Volume – Volume represents the number of shares or individual contracts traded during a given period of time. This indicator can be used to measure a movement’s worth. Changes in volume can be used to analyze liquidity and determine best execution fills.
Rate of Change (ROC) – Rate of change represents the difference between the current price and the price of the default period you selected. The difference is displayed as a line between -30 and +30 points. If the ROC is high, the more likely it is overbought. If the ROC is low, the more likely it is oversold. You may alter the rate of change between 2-200 periods by sliding the tab on the scale. The suggested default period is 12.
Williams %R – Williams %R is an adaptation of Stochastics. This study can be used to measure overbought and oversold conditions. The default setting for this study is 14 periods, however you can choose a period ranging between 1 and 50. If the Williams %R line is in the -20 and above range, it could be considered overbought and if the line falls below the -80 marker, it could be consider oversold.
Fast and Slow Stochastics – This study measures the relative position of a closing price within a given time interval. This is based around the premise that prices tend to close near the upper portion of a trading range during uptrends and near the lower portion of a trading range during downtrends. When prices close in the middle of the range, this suggests a sideways market.
There are two components to this calculation, the %K value and the %D value. The %K is calculated as follows: %K = [(C-Ln)/(Hn-Ln)]*100 where C = closing price of current period, Ln = lowest low during n time periods, Hn = highest high during n time periods and n=number of periods.
The %D value is the moving average of the %K value.
These formulas produce two lines that oscillate between a scale of 0 and 100. As with other oscillators, a stochastic value below 30% suggests an oversold condition, while a value greater than 70% suggests an overbought condition.
Mathematically, fast and slow stochastics are nearly the same, except the slow stochastic’s %K is created by taking a three-period average of the fast stochastic’s %K. After the first moving average is applied to the fast stochastic’s %K, an additional three-period moving average is then applied, resulting in the slow stochastic’s %D. The %K of the slow stochastic is the same as the %D on the fast stochastic.
Moving Average Convergence/Divergence (MACD) – Trend following momentum indicator that shows the relationship between two moving averages of price. The standard setting for slow, fast, and signal periods are set to 26, 12, and 9 respectively. However, you can change these period settings by sliding the tab on the scale.
There are three common methods to dissecting the MACD:
Divergences can tell you that there may be an end to a trend. A bearish diverse occurs when the MACD is making new lows, while prices fail to reach new lows. A bullish divergence occurs when the MACD is making new highs, while prices fail to reach new highs.
The MACD can also help identify overbought/oversold conditions. When the shorter moving average moves quickly away from the longer moving average, it may signify that the security is overextending and will retrace back to normal levels.
Crossovers can also signify when to enter or exit a market. When the MACD falls below its signal line, it may be time to sell. A buy signal may occur when the MACD rises above its signal line.
Relative Strength Index (RSI) – Relative strength index measures the price of a security against its past performance in order to determine its internal strength. The default setting for RSI is 14 periods, however you can set this for any period from 2 to 50.
One method of dissecting the RSI is to look for a divergence in which the security is making a new high, but the RSI line fails to surpass its previous high. This occurrence could suggest a reversal.
RSI = 100 – [100/(1+RS)] where RS= average gain / average loss.
Momentum – This oscillator is used to determine trend direction. When the price action causes the line to rise above the “0 Line”, this signals a positive trend direction. When the price action causes the line to fall below the “0 Line”, this signals a negative trend direction.
Commodity Channel Index (CCI) – The Commodity Channel Index is an oscillator intended to signal cyclical overbought/oversold trends for commodities. However, this study has been adapted to include stocks as well. This study takes the current price, the moving average for the price, and the deviation between to plot a line under the chart. The creator suggested that a buy situation occurs when the CCI line moves above +100 and then is sold off when it falls back to +100. A sell situation would occur when the CCI line moves below the -100 and then the position is covered when the line returns back to -100. The creator of the CCI suggested that the default period be set at 1/3 of the cyclical period. For example – if there is a low reached every 99 days, then the period should be set at 33.
Average True Range (ATR) – Average True Range is a measurement of volatility. Originally built for the commodity markets, this indicator can be used for equities as well. This study takes the absolute value of highs and lows for a given amount of periods and plots them on a line under the chart. The default for this study is 14 periods. Violent price moments (extreme volatility) could be present when the ATR line is plotted on high levels. Mild price movements (small trading ranges) could be present when the ATR line is plotted on low levels.
Average Directional Index (ADX) – Average Directional Index can determine trend strength regardless of the market direction. This non-directional oscillator is based on a range of 1 to 100 (although movements over 60 are rare). If the line is under the 20 mark, the trend is considered to be weak. If the line is above the 40 mark, the trend is considered to be strong. The ADX line is built on the results of two separate technical indicators, the +DI (force of up-moves) and the –DI (force of the down-moves). The default for this study is 14 periods which takes into the consideration the measurements of the +DI and –DI for the last 14 periods.
On-Balance Volume (OBV) – On-Balance Volume is a momentum detecting indicator that measures the positive/negative flow of volume. This study is based on the premise that volume precedes price, and that you can follow the “smart money” shares into and out of the market. An upwards sloping OBV line can suggest an uptrend, while a downward sloping OBV line can suggest a downtrend.