In this video you’ll learn the best of any of the trend trading indicators I’ve ever used specifically for day trading. This is so reliable that I NEVER trade against it!
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Welcome to this video on Trend Trading Indicators.
Actually today I am going to show you one of the most effective and accurate ways to measure a trend that’s not really an indicator, but an index. Now what’s the difference? I get that a lot. So lot of times, like I did a webinar and a video on the tick index before and even after saying that it’s not an indicator, people still kept asking me to send them the indicator. Well it’s not an indicator, neither is this.
So when I say it’s an index, as opposed to an indicator, what I mean is you’re not going to find this in a list of Indicators on your charting platform. It is a, well it has a symbol. Similar to a stock. So here is the symbol. So you look it up a symbol and now you’ll have to ask your data provider, not necessarily your brokered firm or your software provider, unless they are all the same.
Whoever provides your data, they will have a unique symbol for this. And it may be the same as mine or might be different. I am using kinetic for my data providers. If you have kinetic, you can use that symbol right there. Otherwise you have to ask your data provider.
THIS IS AN INDEX, NOT AN INDICATOR
But basically what it is is it is a statistic that is measuring the Volume of shares of a security that are traded when the price is increasing, and then conversely when the volume of shares of a security that are trading when the price is decreasing, and measuring that difference.
There are several versions of this, this is one of the New York Stock Exchange. And they have others that will measure the NASDAQ, or the Dow or the S&P. You can get more specific if you want to. For example if you are trading the E-minis, you might want to look at the one that specifically measures for the S&P. If you are measuring or if you’re trading the MQs, the NASDAQ, the Qs, whatever, you may want to use the one for the NASDAQ.
This is one of the most powerful things that I’ve ever come across. This thing is amazing. It is really, really good. I really encourage you to at least experiment with this because this has helped my trading tremendously.
Okay, so here is how we use it. First of all, I like to add a 15 exponential moving average to it. You can try it with the moving averages. I don’t think there is any particular magic to which one you use. But I will just get a big picture.
#1 WAY TO TRADE THE TREND TRADING INDICATORS
Number 1: Unidirectional Days.
We get this maybe once or twice a week. So this is an especially helpful for day trading. Maybe once or twice a week we’ll get a market that pretty much moves generally in just one direction all day.
Here is literally the open of the day, and that’s the close of the day. And as you can see, right before the close, it goes all the way down there, and then we get a little pop up in last 30 minutes. But basically it’s a unidirectional day.
This is not a day where you’d want to be taking long trades. This is a day where you’d do much better if all you did was short the market. And that’s the only trade you took was shorting the market. I always have this chart up every single day and I’m looking at this thing, and if the net volume is staying below the 15 EMA all day long, I’m just taking shorts.
In fact, I’ll tell you what, there’s some days that you can just take a short at the beginning of the day, and as long as this thing continues going down, you can hold at least part of this position for the entire day. And just have a huge winning day. And let me tell you, one day like that out of a week, can make you a lot of money. Even if that’s all you traded. That can make you a truckload of money.
Now because of the gyrations and oscillations of the markets, you want to use money management, risk management obviously. But might want to still keep a contract or two on small part of your position for the entire day. And just rack up those huge wins. That’s the first way to use it.
#2 WAY TO TRADE THE TREND TRADING INDICATORS
Now the 2nd way to use Trend Trading Indicators is to take trend reversal trades. But here is the tricky part.
This index look is going down down down all the day. Now you’ll look at the say, E-minis. Maybe they’re actually going up, they start a little uptrend. And you look at this index and it’s still going down. Oh, that’s a beautiful trade. That is the perfect time to take a trend reversal trend back down, shorting it back in the direction of this. This is more of a broad stroke indication of what the market is doing.
Even when this is going down the E-minis can, actually be making higher highs and higher lows while this is still going down. So you look for those little uptrends occurring on the market and then take a trade reversal trade back in the direction of this index. And again those are fantastic trades.
Here’s an example of what I was just referring to where the net volume is up above the 15 EMA. Just along the whole way. However on the E-minis, we’ve got a lower low and another lower low. And so this looks like, ‘oh my gosh this is a downtrend. Looks bearish for the E-minis.’ But when you compare it with this, where the volume, the net volume is up. That means that this down move is probably going to be temporary.
Yeah you’ll get down moves, you will, you get moves against this. But there is more up volume or when price is increasing, there is more volume than when price is decreasing. You get still price increasing and decreasing, but which one has more volume behind it, So let’s follow the big volume. And not follow the small volume.Trade against the small volume traders. So this is one way to do that. And it works extremely well.
#3 WAY TO TRADE THE TREND TRADING INDICATORS
And here is the 3rd way to use Trend Trading Indicators. This is one way to help you stay out of choppy markets. So if you look at this, you’ll see that the net volume indicator, well index I am sorry. They all really stay above the 15 EMA or below the 15 EMA. And if you look at the angle of it, it’s not just straight up, or straight down like I had in the last 2 charts. It’s just pretty much consolidating here, and ah then we get a move up. But then it just comes back right down and consolidates.
That’s a day where there is no dominant volume to the upside or the downside. In other words of the market professionals, the big money hasn’t committed to bullish position or a bearish position and therefore most likely you are not getting any big follow-through to the upside or the downside. You can see that on the E-minis here too as well. So it follows just pretty much in a channel type of situation. There’s no big winners or losers to have here this day. They just aren’t existing because the market doesn’t provide that for you. So that’s the 3rd use of this and it’s how to stay out of choppy markets.
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