stochastic momentum index This is a topic that many people are looking for. newyorkcityvoices.org is a channel providing useful information about learning, life, digital marketing and online courses …. it will help you have an overview and solid multi-faceted knowledge . Today, newyorkcityvoices.org would like to introduce to you Stochastic Momentum Index Indicator for Safe Trade Entries. Following along are instructions in the video below:
“I m going to show you the stochastic momentum indicator and how it can help help you get into trades and went to exit trades. These are two of the that i find people have the most problems with and today. I m going to help you with both of them with one indicator. Having said that never use this by itself use it with other things now demonstrate some of that forth with you right now alright.
So first of all let s open up the indicator. So you can see the parameters that i use here. So it s called smi or stochastic momentum indicator now i use lengths. That are different than are going to be the default in your indicator.
So when you open it up this is what i use 15 for d and 6 for k. I like those you can fool around and play with other inputs. If you want to upper and lower hose horizontal lines. 40.
And negative 40. That is traditional and then it draws two lines your smi. I m going to use green for that and the average of the smi and we will use red for that okay so that s it now let s see how to trade it so if you go up here as i said you don t want to trade this by itself. So here s one of the rules and top dog trading.
We have it s called the rule of three we ve gone. We ve approached this price level three times and failed to break through it so the rule of three says that after the third attempt. If the market does not break through a price level. Then it s unlikely to break through anytime.
We would be happy to take the trade in the opposite direction. That we feel that is going to be final resistance at least for the near future. But we need to have some sort of confirmation of that and that s how i use smi use it really as a confirming indicator. So since we ve got this now.
I ve got something to confirm that and that here is the the green line goes below the red line again green lines. The smi red line is its average and this is going down going down momentum. Often leads price by the way that s one of the well known characteristics of momentum. And so we get a come from of trend.
Change here and we could even take a first cycle hi after the cross of the moving averages here by the way. This is the 50 period simple moving average and then the black one is the 15 exponential moving average for your reference and oh by the way you will need something that helps time your entries. Obviously so this is kind of a big broad stroke indicator it s not really for precision accurate timing if you want my timing indicator. I m happy to share that with you just subscribe to my channel click the little red button below for subscribe and then shoot me a quick email bury out top dog training calm and i ll give you access to that for free.
But for today s lesson. Let s continue on so what we re doing is we are confirming the direction of the new trend now down with this indicator. Saying that yes the direction is down. But you know it is also going down with some velocity with some speed with some strengths and that s the only time we want to trade in the direction of the trend is when it s a strong trend.
This indicates that a strong trend. So i like to primarily use this to confirm the direction that i m trading in now here s another example that i want to share with you because this is another sign that you need to be aware of that s when the two lines just kind of hover over each other then that means. There s no momentum. There s no strength and so that s a good time to just keep your powder dry not take any trades at all you can see what happens here and you know it s interesting because the market does pop up here.
But it doesn t sustain to the upside. Does it looks like maybe we re getting a trend started..
But there s no strength behind it and therefore guess what it doesn t continue and it actually comes down. So. This is a second signal to look for when the lines are on top of each other best to just stay out of the market and one last piece of advice on how this thing works. When you get trends move up.
And then they just go sideways for a while see how long it s going sideways. Well. When the market goes sideways for a. While the trend is still up isn t it.
It s up its up its up the 50 ma. Is still up that s the green line. We do put in a 5 wave trend. The average trend.
But in between each one of our waves or wave high is 1 3. In 5. What happens you get a sideways movement for quite a while well that means that the acceleration. The velocity.
The strength has come out of the market. So the indicator will show you that and so the green line will not stay above the red line during those times. Don t expect it to same thing happens here we just go sideways for a bit until we pop up there so in these situations. What you do is you just have to wait for the green line to come back above the red line.
Sometimes they come in a little early like this one sometimes comes in a little bit later like this one. And you know you can obviously adjust the settings..
If you make them faster than the ones. I have you ll get quicker crosses. But you always get some false cross that s like an might cross here so that s just the nature of the beast. But anyway.
The indicator is not doing anything wrong indicators are never wrong by the way they re just simply mathematical formulas so they are doing the right thing you put some values in one side pops. A different value out the other side. It s always correct based on the math of the indicator. But understanding how it works and why this happens is very important so that you ll say oh well this thing isn t measuring the momentum of the trend.
No it actually is momentum has come out of the trend during this time. And it s indicating that accurately so during these long complex retraces. Don t expect the green line to stay above the red line or whatever colors you put to it it s not supposed to it s actually telling you something that s useful. It s telling you something that s actually quite useful so there you go i like to show all these different examples.
So that you don t think oh. My gosh. This is the holy grail. There is no hole lene grail.
The only holy grail that there is is not one indicator or one praise powder for anyone anything the holy grail to trading is really between your ears. That s the holy grail. Getting your head straight. Getting your head together getting attitude right developing patience and of course having a successful trading methodology.
Which has a number of variables to it not only indicators. But especially risk management money management..
That has a positive expectancy over a large sample of data. That s what trading is really about putting those two things together. So if you like this video. Please understand.
It s not really free. I mean sure you can watch it for free. But if you got value from it you actually have a moral obligation to pay it forward so go ahead and click the share button below and share it on social media. It actually feels good to click that button.
I m serious it really does click it you ll find out it s going to feel good in addition if you re watching this i need to please click the thumbs up icon below and leave a comment that really encourages me to do more free tutorials for you i m also giving away one of my favorite trade strategies. While the rubberband trade has a very high win loss ratio. It s very simple you can learn in about twenty six short minutes. Happy to give you that video explaining the trade strategy.
Absolutely free by just clicking on the image in the top left corner or if you re on a mobile device click on the little eye with a circle around it in the top right corner of this video. And if you re not watching on youtube. Then there s probably a link below or in opt in form on the side once you do that i ll personally email. The video to you with the rubberband trade strategy.
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