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Diving into technical analysis with Invstr: Indicators

by | 5 Jun, 2018

Use technical analysis tools in the Invstr app to hone your investment skills

Technical analysis tools can help investors to make smarter decisions when buying and selling securities. In this blog we will get into the nitty gritty of each of the indicators we offer as part of our technical analysis features on the Invstr app and what role each of them plays.

If you want to find out more about our technical analysis features, read part 2, which covers trend lines. 

Moving Average Convergence Divergence Indicator: Moving Average Convergence Divergence Indicator (MACD) is used to identify changes in the strength, direction, momentum, or length of a trend for a stock price. MACD is computed by taking the difference between two exponential moving averages (EMAs) of closing prices. The difference is then charted over time with a moving average of the difference.

Relative Strength Index Indicator: Relative Strength Index Indicator (RSI) is a commonly used measure of market strength/weakness calculated on closing prices during a specified time period. It is based on the premise that prices close higher in strong market periods and lower in weak periods. RSI is the ratio of higher closes to lower closes. The range is 0 to 100.

Fast Stochastic Oscillator Indicator: Fast Stochastic Oscillator Indicator is a momentum financial indicator that displays the closing price relative to the high-low range over a given period of time. There are three types of Stochastic Oscillators: Fast, Slow, and Full. The Stochastic Oscillator is a momentum indicator that shows the relation of the current close price relative to the high/low range over a given time period using a scale of 0 to 100. It is based on the premise that prices will close near 100 in a rising market and closer to 0 in a declining market. The Fast Stochastic Oscillator Indicator is used to identify buying or selling divergences. The Slow Stochastic Oscillator uses a 3-day SMA and the Full Stochastic Oscillator is the Slow Stochastic Oscillator with time period customization.

Slow Stochastic Oscillator Indicator: Slow Stochastic Oscillator Indicator is a momentum financial indicator that displays the closing price relative to the high-low range over a given period of time. There are three types of Stochastic Oscillators: Fast, Slow, and Full. The Stochastic Oscillator is a momentum indicator that shows the relation of the current close price relative to the high/low range over a given time period using a scale of 0 to 100. It is based on the premise that prices will close near 100 in a rising market and closer to 0 in a declining market. The Fast Stochastic Oscillator Indicator is used to identify buying or selling divergences. The Slow Stochastic Oscillator uses a 3-day SMA and the Full Stochastic Oscillator is the Slow Stochastic Oscillator with time period customization.

Bollinger Band Overlay: Bollinger Band Overlay measures variation of price over time. Bollinger band consists of a moving average and two standard deviation volatility bands, placed above and below the moving average.

Median Price Indicator: Median Price Indicator represents the middle point between the high and low prices. Median is a measure of central tendency. The Median Price Indicator displays a chart of the median prices.

Absolute Volume Oscillator Indicator: Absolute Volume Oscillator Indicator is an indicator that is calculated by taking the difference between two average volume measures. It’s scores range from -100% to +100%. The indicator is used to identify whether volume trends are increasing or decreasing. The user can select the time period for analysis.

Accumulation Distribution Indicator: Accumulation Distribution Indicator evaluates the supply and demand of a stock, security, or index over time by looking at disparities in whether investors are selling or buying.

Average Directional Index Indicator: Average Directional Index Indicator is a financial indicator that measures the strength of trend. This indicator does not show if the trend is up or down.

Average True Range Indicator: Average True Range Indicator is a financial indicator that measures a security’s degree of price movement or volatility within a given period of time. The indicator is not a measure of price direction or duration, but simply the amount of price movement or volatility. The Average True Range (ATR) is frequently calculated with a 14 day period using several bases, including: daily, weekly or monthly. The Average True Range is the exponential moving average of the TR values for the last 14 periods. The actual period used can vary depending on user preference.

Typical Price Indicator: Typical Price Indicator represents the arithmetic average of the High, Low and Closing prices of a security for a given period of time.

Bollinger Band Width Indicator: Bollinger Band Width Indicator is a financial indicator used with the Bollinger Bands Overlay. Bollinger Band Width Indicator represents the width of the Bollinger bands at a given point. The more variation there is, the wider the band. Narrowing bandwidth (lower values) indicates decreases in standard deviation and widening bandwidth (higher values) indicates increasing standard deviation in price. The Bollinger Band Width Indicator supports a scaling factor like the BollingerBandsOverlay, so that their values can be matched.

Chaikin Oscillator Indicator: Chaikin Oscillator Indicator is used to identify trends in the accumulation/distribution indicator. The Chaikin Oscillator is the 10-day exponential moving average (EMA) of the accumulation/distribution indicator subtracted from the 3-day EMA of the accumulation/distribution indicator.

Chaikin Volatility Indicator: Chaikin Volatility Indicator is a financial indicator that reflects the volatility of a security by showing the percent change of the Exponential Moving Average of the difference in high and low prices during a specified period of time.

Commodity Channel Index Indicator: Commodity Channel Index Indicator is a financial indicator that is used to indentify cyclical trends in a security. The indicator is based on the assumption that securities prices change in cycles that can be identified. It is calculated by dividing difference of the Simple Moving Average of the Typical Price (SMATP) during a given time period with the previous period’s Typical Price (TP) by the product of the Constant and the Mean Absolute Deviation.

Detrended Price Oscillator: Indicator Detrended Price Oscillator Indicator is a financial indicator that was designed to control for long-term pricing trends in order to identify short-term trends. It is based on a displaced moving average and is not a momentum oscillator.

Ease Of Movement Indicator: Ease Of Movement Indicator is a financial indicator that is used to identify the volume needed to change the price of a security. It is usually smoothed with a moving average.

Force Index Indicator: Force Index Indicator is a price-and-volume oscillator that financial analysts use to determine if a stock’s trend is positive or negative. The force index is calculated by subtracting yesterday’s closing price from today’s closing price and multiplying the difference with the current day’s volume. If the closing price is higher today than yesterday, the force is positive. If the closing price is lower than yesterday’s, the force is negative.

Full Stochastic Oscillator Indicator: Full Stochastic Oscillator Indicator is a momentum financial indicator that displays the closing price relative to the high-low range over a given period of time. There are three types of Stochastic Oscillators: Fast, Slow, and Full. The Stochastic Oscillator is a momentum indicator that shows the relation of the current close price relative to the high/low range over a given time period using a scale of 0 to 100. It is based on the premise that prices will close near 100 in a rising market and closer to 0 in a declining market. The Fast Stochastic Oscillator Indicator is used to identify buying or selling divergences. The Slow Stochastic Oscillator uses a 3-day SMA and the Full Stochastic Oscillator is the Slow Stochastic Oscillator with time period customization.

Market Facilitation Index Indicator: Market Facilitation Index Indicator combines price and volume in analysis to measure efficiency. It is calculated by taking the difference between the low price and the high price and dividing it by the volume.

Mass Index Indicator: Mass Index Indicator is a financial indicator that is used for finding trend reversals. It is based on the premise that reversals are likely to happen when the price range widens. The calculation compares the previous trading ranges (highs minus lows). EMAs are used for this purpose. If there is substantial movement, the Mass Index Indicator increases, if there are small movements the Mass Index Indicator decreases.

Money Flow Index Indicator: Money Flow Index Indicator (MFI) is a momentum indicator and is similar to the Relative Strength Index (RSI The MFI is used as a measure of the money flowing in and out of a security and can be used to predict a trend reversal. MFI ranges from 0 and 100 and is interpreted like the RSI.

Negative Volume Index Indicator: Negative Volume Index Indicator is frequently used in combination with the Positive Volume Index Indicator. This calculation can be used to identify bull markets. These two indicators are based on the premise that smart money trades on low volume days and less informed or overly optimistic investors trade on high volume days.

Positive Volume Index Indicator: Positive Volume Index Indicator is used together with the Negative Volume Index, it can be used to identify bull markets. These two indicators are based on the premise that smart money trades on low volume days and less informed or overly optimistic investors trade on high volume days.

On Balance Volume Indicator: On Balance Volume Indicator (OBV) calculates a running total of sales volume for a stock and displays whether this volume is flowing in (purchasing) or out (selling) of a given stock. The total volume for a day is given a positive or negative value depending on whether the prices were higher or lower that day than the previous day. A higher closing price would yield a positive value and a lower closing price would result in a negative value. These values are accumulated into the running total.

Percentage Price Oscillator Indicator: Percentage Price Oscillator Indicator is an oscillating indicator that shows the difference between two moving averages. The difference is presented as a percentage of the larger moving average. The end user selects the time period for analysis.

Percentage Volume Oscillator Indicator: Percentage Volume Oscillator Indicator is the percentage difference between volume smoothed using a long period and a short period. The PVO Indicator hovers around zero. The user can select the various period values to analyze. PVO changes, when graphically displayed, can be useful for detecting patterns in volume. An increasing PVO indicates increases in volume levels and a declining PVO indicates declining volume levels.

Price Channel Overlay: Price Channel Overlay is made up of an upper and a lower price channels. The upper channel is the n-period high and the lower channel is the n-period low. This overlay is used to identify the start of an uptrend or a downtrend.

Price Volume Trend Indicator: Price Volume Trend Indicator is used to determine the balance between a stock’s supply and demand. The indicator shows the cumulative volume that adds or subtracts a multiple of the percentage change in the stock price and current volume.

Rate Of Change And Momentum Indicator: Rate Of Change And Momentum Indicator calculates the difference between one closing price and the closing price N days ago. Momentum is the absolute difference and usually refers to a price trend. When an upward trend continues the momentum and ROC indicators are positive. When a declining trend continues the momentum and ROC indicators are negative.

Standard Deviation Indicator: Standard Deviation Indicator is a financial indicator that statistically measures variation in stock prices or volatility. The difference between an individual security’s closing price and the average security closing price is called the dispersion. The larger the dispersion is the higher the standard deviation will be and therefore the volatility. The smaller the dispersion is (the difference between an individual closing price and the average price), the smaller the standard deviation and the lower the price volatility.

Stoch RSI Indicator: Stoch RSI Indicator is financial indicator that measures when a security is overbought or oversold within a specified period of time. The values range from 0 to 1. The StochRSI Indicator is calculated by applying the Stochastic Oscillator formula to Relative Strength Index Indicator (RSI) data.

TRIX Indicator: TRIX Indicator is a measure of momentum used to identify overbought or oversold securities. Like other oscillators, TRIX scores hover around zero. A positive value indicates an overbought security while a negative value indicates an oversold one. TRIX is calculated using a triple exponential smoothed moving average of the price over a specific period of time. A signal line is frequently used to indicate where a security’s price is likely to be in the future.

Ultimate Oscillator Indicator: Ultimate Oscillator Indicator is financial indicator that uses the weighted average from three different time periods in order to reduce the volatility and noise associated with other indicators that are based on single time periods. Since this is a range bound indicator, the scores are between 0 and 100.

Weighted Close Indicator: Weighted Close Indicator is a financial indicator that is similar to the Typical Price Indicator in that it represents an average of the high price, low price, and closing price for a day. However, with the Weighted Close Indicator, more emphasis is placed on the closing price and it is included twice when calculating the arithmetic average.

Williams Percent Rate Indicator: Williams Percent Rate Indicator is a momentum indicator that is similar to the Stochastic Oscillator. However, the scale ranges from 0 to -100. It is useful for identifying overbought and oversold securities. The Williams Percent Range Indicator is calculated by dividing the difference between the highest high for the period and the current close by the highest high minus the lowest low for the period.

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ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

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ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

 

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