Like its name suggests, the Know Sure Thing Oscillator can reveal accurate information. With regard to swings in stocks’ cycle, it can determine both short-term and long-term trends. In the foreign exchange market, although most experienced traders are aware that there is no quick and easy route to success, they will agree that it’s a treat to have an indicator that is known to give you go signals in terms of entering or exiting a market.

About the Know Sure Thing Oscillator

The Know Sure Thing or KST Oscillator is an advanced momentum indicator developed by a respected investment advisor, Martin J. Pring. As a Rate of Change indicator, it shows the difference between the closing price two days ago and the closing price of the current day. Since it revolves around the concept that the interaction of different time cycles can determine price trends, it is useful in identifying major market cycles.

The Secret Formula Is All You Need

The KST Oscillator is influenced by closing prices, as well as daily Rates of Change. It follows the idea that Rates of Change have to be calculated, smoothed, and be multiplied by weights. Once these integral figures have been identified, they are added together to obtain the main result.

Step-by-step instructions:

1. Calculate four different figures for Rates of Change.

1. Rate of Change 1 = [closing price / closing price (day 1) – 1] X 100
2. Rate of Change 2 = [closing price / closing price (day 2) – 1] X 100
3. Rate of Change 3 = [closing price / closing price (day 3) – 1] X 100
4. Rate of Change 4 = [closing price / closing price (day 4) – 1] X 100

1. Set parameters.

MOV = moving average

AVG ^(1-4) = moving averages of days one to four

W ^(1-4) = weight of stocks during days one to four

1. Identify the KST using the main formula.

KST = MOV {(Rate of Change 1 X AVG 1) X [W 1 + MOV (Rate of Change 2 + AVG 2)] X [W 2 + MOV (Rate of Change 3 + AVG 3)] X [W 3 + MOV (Rate of Change 4 + AVG 4)] X W 4}

Getting Familiar with Entry & Exit Rules

When the KST Oscillator yields a figure that crosses below the 9-day exponential moving average, you can expect to enter at the next day or once a closing price for that day has already been determined. On the other hand, you are given a cue to exit the market once the indicator surmounts its 9-day exponential moving average.

Information gathered from http://en.wikipedia.org/wiki/KST_oscillator  ,  http://www.admiralmarkets.ae/education/knowledge-base/  and http://www.investopedia.com/terms/k/know-sure-thing-kst.asp

 

 

 

Have you ever heard of the term “Momo”? Other than associating it with a flavorful Tibetan delicacy, it’s a word that many traders are familiar with. In fact, when it comes to the foreign exchange market, these people, especially the experienced groups, beam with joy at the thought of it. So, what is it, really?

What’s a Forex Momo Play ?

Momo Play, introduced by famous forex analysts Boris Schlossberg and Kathy Lien, is the trading strategy that involves looking for a spike of momentum in (very) short charts and identifying the Breakeven Point or BEP. By using it, together with the Moving Average Convergence Divergence or MACD, traders will be hardly interested about anything else but short-term gains. Since it follows the concept that the market should be in the right condition prior to placing a trade, it’s an ideal tactic for both day traders and momentum traders.

5 Minutes Is All It Takes

Keeping in mind the fact that there are some traders who tend to abandon their positions after some time of not observing any movement in charts, the Momo Play requires execution of more or less 5 minutes. After identifying the Exponential Moving Average or EMA, trading can commence. Once the market is strong, you are presented a cue saying it’s a great time to enter. And, as soon as it shows signs of weakness, it’s recommended to construct a plan for your exit.

7 simple rules

For short-term trades:

1. Focus on a currency pair that has a positive MACD and is located above the 20-day EMA.
2. Monitor the price as it crosses below the 20-day EMA.
3. Go 10 pips below the 20-day EMA.
4. Initiate a trade.
   • For a conservative trade, position a stop above the 20-day EMA.
   • For an aggressive trade, position a stop at a swing high.
5. Gain back your entry position.
6. Reach the BEP by moving the stop to the 2^nd half.
7. Position the stop at the 20-day EMA with additional 15 pips.

For long-term trades:

1. Focus on a currency pair that has a negative MACD and is located below the 20-day EMA.
2. Monitor the price as it crosses above the 20-day EMA.
3. Go 10 pips above the 20-day EMA.
4. Initiate a trade.
   • For a conservative trade, position a stop below the 20-day EMA.
   • For an aggressive trade, position a stop at a swing low.
5. Sell half of your position at entry.
6. Reach the BEP by moving the stop to the 2^nd half.
7. Position the stop at the 20-day EMA with 15 pips less.

Better Luck Next Time

There’s no doubt that the Forex Momo Play is a powerful forex strategy. The downside is that there will be instances that its reliability becomes questionable. At times, it can capture wrong reversal moves. It is important to be prepared for that possibility. Thus, granted you’re willing to come up with ways to trade right the next time around, you’re likely bounce from a loss.

 

References: Some of the information have been taken from http://www.investopedia.com/terms/m/momoplay.asp and http://www.mtrading.eg/education/     

 

Like other traders, you may already know that when it comes to succeeding in the foreign exchange market, relying on a single strategy for determining high confidence Forex reversal zones isn’t a good idea. Even if an approach has worked wonders for you before, it doesn’t mean that you have to stick to it for a long time. Insisting on doing so may just result to you not wanting to be associated with forex – ever.

Here are 3 strategies you may consider:

1. Look out for price distributions. Since prices change regularly, you can be assured that there will be a reversal once you are familiar with the current figure. That, and you will know exactly where it fits in the market. As reference, you can rely on price charts in the past. Remember, though, not to search too far back. To identify price distribution, among the things you can do are measuring the position within the final price range and estimating the position of the current price. By using these, and other means, as well, you can move toward the objective, which is to determine the last figure’s location.
2. Observe Forex volatility levels. They follow a trend, which means they are likely to move up and down within a range. In most cases, when they are high, the premiums are high, too. Conversely, when they are low, the premiums are low, too. Since they can inform you when prices are set to decrease and increase, they can help you determine a reversal zone. Regardless of the technical analysis tool you are using, measuring volatility gives you a sign that prices are heading a certain direction. For instance, if the current volatility level is low, prices may reach that area at 4 PM.
3. Pay close attention to Elliot Waves. Since the relationship between a series of waves can be an instrument in identifying ranges, which are likely to result to the continuation of a larger trend, monitoring price movements based on how they fare well together can give you an advantage.

Additionally, by using Elliot Waves, you can also identify when a stop needs to be taken. Since they reveal a trend’s maturity, they can define the time to take a break from trading. Instead of continuing to watch out for a reversal, it provides you important information such as the point when prices are not known to retrace their pattern, and the price that is not expected to go up or down any farther.

 

References:

http://en.wikipedia.org/wiki/Elliott_wave_principle
http://www.mtrading.in/analytics/wave-analysis/