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Leading Indicators Example

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Leading Indicators
Leading Indicators Example

Leading Indicators are often taken for granted by most traders nowadays. Many say there’s no such thing as a leading indicator. They even take pride in saying they only use pure price action and volume. This most of the time leads to high-risk trading.

To better predict the movement of the markets today, one of the best ways is to study what actually leads them; that is, Leading Indicators.

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Leading Indicators

Hey, welcome to this video on leading indicators examples. However, there is no such thing as an indicator that always leads the market, so you have to put it in the context of an entire trading method, just like you do with everything. There’s no one indicator that’s going to be the crystal ball as to what’s going to happen in the next five minutes or five months in the market. That’s not how it works. We use it as a piece of the evidence.

Leading Indicators Example

So one of my most popular videos is on the SMI indicator or stochastic momentum index. We’ve got that down here and I’ll use that one today because, in the traditional technical analysis, momentum indicators are generally accepted as leading indicators. And I like to add the word potential to that because most of the time, they don’t lead to the market. So you have to understand what type of patterns do, when they do, and so forth. So, first of all, let’s look at something very interesting that people don’t understand. First of all, that’s not an indicator. Stochastics is not an indicator. SMI is not an indicator. CCI, when we just plot it here, in other words, that’s really not the indicator. Let’s look at what the indicator really is.

Now that’s the indicator. So it might be semantics, but my point in showing you this is, and this is just part of the formula and this is the SMI, the stochastic momentum index, indicators are mathematical formulas. So let’s just get real clear on that. First of all, that’s what they are and that’s all they are. So it is true that they do not always tell the future. But let’s put it this way. What do indicators do? They indicate! The answer is actually in the question. They indicate. Indicators are not money makers. There’s no one indicator in the world that will directly and by itself make you money. If they did, we wouldn’t call them indicators. We’d call them money makers.

Leading Indicators Technical Analysis

So they indicate something based on math. Here’s one example. What it’s taking is it’s taking data from whatever market you’re trading relative to whatever time interval you’re trading. And it’s putting everything into one side of the formula, crunching it based on the formula, and then spitting a number out the other end. So what that means is that an indicator actually is never wrong, indicators are correct 100 percent of the time because it is math. So one of the reasons that I do like to use a couple of indicators is that it gives me an objective number to work with a value of the energy of money flow that is going to that market.

And it’s always right because it’s based on math. It is math! It is not based on math, it is math. And, therefore, it allows me to create an objective rule-based system based on a mathematical formula; actually a combination. So let’s go back to the chart now. We’ve got our SMI here, stochastic momentum index. Remember, momentum is one of the most commonly accepted leading indicators. And we’ve got the market going down here. Now at this place, you will see what is commonly referred to as a divergence. So we have a lower low on price, higher low on the stochastic momentum index. Now, what does that really mean? What’s behind that? We’ve all heard what divergence is, or at least most of us who’ve been around for a while. And so a divergence is nothing new, but a divergence by itself, frankly, they don’t always work.

Leading Indicators Trading

So again, this is what I mean by, sometimes in certain situations, these indicators can give you leading ideas. Now, here’s what this is. First of all, what momentum means is the market’s going down and it’s going down on strengths. So think of a train going down the tracks and let’s say that train is going 90 miles. Well, let’s say it’s going 60 miles an hour and it’s got 30 cars behind it. Hence, it’s kind of velocity and mass. That is the equation for momentum ranked just the basic physics of it in the real world. In the same way in the market, when you’ve got the market moving with velocity and mass, it’s more likely to follow through.

So back to our training example, if you are to apply the brakes to a train that was going 60 miles, having 30 cars behind it, the train is not going to stop right away. There’s a leading indicator of just the pure physics of momentum. After you apply the brakes, that train is still going to continue to go north a mile after you apply the brakes, cause that’s the physics of momentum. So, in a similar way in the market, when the market is moving with velocity, a lot of mass; massive waste volume, then we can say it will probably sustain and when the brakes are applied, it’s going to start slowing down. Now, where is the brake applied?

Best Leading Indicators for Day Trading

So here is our signal that we’ve had a momentum shift. Price does make a lower low, in other words, the train is still going, in this case, south. But the brakes were applied back here and this maps it for us. That’s one of the nice things about indicators, they just map that dynamic flow on a chart. That’s why it’s actually very easy to see. Now you could do the same kind of thing if you’re a tape reader, but that actually requires quite a bit of skill and experience. So this is a shortcut.

But that’s not all because what we want to do is we also want to say ‘how extended are we in this trend?’ We all know the saying ‘the trend is your friend until the end’. If you get a momentum shift like this early in a new trend, it is probably not going to really mean much. You might get a little ABC complex retrace and then continue down in the direction of the trend. So the longer you wait; we’ve got a failed nine wave count here, and five in the way that count-wave is average. So, anytime we get beyond five, now we are saying statistically, this is a trend that has lasted longer than is normal. And now we wait for strengths to come out of that downtrend to help us determine when the trend will end. So this is the signal that it will end.

Best Combination of Indicators for Day Trading

Now, something very important, ‘where does the market go?’ Kind of going sideways for a while. So, the learning moment here is that just because momentum did come out of the market and sure we did stop trending, we did not get below that bar. That does not mean the markets then going to go screaming up; a downtrend is not always followed up by an uptrend. Uptrends aren’t always followed by downtrends. Trends can end, in fact, I would say trends more frequently end by just going sideways for a while and not reversing. This is why I turned.

Reversal trades are so tricky. They do have the best reward to risk ratio when they work, but they don’t actually work out often. So the win-loss ratio is low. I wanted to give you one more example because I showed you how to determine the end of a trend. Well, how do you get in early to a new trend because that is a more common way of a better win-loss ratio? Here, we’ve had a market just kind of, basically, not doing too much and even in here, right? It’s still kind of going sideways. But look at momentum. What is momentum doing from here to here? It’s still about the same and then it goes crazy? It goes way above that level. In other words, momentum, in this case, the SMI is breaking above this level here on the indicator before price really makes significantly higher highs.

Best Leading Indicators

Price is still just going sideways. So what’s happening is accumulation. In Top Dog Training, we like to take the first cycle low and a new uptrend, which is wave two right there. And we can do that inside of price consolidation knowing that momentum has already come in.  But now, here it is again, ‘how do we know to get out there?’ Well, momentum now has come out of the market, so price made a higher high, but the indicator, lower high. There are your common diversions. Therefore, it’s just a matter of time before we do start coming to an end.

Rubber-Band Trade Strategy

Now if you like this video, if you got value from it, please understand that sure, it’s free! But you do have a moral obligation to pay it forward by clicking the share button below. Also, I’d love it if you give me a thumbs up and leave a comment. I love your comments, they really encouraged me to create more tutorials.

Also, I’m giving away one of my favorite trade strategies called the rubber band trade. It has a very, very high win-loss ratio going to give it to you absolutely free and a 26-minute video. And this gives you everything; all the rules on how to do the rubber band trade. All you have to do is click on the image at the top right corner of this video, or also in the description below the video. There’s a link where you can access it and, if you’re not watching this on youtube, then there’s probably a link either above or below this video or an opt-in form on the side. Once you do that, I will personally email the video to you with the rubber band trade strategy

GET MY FREE MARKET ENTRY TIMING INDICATOR

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 Leading Indicators? Enter your answer in the COMMENTS section at the bottom of this page.

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FREE GIFT!

Also, I’m giving away one of my favorite new Leading Indicators tutorials. 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 the first video.

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Tape Reading Tutorial for Futures

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Tape Reading for Futures
Tape Reading Tutorial for Futures Made Simple

Tape Reading for Futures is one of the fundamental principles of becoming a profitable trader. But the DETAILS of how to identify them are rarely taught.

Some traders are boggled with who to follow when trading. They struggle to identify the smart money due to the lack of information they have and are ultimately facing the inevitable risk of losing money.

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Tape Reading Course

All right, hello and welcome to this video on tape reading for, well actually it’s a tape reading tutorial for futures, but it applies to stocks too.

Tape Reading for Futures

So we’ve got a little higher high here. This is the point where you can see the Blue Line. Question is, will it continue to follow through to the upside or to the downside? And markets are moving faster than I can talk, so I’ll read again to see what’s happening. But in real life, I get started talking a little bit late. How would you determine that? That’s one of the big questions. Whenever you talk to a trading teacher, you should always ask them the question of, well, how do I determine whether you know this is going to happen or that’s going to happen? Tell me specifically, tactically, exactly, specifically give me the rules. So here’s one of the rules that I use.

Tape Reading Technique – Futures

I bring up a time and sales window which you see on the right side of the chart there. And with that, you can actually see each order that comes through the market. So now we are seeing not just the volume histogram at the bottom, which is limited; that shows you the total number of, in this case, contracts, because we’re looking at the NQ when the Nasdaq 100 futures. But we’re actually seeing each order and the volume of each order. Now, I’ve got that customized so that I don’t see any orders less than five contracts. I am not interested in anybody trading one, two, three or four contracts. So I’ve gone and filtered those out.

I’m only interested in a little bigger orders. I’m not interested in the amateurs here, that really means nothing to me. So I want to filter them out and I do. I’m only looking at trades for five contracts or more. And even there, obviously you’re going to get some amateurs. But as you can see, when we had the little breakout there, and this is a big problem, right? False breakouts; How do we determine whether it’s going to be a false breakout or if breakouts are going to follow through to the upside? So this is one of the solutions. This is one of the how-tos; by bringing the time and sales window and looking at what is the dominant direction, or I should say the direction of the dominant energy of the market.

Tape Reading & Market Tactics – Futures

You can also put bids and asks in there. You’ll see the bids and asks at the top – I really couldn’t care less about the bids and asks, these mean nothing to me. So I filter those out as well and I only look for the actual orders; the commitment of the money that the market participants are putting in because that I know they’re serious about. Bids and asks can be pulled and they can game the market that way. Therefore, that’s meaningless to me.

Find the Smart Money

Now, I want to know that talk is cheap. Actions speak louder than words. Bids and asks are talks, and actual orders are being filled. Those are actions, and that’s what I want to see. As you can see, that dominates the red here and it has, ever since the breakout, and we’ve got some decent-sized orders, nothing really big right here now. But at least, these are not people who are just trading with the very minimum accounts available. That’s not going to be your smart money people. We want people who have decent-sized trading accounts and therefore can afford to trade five contracts.

And remember, when they’re trading five contracts, that might not just mean that they’re trading five contracts on that trade. They might be sizing in. So they’re trading five contracts, and then they get in with another seven, and then another eight, et cetera. So keep that in mind as well. It doesn’t mean that their whole position is five contracts. So that’s part of the reason why I do that. Anyway, the mark is still going down here, so let’s take a stop. We’ve already seen this false breakout and let’s stop here and look at another example.

Market Analysis – Futures

So now we are coming down, you see the Blue Line below us? That’s support. So now the next question is, ‘is the market going to hold that support and bounce off? Or is it going to breakthrough?’ Well, again, the market’s moving pretty fast. But look at the time and sales window. So anything that’s over 20 contracts, I designate as a block order and that just means those are really big orders. Anyway, we broke through that support. Therefore, that support level no longer exists and you could see that we broke down below that. And you can tell that because, with price bars alone, you may not be able to see that. But when you look at the time and sales window, you can say, okay. So not only do we have a lot of sell orders, but there’s big volume in each one of those orders.

And we had those what they call block orders and look again, still red, red, red. There’s another block order that’s coming through at 25. We’re in another support level and let’s see what happens here. Now we’ve got some green block orders: 37, 20, 10, and 38. And so we’re getting some big orders, more green orders coming through and see, the market goes back up. And technically, basically now more block orders and the green side, the buy side. So the market’s not really breaking through that support level. Got a little below it, a few texts or whatever. But we’re holding it, holding a middle level. We’ve got some buying coming in here, some accumulation coming in. Hasn’t really pushed the market back up yet, but we are indeed seeing lots of buying, lots of buying, lots of buying, and large orders coming in.

Rules of Economics – Futures

You’re always going to get buying and selling because it takes both to make a market. Obviously, every time somebody buys, someone else has to be selling and someone selling, they’ve got to buy. And so there we go. Now by the way, when it’s light green like that in the time and sales, that means people are actually overpaying a little bit. That’s a sign that either they’re getting a little slippage, or they’re just being really aggressive on the buy side. When it’s Magenta, then they’re being a little aggressive on the short side. And they’re getting some slippage there. So there we go. You’ll notice it doesn’t happen necessarily right away on the spot, at the moment. That’s what is called an accumulation. People are taking positions, building along the positions.

And then we got another block order at 27. So that’s the smarter money. So to say, we’re back above that. What was the support level now? And we are coming back up and that accumulation now has turned into an actual reversal of the market direction.

Tape Reading Made Simple – Futures

So that’s how they do tape reading. That’s your tape reading tutorial for futures. And this is, basically, what I do and watch for it, especially at support resistance levels. This is how I primarily use it at support resistance levels and at swing highs and swing lows to determine whether the market will follow through, whether breakouts will follow through or whether they would fail and the support and resistance levels are going to hold or if the market’s going to fly right through them. So if you like the video, please understand that it’s free!

But if you get value from it, you actually have a moral obligation to pay it forward by clicking on that beautiful little share button below. And if you do that, it’s a spiritual thing because you know what, we assume everything is free on the Internet. But really, if you found something good, you really should pay it forward for good Karma. And if you’re watching this on Youtube, please click the thumbs up icon and leave a comment because I love your comments. They actually encourage me to create more free tutorials for you. I do them every week and I’m motivated. I don’t make money off of doing these, but when I gave good comments back, then it encourages me to continue on.

Rubber Band Trade Strategy

And I’m giving away my rubber band trade strategy. Now, this is a complete trading strategy that has a very high win-loss ratio and it’s a simple trade. I’m going to teach you the whole thing with all the rules, all the filters, everything, so you can start trading yourself. And it comes into a video that’s about 26 short minutes. So get my rubber band trade strategy absolutely free by clicking the image in the top right-hand corner or the description below the video. And if you’re not watching on Youtube, there’s probably a link below or an opt-in form on the side. Once you do that, I will personally email the video to you with the rubber band trade strategy.

GET MY FREE MARKET ENTRY TIMING INDICATOR

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 Tape Reading Tutorial for Futures? 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 new Tape Reading tutorials. 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 the first video.

Those interested in Tape Reading for Futures that works in today’s markets also showed interest in this video:
https://www.topdogtrading.com/forex-strategy-success-strategies-that-actually-work/

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Swing Highs and Lows Forex

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Swing highs and lows Forex
How to effectively trade Swing highs and lows in Forex, stocks and futures

The successful trading of Swing highs and lows Forex, futures and stocks is one of the foundational principles of becoming a profitable trader. But the DETAILS of how to identify swing highs and lows is rarely taught.

Some traders use swing high and swing low in Fibonacci and that can be helpful, but the most accurate and precise method is to learn how to identify the swing high and swing low using candlesticks.

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SWING HIGHS AND LOWS FOREX

Today we’re going to talk about how to determine sweet highs and lows for Forex Trend Trading but actually this applies to stocks, commodities, E-minis and futures. But here’s the question that comes in and an answer to that question. The question that comes in is Barry how do you determine how your highs and lows.

Let’s learn a way to make this objective instead of a subjective. Here’s one way of doing that. First of all we’re going to bring up the indicator and this is an indicator that I think of them pretty much all trading platforms over Racine. It’s called the zigzag indicator. I mean with this over here you can see it clearly the zigzag. All right now there’s going to be different parameters you can set. It varies from platform to platform I’m sure. But usually they do allow you to do it by points or percent or they might have some other options as well. This is ninja trader 7. I like to use percent because a few points.

HOW TO IDENTIFY SWING HIGH AND SWING LOW

What’s the practical use of this. How I use it is more for support resistance support resistance levels. I would say some of the most important support resistance levels are major highs and major lows that stand out to pretty much everybody in the market who’s looking. For example you know these little ones. These are not going to provide measures for resistance. But these big ones are.

Everybody see this is a Euro US dollar daily chart. So a lot of people are looking at this time frame and a lot of people are going to see that low end of that high and then that becomes a self-fulfilling prophecy and that causes people to behave in certain ways when the market approaches those levels the way they behave as they buy off those levels they sell off at those levels they take profit into those levels so much as show when example here with just take this first one and put a horizontal line on it OK.

SWING HIGH SWING LOW INDICATOR MT4

I’m going have to change the scaling here just a little bit. So as you can see I actually have to change it quite a bit. The market came down to it here OK. Close enough. I mean. Yeah. Didn’t quite touch it but remember this poor resistance levels are Zoom’s so don’t get carried away with the line don’t analyze every pixel over the line and undercharged first report resistance. They are zones. And so that’s close enough for government work and close enough for the realistic trading around the globe.

But notice what it did. It went down. It provided support came back up and you can see the line there breaks through it. This time comes back. Now this is of course the technique known as Rio or support here becomes resistance and goes back down. So that is primarily how I like to use it so we can even look over here and you know this is within the zone of that high. They’re marked that high and it came right up to it there so it provided. So this high provided resistance for this move up. So this is one way to do it where you don’t have to be sitting there and guessing you can put it on your charts and have a something to it for you.

GET MY FREE MARKET ENTRY TIMING INDICATOR

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 highs and lows Forex? Enter your answer in the COMMENTS section at the bottom of this page.

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FREE GIFT!

Also I’m giving away one of my favorite a new Swing highs and lows Forex tutorials. 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 highs and lows Forex that works in today’s markets also showed in interest in this video:
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Forex Trading Tutorial: Costly Mistakes in Trend Trading

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Forex trading tutorial
learn forex trading step by step

This Forex trading tutorial video demonstrates big mistakes that beginners and even more advanced Forex traders make in trend trading currencies.

To become a successful trading, you must learn Forex trading step by step from home with a great Forex training course, this this lesson will help you avoid pitfalls that even well trained traders fall into.

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FOREX TRADING TUTORIAL

Welcome to this Forex trading tutorial. Actually this lesson I’m showing you on Forex applies equally to stocks, commodities and futures. Whatever anything you can trade.

Trend is often defined as higher highs and higher lows. That is incorrect. Why is that not a trend? The dictionary definition of trend is “the extended general direction.” Therefore that means a long term move. Whatever you decide to use for measuring trend whatever tool you decide to use it has to measure the long term move. Otherwise it’s not measuring trend.

LEARN FOREX TRADING STEP BY STEP

The fact that trend is always a long term move that then therefore makes it always a lagging indicator because before you can determine whether you have a trend or imagining did a lot of data and once you have a lot of data and it plots it and it’s confirmed well guess what.

A lot of professional trend traders who make money trend trading often have a worse than 50/50 win loss ratio that they make money because they make up for it with an excellent reward to risk/ratio because they’re really good at keeping the losses small and letting their winners run. For me to be comfortable trading, I have to have a better than 50/50 win loss ratio.

HOW TO START FOREX TRADING FROM HOME

I have to use other things too. Nothing leads the market all the time. In trading, we’re not predicting the future really, but mathematically there are times when you can determine the short term move in the market before it shows up on price

This isn’t just just about the long term direction. Higher highs and lower highs only measure short term direction. So we have here a lower low.

BEST FOREX TRADING COURSE

And so a lot of people would say okay well even if it’s not a long term trend at least it’s a downward indication because you have a lower low and therefore that is a bearish pattern. Again wrong!.

That is a short term bullish pattern. And the reason is because with trading, the devil is often in the details one.

I’m just going to tell you what it actually means mathematically and also from a market profile perspective which is based on the auction theory which I agree with 100 percent by the way. This Candlestick here means that yes the market during this period of time and this is a daily chart. So during this day the market did make a lower low but it opened and closed up here. So the overall sentiment that day after all is said and done during that day the market participants said you know what we tried these prices down here.

GET MY FREE MARKET ENTRY TIMING INDICATOR

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 a Forex trading tutorial? 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 a new Forex trading tutorials. 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 a new Forex trading tutorial that works in today’s markets also showed in interest in this video:
https://www.topdogtrading.com/forex-strategy-success-strategies-that-actually-work/

Subscribe to my YouTube Channel for notifications when my newest free videos are released by clicking here:
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