Technical Analysis Quiz 8

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Trend Following Indicators

1

Trading signals are given when

crosses the

line.

2

Fast moving averages are useful for

term trading, but yield many

.

3

Slow moving averages give fewer

signals, but the signals are '

'.

4

are useful in sorting out

signals.

5

Whether the moving average is

up or down defines the direction of the

and is an excellent

.

6

In the

moving average approach, a

moving average is used to replace price -- signals are more clear cut.

7

moving averages are used to produce a system with

modes -- long, short, and

.

8

With

moving averages, all

lines must be in

or short configurations to be in the market. When they are not, we do not trade.

9

Consider the following chart:
Three moving averages.png
Identify the action on each date:

open close long short
January 6
January 15
March 1
March 18

10

is a stop-and-reverse system.

11

It generates stop levels that

as a

develops.

12

Use it only in

markets.

13

is the larger part of

's range above or below

's range.

14

range is the difference between today's high and low, or yesterday's close and today's high or low if today's range is outside yesterday's range.

15

is average directional movement as a percentage of true range.

16

directional movement

is an average of the net directionality of movement, ie. how directional the market is on balance.

17

Go

when +DI crosses from below to to above -DI and go

when -DI crosses from below to above +DI. The best signals are when

turns up from below both lines.

18

Take profits when

turns down from above both lines.

19

Close

when +DI crosses from above to below -DI and close

when -DI crosses from above to below +DI.

20

Directional movement can be used to determine if a market is

.

21

As a trend

, use trend following indicators when ADX is above

.

22

Identify the colour of each line
Directional movement.png

black red green
+DI
-DI
ADX


Next quiz: Technical Analysis Quiz 9