How to use the AROON indicator?

Disclaimer> This post is informational only. This post is not a trading or investment advice! Financial markets are inherently risky. Manage your position size carefully and honor your risk decisions which you and only you are responsible for!

The Fear & Greed indicators

The higher these indicators stand compared to their historical levels, the more fear there is in the market. VIX (market volatility). Put/Call ratio. Spread between 200-day index moving average and the index itself. Spread between number of stocks hitting fresh 52-week lows and number of stocks hitting fresh 52-week highs. Spread between yield of junk […]

Is technical analysis useful in cryptocurrency trading?

Human and trading behavior are the same no matter what the market in question is (government bonds, forex, stocks and the list goes on). The market participants, as well as the asset characteristics may differ, though. This is what gives every market a unique “personality”. Keeping that in mind, let’s contemplate whether technical analysis is […]

How NOT to use Fibonacci retracements

Do NOT apply Fibonacci retracements in a lower time frame without knowing what the trend in the higher time frame is. Instead, start with the bigger trend and draw the Fibonacci retracements in way that you benefit from the direction of the prevailing trend. The lower the time frame, the less meaningful the application of […]

Why embrace market volatility?

Volatility, no matter how measured, is connected to (what academics call) price risk. However, almost everybody agrees that the higher the risk, the higher the returns can be. Trend followers cannot make money in choppy, sideways markets, therefore they embrace volatility. Even buy-and-hold investors are given ample opportunities to enter depressed markets or exit profitable […]

The ATR as a stop-loss tool

Stop losses that factor-in market volatility are some of the best, especially when there is no clear support/resistance on the chart. Average True Range (ATR) comes into play here, as it is a very effective tool for setting up a stop-loss. In a nutshell, ATR is a measure of market volatility that incorporates gaps and […]

ATR as a position sizing tool

For a long entry: What is the trading account size? For example $100,000 How much are you willing to lose on this trade? For example, 1% of the trading account, i.e. $1,000. What is the ATR for this market? For example, $2.5. How many ATRs away from the purchase price do you want to put […]

The power of lower time frames

Use lower time frames to fine-tune your entries. For instance, if you trade in the direction of the daily trend, enter your long trades on the basis of signals provided by the 4-hourly or the hourly candlesticks. Take advantage of counter-trend moves by entering the market trend as soon as the corrective motion is coming […]