| Charts
Overview
These charts are built from the quotes made by E*TRADE Spread Betting on its trading platform. This in effect means
that from the chart point of view any activity that
occurs outside of our trading times is deemed not
to have happened!
Most of the chart functionality is self explanatory
and you will find that you learn most about its possibilities
(and limitations) by practice.
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Open a chart
To open a chart in the desired market you merely
Left Click on the chart icon just after the
order button, this will open the default chart selection
in the desired market.
This default setting is currently a 10 minute chart
with no technical analysis attached.
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Drawing Lines
The line drawing function is simplicity itself .
To draw a new line simply Left Click
on  and
then Left Click on the start point of your
line on the chart and then Left Click again
on the end point of your desired line.
To draw a horizontal line merely Left click
on  then
Left click again on the chart and a horizontal
line from that point will appear.
To draw a parallel line to a line already
created Left Click on  then
Left Click on the line you want to copy and
then Left Click again at the point where you
want your new line to traverse.
To move an existing line Left Click
on  then
Left Click on the line you want to move and
then Left Click again at the point you wish
to move the line to.
To delete a line or lines Left Click on  then
Left click on the lines to be deleted
To create a retracement line array, Left Click
on  then
Left Click at the top of the range and then
Left Click at the bottom of the desired range.
An array of technical support levels will be created
these
retracement levels are set at 100%, 61.8%, 50%, 38.2%,
and 23.6% and give the exact price at which the price
is reached.
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Settings
Settings are your technical analysis tools.
Using these tools is again simplicity itself. Once
you click on the setting button a new box appears
giving you a series of indicators that can be applied
to our charts.
By filling in the various boxes your desired analysis
will immediately appear on the screen. These settings
can be saved as either an individual chart save (see
below) or the individual analytical tools can be saved
using the paintbrush icon  .
Once you have created the analytical tools required
you just Left Click on the paintbrush icon and then
click on delete/save. A new box will appear
add the name you want to give your analysis (for
example Analysis1) into the ‘Templates to be
saved or deleted’ section and then click on
‘Save’.
Whenever you now call up a new chart by clicking
on the paintbrush icon and then on Analysis1 these
settings will be applied to the chart.
Or of course you may not wish to save anything. Just
close the chart and everything is removed.
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Saving your Chart
To save a chart merely Left click on the file
icon in the bottom left hand corner of the chart.
E*TRADE Spread Betting servers will save any single chart
per market. The save button will save your
chart with all its lines and analysis BUT when
you click on the ‘chart icon’ again the
chart will recreate using the default ‘10 minute’
setting. To get to your exact chart you must change
the ‘period’ to your desired setting.
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Printing your Chart
Once you have created your chart you may wish to
print it off. Just click on the print icon, a print
preview page will appear and then you just print et
‘voila’ you ‘ave it.
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Description of Various Technical
Analysis available with the charts
Simple moving average (MA)
The unweighted mean of the previous n data points
in the time series. For example, a 10-day simple moving
average closing price is the mean of the previous
10 days' closing prices. The larger the value of n,
the greater the smoothing effect and the more the
MA line is displaced from the origianl data.
Exponential moving average (EMA)
An exponentially weighted mean of previous data points.
The parameter of an EWMA can be expressed as a proportional
percentage. For example, a 10% EMA has each time period
assigned a weight that is 90% of the weight assigned
to the next more recent time period.
Bollinger Bands
The Bollinger Bands are evelopes based on a moving
average and a standard deviation which makes the bands
widen or narrow relative to the current market volatility.
95% of price action will take place within the Bollinger
bands and thus the Bands act as strong areas of support
and resistance. It is possible at times like this
to successfully trade the price rising or falling
from one Bollinger line to the other.
When a trend begins and the volatility of the market
increases thus the spacing of the Bollinger Bands
will widen, as the trend slows down the Bollinger
bands will narrow.
Parabolic SAR
The Parabolic SAR is another indicator devised by
J. Welles Wilder, who also created the RSI and DMI
indictors. The Parabolic SAR - or 'Stop and Reversal'
as it is otherwise known, is generally used for setting
stops and following a trend in the market.
Wilder himeself recommended establishing that a trend
was in position first by use of other indicators such
as the ADX indicator and then using the Parabolic
SAR to trade in the direction of the trend. If the
trend was up, then buy when the indicator moved below
the price. If the trend was down, then sell when the
indicator moved above the price.
The SAR direction is always the same during a trend
and the trend stays in place while the SAR points
stay above or below the price. When the price penetrates
the SAR then a signal is given to exit the current
trade and possibly look for a position to take up
a new trade in the opposite direction.
The dotted line produced on a chart by the Parabolic
SAR can be used for setting a trailing stop on a trade.
At the beginning of a move there is always a greater
distance between the price and the SAR giving much
needed leeway, however this will narrow as the trend
continues therefore giving tighter stops as the price
moves in a favourable direction.
MACD
MACD measures the difference between two moving averages.
A positive MACD indicates that the 12-day EMA is trading
above the 26-day EMA. A negative MACD indicates that
the 12-day EMA is trading below the 26-day EMA. If
MACD is positive and rising, then the gap between
the 12-day EMA and the 26-day EMA is widening. This
indicates that the rate-of-change of the faster moving
average is higher than the rate-of-change for the
slower moving average. Positive momentum is increasing
and this would be considered bullish. If MACD is negative
and declining further, then the negative gap between
the faster moving average and the slower moving average
is expanding. Downward momentum is accelerating and
this would be considered bearish.
There are 3 common methods to interpret the MACD:
- Crossovers - When the MACD falls below the signal
line it is a signal to sell. Vice versa when the
MACD rises above the signal line.
- Divergence - When the security diverges from the
MACD it may signal the end of the current trend.
For instance, price may continue to make higher
highs while MACD makes lower highs. This is an example
of bearish, or negative divergence and a warning
that the up trend may soon be finished.
- Overbought/Oversold - When the MACD rises dramatically
(shorter moving average pulling away from longer
term moving average) it is a signal the security
is overbought and will soon return to normal levels.
RSI
RSI is an extremely useful, reliable indicator which
is a favourite of many traders.
In general terms the RSI is an overbought/oversold
indicator. In practice below 30 is considered being
an oversold indication and when the RSI crosses 30
to go up, this is a buy signal. At the other end of
the scale a value above 70 is considered overbought
and when the RSI crosses to go below this, it gives
a sell signal.
It should be noted that the RSI will form chart patternssimilar
to those found on the mainchart, such as a double
top, head and shoulders etc which may not show up
in the stock/indices price, but which will give and
an indication as to pending change ahead.
The RSI will also form support and resistance levels,
just like the main chart and it may also diverge from
the main chart direction indicating change. For example,
the stock/index may make a new high, but the RSI doesn't
- that's a bearish indicator. Conversely the stock/index
may make a drop to a new low but the RSI moves sideways
or upwards - that's a bullish indication. In these
cases the price will ususally follow the direction
the RSI has just shown.
Williams %R
One use of the Williams %R can be on trending days,
where the indicator can be used to establish entry
points into the trend.
It should be remembered that the Williams %R is just
and indicator and an overbought or oversold indication
on it does not necessarily mean that the price is
about to turn. It is better to wait for the price
to actually show a marked reversal and then using
the Williams %R as a confirmation of this.
Momentum
Refers to 'momentum' as the impetus, or increased
activity of an item - such as a stock or index. This
can be referred to as gaining momentum or losing momentum
Volatility
For this indicator, we must chose the period (the
last 10 days, for example). Then we calculate the
variation of every day during this period. Then we
calculate the napierian logarithm and the variation
on this data. By extrapolation, we obtain the historic
volatility in %.
Price Oscillator
The Price Oscillator is calculated by substracting
the short moving average by a lonf moving average.
In its percentage form, the result is divided by the
short moving average and multiplied by 100. The parameters
are the numbers of days of both moving averages.
Standard Deviation
The units of the standard deviation are the same
as the units of the original data making the standard
deviation a linear value. The standard deviation is
the square root of the variance. It is a measure of
dispersion, and often used as a volatility indication.
All Technical Data Retrieved from http://www.trade2win.com/traderpedia
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