As Good As It Gets
TREND AND MOMENTUM TUTORIAL
Trend Direction and Momentum (Price Action) are two important factors for your success.
TREND AND MOMENTUM TUTORIAL
Trend Direction and Momentum (Price Action) are two important factors for your success.
The Trend of the Market is the tendency (Stock, ETF, etc.) to move in a particular direction over time (short, intermediate and/or long term). We have several indicators to help show trend, direction and momentum.
MOMENTUM measures the rate of the rise/fall of stock prices in real time.
Today, I want to talk about using REGULAR CANDLES verses HEIKIN ASHI CANDLES for both DIRECTION and MOMENTUM.
Here are two charts: an AAPL Day Dual Chart and then two MSFT Day Charts, which after viewing we will discuss.
Here is the AAPL:
First, I want you to look at Dual Charts of AAPL. Both of the charts are Day Charts. First study the left chart (it is using REGULAR CANDLES, which most traders use).
Now look at the Right Chart (it is using HEIKIN ASHI CANDLES) and my question is this: If trading AAPL on a loner term basis which chart would you prefer to use.
Now look at two Day Charts for MSFT
So, let’s talk about what we see. Heikin Ashi Candles are Japanese inspired, which average price data using Red/Green bars.
Direction and Momentum are Green/Red Candles growing, or shrinking in length.
The Green candles which you saw on both charts on the right side were Heikin Ashi having flat bottoms and growing in length with each candle closing higher than the day before. Note you will frequently see a wick on top of a Green Candle showing direction being traveled. We know that candles usually last 6-10 days in all time frames. When they begin to shrink (or have traveled 6-10 days) look for an impending change in direction and a slowing in momentum.
Red candles work the same, except in reverse.
On the AAPL Day Chart, there was a change to Long on 10/9 that lasted for at least four days for at least a 9 point change. Which chart was easiest to follow and would that have been a good trade?
Notice on MSFT that an uptrend began on 10/10 and lasted for 5 Days before momentum began to slow for a change of approximately 33 points. How would that have been for a nice profit? Then on 9/23 it changed direction and momentum again (short) for 11 days and another 23 points. Which candles were the easiest to trade or follow?
This works with Heikin Ashi Candles on all time frames and works wonderfully if you’re using a chart like my AGAIG Visual Options Trading Chart for ThinkOrSwim
https://usethinkscript.com/threads/agaig-visual-options-trading-chart-for-thinkorswim.19840/
or my AGAIG Swing Trading With Heikin Ashi for ThinkOrSwim
https://usethinkscript.com/threads/agaig-swing-trading-with-heikin-ashi-for-thinkorswim.19699/
or any of my AGAIG Charts!
My charts add indicators which help add value to Heikin Ashi and when two or more other indicators are in agreement you are looking to add dollars to your account.
I hope this Tutor Session was of some value for you, and also hope it helps improve your trading acumen and success!
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