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Hello and welcome to the Indicator Warehouse.
In today's video I am going to cover how DTS can help you
stay on the right side of the market and really maybe help
you stay out of the chop.
So let's go ahead and get started.
I'm going to start with the Eagle Trend Trader.
And I'm going to show a couple of examples of what you really
want to look for as far as how do you know that
you are in the chop.
This current chart that we're looking at right here is for
today May 16, 2012.
And we have got a great example right here of some
consolidation.
And, well, we've got some chop.
What's going to tell us to stay out of the chop?
One of the first signs that we're going to see is, is
we're going to see that you're going to get a lot of signals.
And they're going to be going in both directions.
Here we've got a short signal--
long signal, short signal, long signal, short signal.
Now the other thing that we need to consider is, is let's
look at our time of day.
Currently, what you're seeing right here started at about
11:15 Eastern Standard Time, and it did not end until about
12:45 Eastern Standard Time when it broke down right here.
What are we really looking for?
You're going to notice that as a trend starts to develop with
the Trend Trader, the band is going to be
getting wider and wider.
We're going to have a soft edge on the top.
We're going to have a hard edge on the bottom.
Ideally for a long trade if you want to be conservative,
you want the soft edge on the top.
You want the hard edge on the bottom.
Green filter and all your signals in place.
I also like to have my bar color matching my filter as
well as my signals.
So we see here the channel is widening up.
And we're looking good for maybe a long day.
Now we've got some examples of we've got short signals.
But do we really want to take the short trade
on the Trend Trader.
Remember, the Trend Trader is designed for bigger moves than
what we're going to get with the Falcon Swing Trader as
well as the Hawk Micro-Scalper.
So we're looking short here.
We're thinking short.
We've got nice red bars.
However, I'm not going to take any of these short trades, and
there's reasons that I'm not going to do it.
Number one, the time of day.
Number two, I've got my soft edge on top of my hard edge.
For a short trade, ideally I'm looking for the
soft edge to be below.
Now when you do get into the chop, you are going to notice
that the narrower this band gets, the
choppier it tends to be.
So we see that we're moving down, and we're starting to
maybe transition to the downside, which of course we
eventually do.
However, as a rule the skinnier this band gets, the
choppier it tends to be.
And for me and the way that I trade in the reality room, I'm
hands off when this thing gets skinny.
Taking these short trades out of a skinny band and a band
that is not transitioned to the downside is a definite no
no, and I pass on these.
So that is one way that the Eagle Trend Trader can tell us
that we are definitely in a choppy market.
Take a look at our filter as well-- red, green, red, green.
And eventually we go red.
However, remember, time of day, very thin band, it's not
expanding as well as multiple signals definitely helped me
realize wow, I'm in a slow, sloppy, choppy, market.
Another thing that we can take into consideration as far as
how do we know if we're in the chop is, how long does it take
to make a Renko Bar?
Now even though Renko was never created to be traded on
a timed basis if you will, I have found that the longer it
takes to make a bar more than likely, it's usually during a
choppy market.
So we can keep that in mind as well.
Now let's go ahead, and let's take a look at the Falcon
Swing Trader and see how it can help us
stay out of the chop.
Ideally for the Falcon Swing Trader, you will notice that
you're in the chop when it does a couple of things.
You're going to see red, green, red, green, red, green.
I mean, just back and forth crazy filter dots.
One of the things that stands out the most or what should
stand out the most is, what you're going to notice is
you're going to notice that when it traverses back and
forth across the Falcon Swing line line, as you see right
here when you see it traversing back and forth just
like that, you definitely know you're in the chop.
Another thing that tells us that were the chop, of course,
and just like the Eagle Trend Trader is all these signals.
We've got green, go long, red go short, green go long, red
go short, green go long, and then finally, red go short.
Now, is this a taker right here?
For me personally, no, because in my opinion, we're carrying
the flag out of all this mess right here that we were
subject to over the east coast lunch hour.
Also, we need to keep in mind that with the Falcon Swing
line that you're seeing right here, this is actually a
combination of three proprietary moving averages
that we've combined together.
And we've smoothed it out, and it is actually designed to
help show us when we are in some sort of trend.
And if we look very closely here, here you see we're
magenta, we're green, we're magenta, we're green.
And then we finally go magenta, and then we start to
stay at magenta.
But any time you see this line flatten out and price
traversing back and forth across this line, that may be
an indication that you are in the chop and that you might
want to sit on your hands.
And also, just like the Eagle Trend Trader, the bars
themselves can tell us if we are in a choppier environment.
If it's taking five, 10, 15 minutes to make one eight
range bar, that may be a sign that there's no market
participation, volume is low, and that things are slow.
And generally, in slower markets we're
going to see the chop.
I hope you found this video to be informative and that you
can see how DTS can really help keep us out of the chop
and how DTS definitely can help us with staying on the
right side of the market.
I hope you found this video to be informative.
If you have any questions whatsoever, please feel free
to contact us here at the Indicator
Warehouse at any time.
Thanks, and have a great day.