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What is the difference between an indicator and a strategy? Indicators, such as MACD and stochastic, are used in technical analysis to predict changes in price trends and patterns. The goal of using indicators is to define high probability trading setups. Indicators are mathematical calculations used to highlight what has already happened and what is currently happening to allow us to make an educated guess about what will happen next. For instance, a moving average crossover often predicts a change in price trend. In short, indicators help us determine areas of price that could be profitable entry and exit points... Continue reading
Posted Nov 6, 2009 at Traders' Library Blog
by Jean Folger // Jean Folger, co-founder of PowerZone Trading, is an experienced stock and futures trader. She is co-author of Make Money Trading: How to Build a Winning Trading Business. ***Most traders, whether greenhorns or an experienced fund managers, have ideas for trading indicators and/or strategies that they would like to test to determine how they would perform in the markets. Going through years of data and locating potential trading opportunities by hand is time consuming and, due to its tediousness and subjectivity, can yield flawed results. Developing these ideas into code can let our computers do the hard... Continue reading
Posted Oct 15, 2009 at Traders' Library Blog
by Jean Folger of Trailing stops are dynamic stop orders that follow price in an attempt to lock in profits, while allowing a position to capture additional profits during a price trend. A trailing stop will move up in a long trade to follow the rising market and will move down in a short trade to follow a falling market. The trailing stop can be based on a certain dollar amount: for example, a trailing stop can follow price and allow the trade to fall back $100 from its most profitable point before it is closed out. A trailing... Continue reading
Posted Sep 15, 2009 at Traders' Library Blog