Almost two years since my last post but I have kept trading actively when my brick and mortar job so permit
Anyway we’re still active and I want to share with you a set of market indicators I’ve developed as time went by.
So let’s start
The first thing I check every night is the economic calendar for the next day, when there is an important event scheduled for the day, like FED or FOMC news, if it’s scheduled for trading hours I try to avoid trading that day
At markets close I check the general volatility of the market, needless to say market volatility is not an indicator for swing trading, however when it is low my trades have more probability of being profitable
Market volatility is dependent of time, my volatility check is short term, like all market price related indicators volatility is lagging to the market, however for going long I prefer my volatility below 2% and if possible below its 21 day MA.
Here is a 5 months volatility chart for you to appreciate the changes in price as related to volatility
Next I want to check the volatility extremes, very low or very high it’s bound to change
And last I will check the volatility short term and momentum indicators
Now, let’s see how this work
We want the short term crossing below 0 for going long, preferable with the momentum below 0 also, but that is an ideal situation so we can take the short crossing alone looking at the others indicators
On april 28 the market closed 2.47% up and the short term volatility indicator crossed below 0, the volatility momentum was above 0
The extreme was very high signaling still turbulence
And the volatility percentage was an ugly 2.4% above the ma(21)
In this circumstance you don’t take the trade, next day the stop loss below the previous low is reached, it would be a losing trade
More coming……
Shalom
