Session 7 4.17.22

 Indicators

how many indicators? 100s

Indicators are not always right, 

The time I had worked for someone for free, one of our projects was he said: I want you to find all indicators you can. Get a great list and we're gonna test them and see which ones are the best. How many you think I had on my list? 452. 

We got a list and made some software for it. Out of 452 indicators, there were 6 that were a lot better than the rest. They are the 6 that I'm going to give you now. That saves you years of time in figuring it out.

I'm going to explain the rules of how to use these indicators. For some of them I am going to explain the background, what they measure, what they stand for. I'm going to give you the rules for all of them.

If I taught them the rules of how to use an indicator can you then use it? yes. 

I'll give you the indicators, few I'll go into detail. For the rest of them, I will show you how to get the background on it yourself.

MOST COMMON USED INDICATORS?

Moving averages- most commonly used. 

What is it measuring? The average price over certain period of time. For example, if we had 

Exponential Moving Average- gives more importance to the most recent data. EMA is going to react quicker. Let me give you setting for more indicators. 

Settings for the indicators- they will be a box where you type a number. 

the setting for a moving average, I can put 10 or 2 for example. 

If you used the same indicator as me but you use a different setting you will get a totally different return.

We tested the best setting to use for the best indicator.

Not explain anything about them. 

MACD  5, 35,  if there is a third box type in 5. 

Volume (no setting for volume, its just volume) 

Stochastics [slow] settings are 20, 12, 9

Stochastics [fast ]  settings are 12, 3, 3

RSI 21, [1]

CCI 90

MOVING AVERAGES

[short/medium term] 10 MA, 20MA, [exp]

[long term] 50MA, 100MA [simple]

Moving Averages, (Trending)

you use on prices that are doing big move up and big prices doing moves down. 

Most traders

MA is just for trending. This is how we use it: The MA is (this is a 10 and 20 day MA) exactly how I gave you, when they cross going up its a buy signal. When they cross going down that's a buy signal. You just wait until they cross. 

Q: Could you set a stop for when they cross? No. (Auris thought: because no one knows when that will be) 

Let's do MACD in detail. First of all lets do a non investing example. I'll explain it in just a second, just a name of that indicator. I'm a captain in a big oil tank. I left harbor, get up to full speed. I turn this around to get my lunch. can I turn around quickly? No, because it has a lot of momentum in one direction. 

MACD is measuring acceleration or deceleration of the price. What happens is, prices will usually slow down first before they change direction. 

Settings: 

What these indicators are showing us, what they are measuring, they are measuring the distance between 2 moving averages. now, one of those is the 5 day moving average and one of these is the 35 day. (He draws same up and down line but one is slightly to the right of the other)

MACD is measuring the distance between these two lines.

Big MACD upwards means a big acceleration upwards in price. A big MACD downwards is a big acceleration in price. 

PRICE: (CURVED LINE GOING UP DRAWNING)

1) MACD. 

(Only look at MACD) the price is slowing down, getting ready to change direction. This is a sell signal. If the price was going down, 

If the price is going down, ONLY LOOK AT THE MACD DOWN. What its happening to the price: slowing down, this is a buy signal. 

If we didn't look at MACD, would we know that was about to happen? MACD is letting us know what's about to happen.

You need 3, 2 is not enough, you need 3 getting smaller. ALWAYS GETTING SMALLER.

3 GETTING SMALLER THERE, 3 GETTING SMALLER THERE (POINTS TO 2 DRAWINGS)

MOVING AVERAGE CONVERGENCE DIVERGENCE (they come together and get apart, the 2 moving averages) 

little STOP 743

2) RSI- this

q: why you need RSI

If you want several different things to confirm the same thing, to make sure you are right.

If RSI cross the line, it is a sell sign. 

3) CCI- Commodity channel index

convergence means a buy signal.

**missed some**

Stochastics (oscillating)

When its going up, its buy signal

When goes down, it's your sell signal

The lower down the page the stronger buy.

The higher up the page, the stronger sell. 

I gave two setting for Stochastics, slow and fast.

when we do all the testing, the prices would oscillate slowly or fast. So 

we needed 2 different settings. One of them would give you very good signals. 

I'm on fast Stochastics there, it gave good signals. 

if we are looking for an up trade, (we're trying to make money as the price goes up)

if price goes up, we want volume to go up (more activity, more interest).

If we are looking for an uptrade, if we are looking for a downtrade, if price went down, what would you want the volume to do? more volume, more activity, 

Last indicator in just a second. 

STORY: went out with some friend to Japan a few years ago. For many years, people had recommended if you like skying or snowboarding, to go to Japan. We did a week in Tokyo, tea ceremony and dress up in the gear. Then we went to the skying capital, got helicopter to drive us around the area. Dropping us off at the top of the mountains. Beautiful powdered snow. Highly recommend it.

One the last day, I broke my ribs. I thought wow that was lucky. Last day it was okay. With broken ribs, nothing you can do about it, just suffer for a while. 

Find quiz? Someone is going to win a million tomorrow. 

we're on question #2. We are now on question #6. 

2 UK coins total 30p. if one is not 10p what are the 2 coins?

15 and 15 

20, 10 

6 man 6 days to dig 6 holes. how long to take 1 man to dig half a hole?

I saw John, he invented this indicator. We sat together on laptop, we sat there in 4 hours. 

I said John, what is the best way to use this indicator? 

He said its this. 

Bollinger Bands (Squeeze). 

Notes: All the indicators, good idea on this stage, now. 

When all the indicators match, then you should take action.

What would be a good idea now? Main chart behavior, trade lines, chart patterns, indicators. 

Last bit is conclusion. Indicators is step 5. You find a trade, everything looks good.

Then you say, let me look at the indicators if they confirm. 

Goes in the back, hard to hear, its like he's whispering.

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Short term meeting and short term strategies. a few of these I will give