called envelopes because the lines envelope above and below the midline and the midline in this case. We’re going to use as the 20 period moving average which is right here.

So right now I have it as you can see the Keltner Channel on here. We’re looking at a Disney daily chart. And one of the big differences between the Keltner Channels. The Bollinger Bands are the Keltner Channels for mt4 and other charting platforms use an average true range to set the channel distance.

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VIDEO TRANSCRIPTION

So these are the channels here, and then we’ve got a 20 period moving average here in the middle. And by the way that is a 20 period exponential moving average. That’s typically what’s used for Keltner Channels.

Now Bollinger bands, they are calculated differently instead of using an average true range so when people use this as a trend indicator. Primarily what they are looking for is for it to show an impulse move here, strength to the upside, hit the upper Keltner Channel. Now see here it did not and but here it does so that shows a strong impulse move to the upside. Then we are looking for it to not to come back and retrace and it hit the bottom channel in order to maintain strength to the upside.

KELTNER CHANNEL TRADING STRATEGY

And that philosophy in general, I agree with. Big part of my trading is looking for the direction of that dominant energy in the market and this would be one way of doing it. So that works very well here in this particular situation. Let’s look at another one.

So as you see here, we had been in a downtrend and then we come back, we reverse, we hit the upper Keltner Channel. The market does continue up and up and up, and then it comes back down, and well let’s move the screen forward here. You can see and so in this case, actually we’ll just go ahead and move it all the way forward. And you know it looks pretty great for a keltner channel breakout system.

It does come down and hit the lower Keltner Channel and does not come back and reach the upper one, and continues with a nice downtrend. So that’s the basic use of it, the basic way of reading it. And it works pretty well if you got a market that is having a rather low volatility trend, and Disney tends to move that way.  However not all markets do. So let me show you some other examples. I’ll just, I’ll show you one more.

SCALPING WITH KELTNER CHANNEL

Now I’ve brought up GLD, so just as a different example. This one we hit the lower line. Now we go back up, hit the lower one here. And so that would indicate an impulse move to the downside but then we have one that hits to the upside which is what we don’t want in order to start a downtrend. But then it really goes down.

By the way other thing to notice is look how far price bars get below the line in the keltner channel trading strategy. So it doesn’t, if you get a high volatility market or particular time at any market, it’s not going to contain price action very well, Bollinger bands do a better job of that. One way around this however in some softwares, some software programs, you can do multiple multipliers. Well that’s good, multiple multipliers.

KELTNER CHANNEL MT4, EXCEL AND OTHER SOFTWARE

You could do, instead of just having one offset multiplier here, you could do 2, you could do 3, and that will help. A lot of people actually do that, and that’s good then you’ll have 2 bands above the mid-range, and 2 bands below the mid-range. So that’s one way to real help to answer that problem. But again you see that we go down here, well below and then we come back up well above and then we go back well below.

And so this is one of the problems and one of the reasons that I said I don’t like using this as a trend indicator is because it’s typically based on 20 periods. 20 period exponential moving average. And 20 bars is not enough to have a trend in my opinion. But word trend means in the Webster’s Dictionary, ‘The Extended General Direction of something.’ So trend by definition is a long term move, not a short term move. I think 20 period is too short of a term to measure trend. I like to go with 50. And obviously there’s really different opinions about it, that’s no problem, but that’s my opinion. And so down and down and down we go.

KELTNER CHANNEL BOLLINGER BAND AND THE SQUEEZE

I am in the Bollinger bands now. They are the red envelopes here and here. And you’ll see I am using essentially the same settings. Even though the equation is different, so I am using the same settings essentially that I did for keltner channel trading strategy. Again the equation is different, so that’s why obviously they are different.

One thing you’ll notice right away is that the Bollinger Bands, the red lines are able to capture more or contain more price action than the Keltner Channel. The Bollinger Bands they will expand and contract more. That’s because they are not based on average true range, they are based on the standard deviation which varies, so they measure volatility much better in my opinion.  Use them more for volatility than I use them for trend, again we are using a 20 period moving average, so I wouldn’t use it for trend. But for volatility I think it is very good.

Also couple of another thing that I like about the Bollinger bands is that not only do they contain price action or more price actions, so for example here, you just get three bars above the Keltner Channel, but here is the signal that I use a lot where you get a real body outside of the Bollinger band, and to me that shows extreme move.

KELTNER CHANNEL PARAMETERS

A very very unusual high volatility move that is generally unsustainable. So the keltner channel trading strategy doesn’t show you that because you get so many bars above and below it all the time. And but you don’t get as many bars above and below the Bollinger bands, and so it’s an usual activity and when it is, it’s usually measuring exhaustion. And that’s very valuable information, very valuable.

So as we come down here for example, we see that yes we are hitting the bottom here. The 2 levels are pretty even, but as volatility increases, the Bollinger bands start to move apart. That’s a, that’s a signal of increased volatility.

Something that the Keltner Channel doesn’t give you. Then when we get down to here, then this is very important, notice that all these bars here, all those bars are below the Keltner Channel but only these couple of bars here are below the Bollinger band. When I see that, then I say, oh okay Bollinger band captures the vast majority of price action and because now we have gone down so far that we’ve broken below that.

KELTNER CHANNEL TRADING STRATEGY CONCLUSION

I think we are coming to the end of that move. And that is a great signal that works a lot, and there you go. So it comes back up and that is the end of that down move, end of that trend, if you want to measure trend that way.

BTW, if you’re interested in the indicator that I use personally for very precise entries and exits. I’m happy to share that with you. Just send me an email at Barry@TopDogTrading.com, and I’ll show you how to get access to that indicator.

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CCI Indicator Strategy Video – Best Trading Strategy

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CCI indicator strategy
CCI indicator strategy best method

The best signal offered by the cci indicator strategy will surprise you and works equally well if you’re day trading or swing trading stocks, Forex, futures or E-minis.

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VIDEO TRANSCRIPTION

Welcome to this tutorial on CCI Indicators strategy for winning trades. I am Barry Burns with Top Dog Trading, and let’s jump right into it.

One of my basic principles for trading is this, this is really really important, commit this to memory.  In the direction of the dominant energy of the market. The market meaning whatever market I am trading. Whether its futures, whether its day trading, swing trading, stocks, forex, whatever. So that’s the key, now that’s a great principle but then the next question is, fine but how do we determine the dominant energy of the market. Okay, great question.

CCI INDICATOR BEST SETTINGS

I like to use a period of 20. Some people like to use a period of 14. I find that creates a choppier indicator and I don’t find it to be quite as easy to do trade. So I like 14, if you are using. I like 20, if you are using 14, that’s great. If it works for you, great, hey god bless you, and the horse you are riding on. I don’t complain if anybody’s making money with 14, then keep doing it. But I find personally that 20 is a setting that gives us better, less choppy signals.

Now here is the way that we are going to trade this. So back to looking at the direction of the dominant energy of the market. They are just mathematical equations. Right? So you’ve got 0, you’ve got a 100, you’ve got 200. And then below 0, you have -100 and -200. So the way you created the formula was intended that 70 to 80 percent of the CCI indicator strategy values would fall between 100 and 1-00. So what that means is that anything in there is just kind of an average range, nothing really special is going on.

Now number 2 is a lot of people look for those to be overbought, oversold signals, I don’t. The CCI is actually not a bounded indicator like some indicators like stochastics for example or RSI. So, but it’s rare that it gets too far above 200, or too far below negative 200. Even though it can, and it does from time to time. But here is what you have to understand. When we are below -100, that’s actually showing strength, in other words, dominant energy to the downside.

CCI INDICATOR STRATEGY

I am now looking for shorts. Especially here in this situation. The dominant trend is down. A long term trend is down, so I am only looking for shorts right now. And we’re early in a new trend. That’s the other thing how early or late are you in a trend. That’s very very important. So late in a trend, I might be looking for reversals but early in a trend, I am looking to trade with the trend.

We see early in a new trend here and we go down, CCI indicator strategy goes down below -100. That shows that statistically it’s got more strength than average. And therefore great, we’re showing strength to the downside. Still not ready to trade though. Because here is the key, now I want to look for the retrace. So the retrace, I want to be weak. I want strength to the downside if I am going to go short and I want weakness to the upside. Where do we go here, we go just a little bit above 0.

If we got above 100, now that’s a strong signal to the upside, I’d no longer be interested in going short. Because then we just had basically a weak bottom type of energy where we had very strong selling, followed immediately by strong buying. And that’s not what we want. What we want, in fact here is just a basic overarching principle, then we’ll show it to you on the CCI again, is I want the market to go down on strength, and what does that really look like, I mean what is really behind that.

CCI INDICATOR FOREX

What’s behind that is we have a lot of traders making a lot of trades, lot of trades coming through the market with velocity, speed if you are looking at your price action you would see it moving fast. If you are looking at time and sales window, you see those orders coming through fast, and we want big volume. Not just a lot of volume, but we want individual orders with large volume. So we got the big boys, we got the whales who are shorting.

Now the market oscillates, right. It goes down, then it pauses, then it goes down, retraces, goes down, retraces, so here is the key. Goes down on strength, now we got to watch the retrace, the retrace is the key. This is what a lot of people don’t understand. That retrace, that is your key. We want that to be coming up on weakness. So we don’t mind retraces, they are fine, they are the normal flow of the market, the respiration of the market if you will. Inhale, exhale, inhale, exhale, the markets do that, that’s natural, that’s normal.

CCI VS RSI

But when it comes back up a little bit, we want behind the scenes for that to be maybe, some people just take taking profits who have gone short or perhaps some retailers buying there who you know, they are just buying with their one lots or a hundred shares or whatever. Plus they are amateurs, they don’t know what they are doing, so they are probably going to be wrong. What we don’t want is to look over to time and sales and to see huge block trades buying. So down on strength, up on weakness, back down on strength. That’s what I basically mean by trading in the direction of the dominant energy of the market. Because if the retrace was weak, the dominant energy remains down.

That’s what happening on the chart and price action basically. That’s what happening behind the scenes with the actual buying and selling. Now we can map that with indicators. So today of course we are talking about the commodity channel index, the CCI indicator strategy. And so one of the ways we do that is we look for, okay first of all the dominant energy being down, getting below -100, retracing back to 0’s perfectly fine. A little bit above 0 is perfectly fine. Above 100, not so fine. Okay, not so fine.

WOODIES CCI METHOD INDICATOR

That little green line there, its 100, the number is not there but that’s what that is. And so we are showing more strength when we come back up, what happens, okay we get back up here to again, a little bit above 0, not quite to a 100, and then we go down to 200. We get down to 200, but here is the issue now. Now we are in a 5 wave trend. So, and this is an extreme reading too, negative to 100 is a very extreme reading.

Now again we are watching that retrace. Right, so okay we have got nice strong move up. We want a strong move up and we want a weak move down. Where do we go down? Well here is our zero line. The scaling kind of changed a little bit there. So just to show you, it doesn’t even get back down below the zero. In fact this whole time, it never gets back below 0, the black like there. And so therefore, just basically strong move up, weak move down, strong move up, weak move down, strong move up, weak move down, strong move up, weak move down, okay.

BTW, if you’re interested in the indicator that I use personally for very precise entries and exits. I’m happy to share that with you. Just send me an email at Barry@TopDogTrading.com, and I’ll show you how to get access to that indicator.

What did you think of this tutorial on CCI indicator strategy? Enter your answer in the COMMENTS section at the bottom of this page.

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Swing Trading vs Day Trading Forex, Stocks and Futures Video

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swing trading vs day trading forex
swing trading vs day trading forex

Swing trading vs day trading Forex, stocks or futures – which is best for you? This video (and article) compares swing vs day traders side-by-side, providing a clear guide for you.

You’ll learn about swing trading requirements, the disadvantages of day trading, and even swing trading vs day trading Forex.

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VIDEO TRANSCRIPTION

Welcome to this video on day trading versus swing trading Forex, stocks and E-minis, which is the best. Let’s get right into it and do some comparisons here.

First of all let’s define our terms. I define day trading as getting in and out during open outcry hours. So that means you are totally flat by the time the market closes. And for that we are using intraday charts.

Now for swing trading, generally swing trading means holding for about 2 days to 14 days. I use daily and weekly charts when I am swing trading which is little different from some people. Some people use long-term intraday charts and so they might hold just for 2, 3 or 4 days.

I do it a little differently. I use daily and weekly charts and the primary reason I do that is because I am also day trading. So I don’t want to have to look at my swing trades while I am day trading.

SWING TRADING VS DAY TRADING FOREX, THE STOCK MARKET AND E-MINIS

I still swing trade but now I learned something, that I don’t like that exposure to overnight risk. That can really mess you up so now when I swing trade, I hedge with options. Because a protective stop is not enough. I had a protective stop in but it went right through that protective stop because it happened overnight.

There’s also a benefit of that overnight risk that a lot of people don’t talk about. They just say oh yeah, overnight risk, eliminate that and that’s why day trading is better than swing trading. Well again you can minimize that with hedging but then also remember there is an upside to that overnight risk.

If the market goes up 50% in the direction of your trade, well that’s something you just cant get with day trading. So you can get these big high profits with swing trading overnight as well. Just depends on which way the market moves; in your favor or against you.

DISADVANTAGES OF DAY TRADING

Day trading requires a good attention span. So a lot of, which one is right for you is going to be psychological. It’s not that one is better than the other. But one might be better than the other for you, for your mindset. So if you have a good attention span, you sit there and focus on the market. You got to watch the market tick by tick, bar by bar for day trading then that can be great for you.

You might not even be able to do it for 6 and a half hours a day, and you don’t have to. A lot of people who day trade will only trade for maybe an hour or 2 or 3, and in fact that’s what I do now. I only trade for 2 to 3 hours a day when I am day trading. And if you can focus for that period of time, then you are golden.

DAY TRADING VS SWING TRADING VS POSITION TRADING

With swing trading, you don’t really need to be sitting there and watching every single tick in the market. So a great attention span is not as required.

With day trading, you may need a larger account if you are day trading stocks. So, I’m not going to go into it a lot here, but ask your broker about the pattern day trading rule, look it up online, but you’d be best to talk to your broker about it. A lot of times you’ll need $25,000 account in order to do day trading if you fall into the pattern day trading rule. At least that’s here in the US.

There’s way around that of course. You could be day trading futures, or day trading forex, and there is different rules for that. So in that case, you can actually have a smaller trading account if you are trading those markets. So the irony is that it is also possible when you are comparing with futures or forex. You might need a larger trading account if you are going to trade stocks with swing trading. Because the risk that, at least the way that I trade, the way I define my maximum risk per trade is based on the range of the bars. And on a daily chart which is what I use for swing trading.

HOW TO START SWING TRADING

That range is a lot bigger than the range on a intraday chart, and therefore the amount of money I had after risk is larger. So you, I would need a larger account. So these are, you know things you have to look at depending on the market that you are trading. And which your money and management rule is. My money management rule is I want risk more than 2 percent of my trading account at any one given trade. So to keep the risk minimal, down to 2 percent, I got to have a bigger account in order to do that.

Now a lot of people talk about stress. And they say day trading is more stressful than swing trading. And it can be, it can be. So if it’s stressful for you to sit there and watch every tick of the chart come through, then please be aware of that. And again that’s a personal thing that you need to take into account.

MOST SUCCESSFUL SWING TRADERS HEDGE THEIR POSITIONS

The average income of a swing trader can be disrupted overnight by a market gap against their position. For this reason swing trading may not lend itself to you sleeping well at night! Day trading, Your positions are all closed, you are good and you can sleep well at night. So swing trading may be less stressful during the day but again overnight, it’s possible you might have trouble relaxing if you are not watching positions and again that’s more of a personal thing. Best way to overcome that again is in my opinion hedging with options.

BTW, if you’re interested in the indicator that I use personally for very precise entries and exits. I’m happy to share that with you. Just send me an email at Barry@TopDogTrading.com, and I’ll show you how to get access to that indicator.

What did you think of this tutorial on swing trading vs day trading Forex? Enter your answer in the COMMENTS section at the bottom of this page.

PLEASE PAY IT FORWARD BY SHARING THIS VIDEO & ARTICLE ON FACEBOOK OR TWITTER by clicking one of the social media share buttons.

FREE GIFT!

Also I’m giving away one of my favorite trade strategies that works in trading the markets. Just fill out the yellow form at the top of the sidebar on the right. Once you do that, I’ll personally send you an email with first video.

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http://www.topdogtrading.com/swing-trading-strategies-stocks-mcclellan-summation-index/

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Swing Trading Strategies Stocks Tutorial with the McClellan Summation Index – Video

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Swing Trading Strategies Stocks with the McClellan Summation Index
Swing Trading Strategies Stocks with the McClellan Summation Index

Swing trading strategies stocks using the McClellan Summation Index is a great option for those who have a day job and can’t do day trading. Using this swing trading tutorial can potentially help you find good swing trade stock picks.

The swing trading techniques in this video can be used to help you potentially make some extra money on the side. If you learn to trade well enough, you may even build up your skills well enough so you can swing trading stocks for a living with the McClellan oscillator formula as part of your trading method.

The summation index math can be used for NYSE or Nasdaq charts and is available for many charting platforms including the McClellan Summation Index for ThinkOrSwim.

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VIDEO TRANSCRIPTION

One of my favorite swing trading strategies stocks is to use the McClellan Summation Index. It is derived from the NYSE McClellan oscillator chart which is a breath oscillator indicator. Basically it is measuring the advanced issues, less declining issues, and then the summation index math is following that and creating different types of patterns on it.

SWING TRADING TUTORIAL

Here’s one of the signals that I will take: a divergence, like this. And I like this one but what you really need to have here is more than just this. Like any other, this is not really an indicator as such, it’s an index, or statistics. You see that kind of divergence there and those are pretty good. So the key here is we get equal highs and then we get a lower high. So equal highs on the price action but then lower highs on the summation index. So basically whats that telling us is of course that we are seeing underneath the price action that declining issues are starting to increase over advancing issues.

MCCLELLAN SUMMATION INDEX

Number 1, look at the date. It’s May. You probably heard the phrase that ‘You buy in the fall and then in May go away because we are heading into summer months, and so that’s one signal that you want to look for here and then indeed it does go down and down and down through the summer. So that gave us a very nice signal time wise seasonally if you will, based on the seasonal cycles that we should get out and then in October it starts going back up again.

So did we have a signal to go long back in October? Well yes we did again. If you look at that, we get another divergence pattern here. There are equal lows, little bit a higher low there I guess if you draw out from the lower candlestick pattern. But then we get a shift, higher low on the McClellan Summation Index.

These aren’t always long term signals by the way. Sometimes they are just a short-term signals, but that’s why we got to use them with, with everything else. All the other things you have in your trading toolbox. It’s one more piece of evidence. Here we get double bottom, and well equal bottoms at least and then a higher low on the index. And again this is during bullish time of year, February.

SWING TRADING STRATEGIES STOCKS

Now here is a real interesting one and this is the trade I actually took. So this is last fall. We get a little bit of a higher high here. We put in a wave 5. So we got a wave 5 trend up which is an average trend but well you can look and see there for yourself the McClellan Summation Index is heading on down. So it is diverging. We are getting more net declining issues and the market kind of pinballs there between the moving averages for a while and then it goes down down down to the orange line. The orange, moving average there, that’s the 200 simple moving average.

So great place to take out or to get up, and then look what happens. We get into November and November 7th and whats then. Well that was election time; presidential election time here in the US. So great place to exit the trade. We had to rally out of the election and also that coincides directly with the Halloween cycle which starts the bullish time of year based on the traders’ almanac.

SWING TRADING INDICATORS

So again now just recently we had another signal, very dramatic signal actually and we got a wave 7 which is an extended uptrend and then we came up and retested that high and of course again you look down at the summation, and then actually you can see it made a dramatically lower high, and so yes we had a shift there. Its’ a very short-lived opportunity for swing trading strategies stocks

I showed you that because it’s recent, a very recent signal and also because I’d like to show you the things that can happen that are not a deal. I want you have that in front of your mind. So you don’t get over enamored with anything. There is no one thing that makes you money. Everything is a piece of evidence that you put together with other pieces of evidence to establish a probability scenario.

Having said that, this is still one of the best swing trading strategies that work which I’ve come across.

BTW, if you’re interested in the indicator that I use personally for very precise entries and exits. I’m happy to share that with you. Just send me an email at Barry@TopDogTrading.com, and I’ll show you how to get access to that indicator.

What did you think of this tutorial on Swing Trading Strategies Stocks with the McClellan Summation Index? Enter your answer in the COMMENTS section at the bottom of this page.

PLEASE PAY IT FORWARD BY SHARING THIS VIDEO & ARTICLE ON FACEBOOK OR TWITTER by clicking one of the social media share buttons.

FREE GIFT!

Also I’m giving away one of my favorite trade strategies that works in trading the markets. Just fill out the yellow form at the top of the sidebar on the right. Once you do that, I’ll personally send you an email with first video.

Those interested in Swing Trading Strategies Stocks with the McClellan Summation Index also showed in interest in this video:
http://www.topdogtrading.com/swing-trading-strategies-best-trend-trading/

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