The Commodity Channel Index, is a technical indicator which was developed by Donald Lambert and first featured in Commodities magazine during 1980. The Commodity Channel Index or CCI for short, is a very versatile indicator that can be used to both identify a new trend or warn a trader of extreme trading conditions. The CCI was originally developed in order to identify cyclical turns in commodities, but it was soon realized that the indicator could be applied to a far broader range of securi...
MoreIntroducing Simple and Exponential Moving Averages
Moving averages are used to smooth price data in order to create a trend following technical indicator. Moving averages are not used to predict price movement, but are instead used to help confirm the current trend direction. Moving averages lag due to the fact the indicator is based on past prices. In despite of this lag moving averages are deemed useful as they both help smooth price action and filter out market noise. Moving averages also play an important role in the construction of a n...
MoreIntroducing the Williams Percent Range (%R)
Developed by successful commodity trader Larry R. Williams, the Williams Percentage range or %R is a technical indicator which is the inverse of the fast Stochastic Oscillator. The Williams Percentage range measures the current close in relation to the highest high of the selected period. This is to be contrasted with the standard Stochastic oscillator which gives a gauge of the current close in relation to the lowest low of the selected period. This means that the fast Stochastic oscillator...
MoreIntroducing Gann Angles
W.D. GannWilliam Delbert Gann (1878-1955), built a reputation as one of the most successful stock and commodities traders of his era. He has also gained a legendary status with many being impressed not only by Gann's legendary trading abilities, but also with his spectacular record when it came to making financial market forecasts. Gann started trading Stocks in 1902 before moving to New York in 1908 where he promptly opened up his own brokerage firm. However his early t...
MoreIntroducing Stochastic Oscillators
In mathematics the term stochastic signifies any process involving a randomly determined sequences of observations, each of which is considered a sample of one element from a probability distribution. However, in the world of technical trading the term is used describe an indicator which compares the most recent close with the highest high and lowest low over a predetermined period of time.The Stochastic Oscillator was developed by the late George C. Lane, who developed the indicator dur...
MoreIntroducing the Relative Strength Index (RSI)
The Relative Strength Index was introduced to the wider trading community in 1978 by J. Welles Wilder. Wilder first published information regarding the Relative Strength Index in the June edition of Commodities magazine before going onto cover the indicator in more detail in his 1978 book, New Concepts In Technical Trading. The Relative Strength Index is an oscillator designed to track the momentum of price movement. The oscillator fluctuates between a 0-100 range, with the Ind...
MoreIntroducing Elliot Waves
R. N. Elliot Ralph Nelson Elliot (1871-1948), the creator of Elliot Waves had a successful career as financial consultant to a number of railroad companies. A sector which was undergoing a resurgence during his early professional career, considered an expert in business planning Elliot's services were in high demand. Which led to the US government sending Elliot to Nicaragua as an economic consultant where he was in part responsible for reorganizing the country's finances. I...
MoreCriticisms of Technical Analysis
Technical Analysis is used by many trading the financial markets with some making trading decisions based solely on technical analysis. While the value of technical analysis is accepted by much of the wider trading community, there is a group of ardent critics who are very skeptical of technical analysis. In this post I want ...An Introduction to Bollinger Bands
Bollinger Bands are technical indicator developed by John Bollinger during the 1980's and most thoroughly explained in his 2001 book 'Bollinger on Bollinger Bands'. Bollinger bands are volatility indicator similar and can be used to measure the 'highness' or 'lowness' of an instruments price relative to previous closes.This particular indicator involves overlying three bands (lines) on top of either bar or candlestick chart. The central line or band can be either a simple moving...
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