Stock Raider -- Because stock trading is not a game

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Because stock trading is not a game

Explanation of various indicators

Moving Averages:
Referred to as MA's. There are many books and many places on the web that explain MA's, and MA's are used for simple trading systems, such as MA cross-over schemes. Search the web and your books for more info.

Squeezed Moving Averages:
I got this idea from a discussion on the Worden.com web site: There are some formulas to make this into an indicator, and you'll see that indicator as a brownish line in all my pictures. I'm using a slightly modified function:

((ABS(XAVGC3-XAVGC8) + ABS(XAVGC5-XAVGC8) + ABS(XAVGC11-XAVGC8) + ABS(XAVGC13 - XAVGC8)) / XAVGC8) * 100

where XAVGC3, for instance, is the 3 day exponential moving average of price, and ABS is the math absolute function.

If this indicator is very low, it indicates the exponential 3MA, 5MA, 8MA, 11MA and 13MA are squeezed together, which predicts a decision point, usually the minor trend is changing direction. If this indicator is going higher, it means the current minor trend is gaining strength, don't enter any new trades, and hold on to your current trades. If the indicator is going down from a high, it's time to exit your trades.

Channel lines:
I use channel lines they way they are explained in Edwards and Magee "Technical Analysis of Stock Trends" book. At a minor top, you draw the top channel line between this minor top and the last minor top, and draw a parallel bottom channel line through the last minor bottom. The assumption is that the price will go down to touch the bottom channel line. Same at a minor bottom, draw the bottom channel line through the current bottom and previous minor bottom, and draw a parallel top channel line through the last minor top. The price will go up to touch the top channel line.

DMI / ADX and +DI and -DI:
Indicators developed by Wilder. They will tell you where the trend is going and how strong the trend is. If the +DI indicator (green in my charts) is above the -DI indicator (red in my charts), the trend is up, -DI above the +DI and the trend is down. The ADX indicator (light blue in my charts) will tell you the strength of the trend. These are great, but complex indicators, and well worth learning about. Search the web and books for more info. There is one book specially written about these indicators, the ADXcellence book, which I thought was an excellent book, but unfortunately it's very expensive, so try to borrow it from a friend to see if you like it.

Stochastics:
An oscillator that shows momentum, it swings between 0 and 100, and has a fast and a slow line. I look for the fast line crossing over the slow line where the lines are around 20 - 30 (best below 20) BUT ONLY when the price itself is making a new minor low and the trend is starting to go up or is already up. There's lots of information on the web and in book about stochastics.

MACD:
Another momentum oscillator derived from exponential MA's. I look for a rising MACD crossing the zero line, or turning around at the zero line. Look on the web or in books for MACD information.

Volume:
Use volume as an indication of the enthusiasm for the stock. Volume going down while price goes down is a sign that people are not selling, they think the stock will go up. Volume down, price up, there is no strong buying to support the move up, people think the stock will go down soon. Volume up, price down, people are heavily selling, they think the price will keep going down. Volume up, price up, everybody is buying, they think the price will go up more. Look at volume in relation to its MA, which tells you if lately, over the last so many days, volume has been up or down.