Sigma Learning

Alligator

sigmalearning — Thu, 22 May 2008 18:49:02 +0000

Alligator

This technical indicator contains of three lines, which are Moving Averages with different parameters.
The blue line: (chap) is a line of balance to the significant time period, which is used for building of the chart (13 period smoothed moving averages, shifted on 8 bars to the future.)
The Red line: (teeth) is the line of balance for the significant time period, which is one step less (8 period smoothed moving average, shifted on 5 bars to the future);
The Green line (lips) is the line of balance for the significant time period, which is one more step less (5 period smoothed moving average, shifted on 3 bars to the future).
Interpretation: When the Jaw, the Teeth and the Lips are closed or intertwined, it means the Alligator is going to sleep or is asleep already. As it sleeps, it gets hungrier and hungrier the longer it will sleep, the hungrier it will wake up. The first thing it does after it wakes up is to open its mouth and yawn.
Then the smell of food comes to its nostrils: flesh of a bull or flesh of a bear, and the Alligator starts to hunt it. Having eaten enough to feel quite full, the Alligator starts to lose the interest to the food/price (Balance Lines join together) this is the time to fix the profit.
You should close all positions and wait until Alligator awakes again.
The goals of this indicator are:
- to give integrated way for monitoring of the moving of the market;
- to represent a simple indicator to trade in the current trade only;
- to create a protective way to save the money during the moving of the market limitet with the price channel.

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Accelerator Oscillator

sigmalearning — Thu, 22 May 2008 18:45:55 +0000

Accelerator Oscillator

Acceleration/Deceleration (AC) is introduced by Bill Williams; it measures acceleration and deceleration of the current driving force.
When the AC value of the current bar is greater than the previous bar value, the histogram bar is colored in green (and vice versa). According to Mr. Williams this indicator will change direction before any changes in the driving force, which will change its direction before the price.
The only thing that needs to be done to control the market and make decisions is to watch for changes in color. To save yourself serious reflections, you must remember: you can not buy with the help of Acceleration/Deceleration, when the current column is colored red, and you can not sell, when the current column is colored green.

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Volumes

sigmalearning — Thu, 22 May 2008 18:43:32 +0000

Volumes

Volume is a measure of supply and demand that is independent of price
Volume is usually light during the formation of the pattern and increases on a breakout from the pattern. For any pattern or trend line penetration, a breakout with increasing volume is more an indication that prices will continue in the direction of the breakout than a breakout on low volume.
Rising volume levels when price is falling after a major peak gives supporting evidence that there is an underlying weakness in the security & warns that falling prices may continue.
When price goes to a new high on increased volume, traders often compare volume with that which occurred during previous rallies in prices. If the current volume is less than the previous rally’s volume, there is a potential for a price trend reversal.

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Accumulation/Distribution (AD)

sigmalearning — Thu, 22 May 2008 18:39:52 +0000

Accumulation/Distribution (AD)

Accumulation Distribution is a price and volume indicator.
-    When the Accumulation/Distribution moves up, it shows that the security is being accumulated (Buying), as most of the volume is associated with upward price movement.
-    When the indicator moves down, it shows that the security is being distributed (Selling), as most of the volume is associated with downward price movement.
-    Divergences between the Accumulation/Distribution indicator and the price of the security indicate the upcoming change of prices.

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William’s Percent Range

sigmalearning — Thu, 22 May 2008 18:39:02 +0000

William’s Percent Range

It was developed by Larry Williams. This system attempts to measure overbought and oversold market conditions.
The %R always falls between a value of 100 and 0. There are two horizontal lines in the study which represent the 20% and 80% overbought and oversold levels.
Indicator values ranging between 80 and 100% indicate that the market is oversold.
Indicator values ranging between 0 and 20% indicate that the market is overbought.
But we have to take in consideration that overbought does not necessarily imply time to sell and oversold does not necessarily imply time to buy so, it’s very important that if an overbought/oversold indicator, such as Stochastic or Williams %R, shows an overbought level, the best action is to wait for the futures contract’s price to turn down before selling.
So, you sell when %R reaches 20% or lower (the market is overbought) and buy when it reaches 80% or higher (the market is oversold). However, as with all overbought/oversold indicators, it is wise to wait for the indicator price to change direction before initiating any trade.

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Stochastic Oscillator

sigmalearning — Thu, 22 May 2008 18:36:07 +0000

Stochastic Oscillator

George C. Lane developed the Stochastic Oscillator in the late 1950s.
It’s a technical indicator which compares a stock’s closing price to its price range over a given period of time. The belief is that in rising market stocks will close near their highs, while in a falling market they will close near their lows.
The Stochastic Oscillator contains four variables:

1)    %K Periods: This is the number of time periods used in the stochastic calculation.
2)    %K Slowing Periods: This value controls the internal smoothing of %K. A value of 1 is considered a fast stochastic while a value of 3 is considered a slow stochastic.
3)    %D Periods: This is the number of time periods used when calculating the moving average of %K.
4)    %D Method: The method (Exponential, Simple, Time Series, Triangular, Variable, or Weighted) used to calculate %D
Signals for buying & selling:
- The signals of buying given when oscillator (either %K or %D) falls below the line, and then again crosses the bottom level upwards or when the curve %K crosses the curve %D from below upward.
- The signals of selling when oscillator grows above the line, and then crosses the top level downwards or when the curve %K crosses a curve %D from top to downward.

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Relative strength Index

sigmalearning — Thu, 22 May 2008 17:10:55 +0000

Relative strength Index

Relative Strength Index (RSI) is a popular momentum oscillator developed by J. Welles Wilder.
The RSI indicator ranges in value from 0 to 100, with numbers above 70 indicating overbought conditions and fewer than 30 indicating oversold (Go long when RSI falls below the 30 level and rises back above it) or on a bullish divergence where the first trough is below 30.
If the RSI rises above 30, it is considered bullish, while if the RSI falls below 70, it is considered bearish (Go short when RSI rises above the 70 level and falls back below it
or on a bearish divergence where the first peak is above 70).

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Relative strength Index

sigmalearning — Thu, 22 May 2008 17:06:49 +0000

Relative strength Index

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Moving Average of Oscillator

sigmalearning — Thu, 22 May 2008 16:58:25 +0000

Moving Average of Oscillator

Moving Averages Oscillator displays the difference between the oscillator and the smoothing of oscillator.
In this case, the basic line of MACD is used as an oscillator, and the signal line of MACD is used for smoothing.
The signal for buying is given, when OSMA stops falling and begins growing.
The signal for sale is given, when OSMA ceases growing and begins falling.
The divergence of the price and OSMA is a good signal.

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Momentum

sigmalearning — Thu, 22 May 2008 16:50:10 +0000

Momentum

It measures the amount of change in commodity’s price during a period of time.
Momentum indicators presume that the current tendency will continue. So, if the indicator reaches the extremely high values and then turns downwards, the coming price increasing should be expected. But, in any case, one should not open/close position before the prices confirm the signal of the indicator.
Momentum line goes long when:
Momentum crosses to below the oversold level and then rises back above it; or on bullish divergences - where the first trough is below the oversold level.
Momentum line goes short when:
Momentum crosses to above the overbought level and then falls back below it; or on a bearish divergence with the first peak above the overbought level.

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