Discover 5 Game-Changing Trading Indicators for Any Market Condition

0:05 Welcome everybody. We are here for another webinar. Thank you so much for coming on in. Um, welcome everybody in the chat. I see you DJ 2 AM glass half full. Thanks for making it in. Appreciate y'all. We are getting started in just a sec here. So this week as people filter in, we are going to be just talking about what we're going to talk about. So, um, the past six weeks we've been going over a pretty intensive comprehensive trading course about, you know, everything from the fundamentals and a little bit of everything you need to kind of just, you know, get a get a complete trading system that you can just learn, repeat, and, uh, progress with and hone. Um, so now I want to talk about probably my favorite part of trading, which is all

0:52 the nerdy technical stuff. So, I'm going to be starting another series and you know, we'll do a few here, few here, few there, but we'll be building a series of uh indicators um and how to use them, what they're uh what they're most optimal for, trading strategies with them, and so on. So, this week we're doing um oscillator indicators, which are a very important category of indicators, and we will talk about that, why they're so important, why they give you information that other indicators just don't give you, and how you can use them in combination with a lot of the systems we've already learned. and just, you know, technical analysis fundamentals to really really um, you know, juice those trades, get the best win, uh, best hit rates for these, you know, because often uh, somebody's just trading off of an oscillator won't do too well. So, we're going to be definitely talking about how to combine

1:38 them. So, getting into this, let's hop right on over. There we go. So, oscillator indicators, that's what we're talking about today. We're going to be talking about how to understand just the basics. We're going to be going into specifics of the RSI and learning momentum analysis with it. We're going to be talking about MACD, a lot of people's favorites. Um, looking for signals there for trend confirmations and for reversals. And we're also going to be talking about the stochastic oscillator as well, which doesn't get quite as much love, but I think it's pretty useful as well. So, uh, this is going to be used more for precise entry and exit timings. Um, and then we're going to just develop some

2:24 practical trading strategies overall using these and talk about some common mistakes which people kind of encounter. Um, if anybody watched our stream on Tuesday, Michael NS, our esteemed co-host, uh, made some very good points that I will be touching on as well. And that'll that'll be in the common mistakes. So, I'm glad that he mentioned it and we're going to bring it all together for any of the regular watchers of that stream, too. So, let's jump right on in. What are oscillator indicators? So, the key characteristics of an oscillator indicator is that it is uh bound with specific ranges. So, you'll often see these 20 to 80 kind of ranges on things like RSI or MACD, stuff like that. And it basically oscillates

3:11 around zero around the mean. and it is used to identify overbought or oversold positions or conditions. So, um the signal potential um the signal is often sorry it often triggers potential uh reversal points. It often signals for them and we'll be going over uh spy charts, Q's charts today and we can also take some take some charts from the crowds to go over as well. But we'll be identifying how this week we did get a few warnings and uh these oscillators were a great a great uh canary in the coal mine so to speak. So um yeah these work best in ranging markets because like Michael NS very very uh importantly mentioned things can stay overbought or oversold for a very long time. And so if

3:57 this is a ranging market, then we're trading, you know, up and down in a range. And that'll be a lot easier to identify that top, that topping action into the top of the range. Whereas if we're not in a ranging market, we're breaking out of a range, then that RSI can just stay overbought as price rips higher. So, uh, Michael actually noted that you do a lot better trading only overbought conditions long and only oversold conditions short than than vice versa than trying to fade these. So, uh, I just I'm just getting this um out there right off the bat that these are not a holy grail. What they are is very useful for when you're able to apply them in the right circumstances. So, uh, very important there. That's what an oscillator indicator is. And why do they matter? Let's just talk about that a

4:43 little bit more. So price alone, it really doesn't tell the whole story. What we're looking for is divergences between price and underlying indicators which could dictate where price may go. So essentially, we're looking for uh mismatches where price is not uh has not caught up to other indicators yet, so to speak. So for example, the uh the RSI signal to crossover, I'm sorry, the MACD signaled to crossover, I believe, on Wednesday morning. So, Wednesday morning was essentially the top and we didn't really see that price action start to confirm until yesterday and today. So, um like I said, price alone doesn't tell the whole story. And again, that's why I'm really big on secondary indicators, specifically volume, but I use

5:29 oscillators every day as well. So, um yeah, we just can't infer the whole picture just from price candles. we need the confluence with other indicators showing momentum like these oscillators as well as volume to show the kind of uh strength of any given given move on a chart. So uh momentum often changes before price like we mentioned with spy it started uh peaking in momentum about Wednesday and then price then started nose diving um and it can really help time entries and exits more precisely. So, for example, if you were long a bunch of spy and your system is to, you know, basically trim when it gets too overbought and is starting to lose that overbought territory, which is essentially what we got, then this would have been a great indicator for you to get out of the way and avoid these couple red days and wait for a proper

6:17 re-entry. So, um, that's what an oscillator indicator is. And I just want to talk about the power of momentum here. So the power of momentum. I mean momentum is like the most important aspect of the market that I feel like doesn't get talked about enough. Like obviously people talk about it but it's like the core principle I guess if that makes sense. So uh momentum is what coils a chart. So the momentum is going up but the chart is lagging and coiling and then the chart explodes up. So that's why watching this momentum can lead to basically frontr running moves. Um in general bulls and bears, they're always fighting for control, right? It's a big power dynamic. And uh momentum

7:04 shifts can reveal which narrative is kind of winning out overall because there's always going to be fluctuations. There's always going to be red candles and uptrends and green candles and downtrends. But the overall momentum can be tracked with these indicators and can help kind of uh um separate that signal from the noise of choppy price action. So, um early warning, it's also an early warning system for trend changes. Like I said, that Wednesday trigger, I I didn't sell everything. You know, it would have been nice, but you know, it um it was a good sign to be on alert essentially. So, that's what we're going to be kind of uh prepping here. And sure, it's kind of a bummer we just missed this signal on the daily on the upside, but what we can do is talk about multiple time frames and

7:50 how we can use these same principles to catch the dip when it does finally uh start to turn around. Hopefully sooner rather than later. Um, personally, I think we have a a green Monday or Tuesday before probably another push down. But the important thing is that it doesn't matter what I think because when the indicators show that it's time to get back in, I'll be ready to get back in. Um, moving on, the advantages of an oscillator um, compared to other indicators are that they normalize price data for kind of easy comparison. So, it's just, um, price always tra trades in a range, right? But it's a lot clearer to see when the range is strictly horizontal. It's trading between, you know, 20 and 80 RSI or whatever. It's a lot easier to

8:37 kind of um identify that visual visually with an RSI I found or an oscillator indicator. So um they also provide some clear buy and sell zones too. You can do TA on your RSI uh chart line for example and you can see some really interesting patterns like double bottoms or you know just levels holding levels um acting as resistance multiple times. Um, so you know, you you get a lot more information than a lot of people kind of realize with these charts and it's just important to kind of start noticing what little hints they give you and start kind of working that into your overall um your overall directional bias on any given day. So, um, what else? They work across all time frames. uh certain ones work better for certain strategies in certain time

9:23 frames and we'll talk about that a little more later. But in general, these are all pretty universal indicators. Uh for example, I have an RSI on my chart, whether it's a one minute chart or a weekly chart. You know, it doesn't matter to me because there's going to be something worth gleaning from that. So um they complement other trend following indicators really well because they are giving you a different aspect of the underlying um influences on price than say uh moving averages for example. But combined they give multiple multiple reasons why a stock may respect respond or respect a certain level. And that confluence is where we get the real uh the real gains where we move from 50 to

10:08 60% win rates to 70 to 80% win rates. And that really is obviously a massive massive game changer there if you're able to kind of stack these up and use them to kind of uh you know turbo boost your trading because really that's that's a big big uh bottleneck I'd say for traders. They don't realize that either they have too many indicators that are telling them the same thing or they don't have they're missing like a crucial kind of um flavor of indicator, let's call it, you know. So these momentum ones, these oscillators, I think I feel like really help round out a good trading setup. So for me, I always have RSI, I always have volume profile, obviously always have volume, always have my moving averages, and that's kind of all I need. Ballinger

10:55 bands, too. But uh yeah uh the oscillators they give me something different than all other aspects of that trading setup. So they're always on my screen for that reason. So in market conditions of range like I said these will work the best and when they are ranging you can use these as uh confluential signals for a sell right you can play the range. Okay, we're too high like on Wednesday. You could say, "All right, if I think that we're not just in straight expansion mode," which I'm not sure, you know, I'm not saying go go go out and short the market. Um, what I what I am saying is that if that was the top, we're probably going to test a low, not a major low, but you know, some some level of support below. And that was a um a valid uh indicator. I I didn't give it too much

11:41 weight myself because we're breaking out into all-time high territories and in general just, you know, crossing over on a MACD, for example, on Wednesday. It was it that's not all I need, you know, when everything else is working. So, um I thought we were in straight expansion mode still. The jury the jury's uh still out on that. But um if we were then you know we we we just got to basically wait until we know whether it is a ranging or a trending market before we start to give too much credit to an overbought or oversold signal if that makes sense. Um so um in strong trends you got to really change what you're doing with these. uh you should be really looking for certain key levels

12:28 uh to hold on the oscillator and to it for it to build kind of constructively like a normal chart. And what you should be looking for is um smaller like on maybe an hourly time frame or a 4 hour time frame pullbacks uh and reversals on those oscillators to buy to catch that trend up, you know, and just basically give yourself a little cushion catching a small downswing and a bigger up uptrend. So hopefully that's what we're seeing this week and we can put in a nice bottom next week and start to move back on up and be constructive again. Uh but we'll be watching those moving averages and we'll be watching these uh these momentum indicators for uh increased trend, right? Because they did tip bearish on like the daily briefly. So, you know, we'll see if that can hold

13:13 or not. So, uh like all like all setups and strategies and indicators, they're most effective with proper risk management. But I would say more so than others just because if you are wrong fading momentum you can just get your face ripped off for an extended period of time. Right? So um if you were like I don't know SMR OKLO maybe a year ago 6 months ago when they were at alltime highs then you you might uh you might say oh these are overbought. I'm going to short these with no stop. you know, and then here we are now. They're like twice as high and they've just been overbought the whole time because people love them. But they did give underbought signals to buy on like maybe an hourly or a 4 hourly chart within that period. So, uh yeah, always have stops is the

14:00 moral of that story. But let's let's move on into uh into the RSI in detail here. So, RSI was developed in 1978 by Jay Wells Wilder Jr. And um it is basically just a measure of the speed and change of price movements. So it oscillates between that 100 and the zero just like all of these oscillators. That's what they do. They be oscillating. And uh the default setting is 14 periods. So um for all of these indicators, I'm just using the defaults. Uh, I think that fiddling with parameters you don't fully understand often can just be not a good use of your time or energy. So stick with the basics. A big thing

14:47 about these is um they are to some degree largely influenced by psychology, right? So if everybody well let's talk about moving averages to explain it, but if everybody has the same moving average on their screen, price is going to bounce there. So, if everybody's using the default settings, that's going to be more responsive in general than your own homebrewed custom custom lengths and all that. So, uh before we keep going, I'm just going to real quick go over the comments just because I I don't have my second second screen set up here today, so I don't want to miss anything good. Hey, Tech, good to see you in here. Good to see you Eduardo, Tyler. Oh, the gang's all here. I love it. Oh, mom's back. Awesome. Um, yeah, RSI above 80 is probably a sell

15:35 sign on the 4 hour in general. Yeah, definitely. I'm definitely like that puts me in the mindset of like, okay, now I'm looking short. If I get a confluential signal of, you know, rejection of a key high time frame moving average or you know, you know, whatever it may be. Um, that will really help build confluence for a for a trade. Um, glass half full asking, "What platform do you use? Do you have stochcastic momentum index? You use that every day. Awesome. So, I use Trading View right now. Um, so I'm sure I have access to this. I'll have to check it out. I just uh I don't even use the stochastic every day. I'm an RSI guy. I I find I don't need multiple multiple uh oscillators. Uh maybe that's just a lack of experience on my part and I could be gleaning more from the difference. And we will talk about some of the differences and how

16:21 you can stack these confluences between the two. But we'll also be talking about how I think it can be a little bit of a red herring to feel like you have a stack of confluences when really you have three momentum indicators telling you the same thing. So just something to keep in mind there. But yeah, I use Trading View and uh we'll we'll have charts that we go through in a bit and you can see all my indicators and we can talk about them as well. So uh DJ2, I see you, brother. Uh, let's let's talk about this in the question and answer section so I can get more into it though. Mom's saying, "I don't know how these guys found indicators without computers. Did they just draw charts by hand?" They did. It's wild, right? I don't know. I don't know. Uh, I guess somebody was just staying up late at night crunching the numbers on uh, you know, the the

17:08 hand the manual RSI there. That's that's dedication. Okay, awesome. Just catching up here. Appreciate you guys. Uh, what are the fewest number of indicators that should be a minimum? Like, um, I mean, some amazing traders I know don't use a single indicator other than volume. I I admire that. And sometimes when I feel like I have too many false signals, I'll just strip back down to the basics there. For me, I think volume essential. Basic moving averages pretty darn essential. I think Ballinger bands are essential. I'm going to say RSI is essential, too. One of each. One of each. fast trades use Ballinger bands and volume profile. Absolutely. Yeah. No, I'm totally with you. I mean, you know me talk. I'm a huge volume profile guy. That's a massive, massive part of my

17:54 trading system. So, um, getting back into it. Sorry, I just wanted to catch up with all you lovely people. I appreciate the feedback and all that. So, moving on. Moving on into RSI trading signals. So overbought and oversold is generally considered over 70 or under 30 in general. Like mom mentioned, I like the 8020 handles. I like you got to give me a real good deal if I'm going to fade a trend, right? So, that's where I'll really start looking for confirmation because you can get some really juicy moves to the downside and have pretty minimal risk to the upside or, you know, for the trade going against you because you can put a stop over the high of the candle where it uh on a 4 hour or daily had that crossover and those those hold

18:39 pretty well. I I should back test them. I actually don't have the numbers on hand, but just off the off the top of my head, it feels like they work 60 70% of the time at least. I don't know. I don't know. But uh what I do know is that in general you need more than just the over 70 under 30. So uh wait for RSI to exit these zones before trading. Remember we're trying to catch the bulk of a range with these if we're fading them. So we just want to make sure that we have a solid bottom in and we're pushing off of that. So, uh, it's it's I I think it's probably a toxic trade of mine to want to wait for that 8020 to be completely honest because I should probably be waiting for the 70 or 30 to get lost and then reclaimed. And I I think that just talking it out with

19:25 myself. I'm probably discovering a bad habit of mine in these. So, that's good for me. Um, RSI in general though, yeah, uh, just really good to have on your charts. Always keep it pretty easily accessible. I'd say you want to look for divergences as well. So, a bullish divergence in RSI would look like price making a lower low and RSI making lower lows. Sorry, hold on a sec. Let me make sure I got the right. Did I skip something? I'm going crazy. Anyways, um okay, I think I just misspoke. Yeah, price makes high lower lows and RSI makes higher lows, showing that the relative strength is trying to kind of pull the stock up. Um a bearish divergence would look like price making higher highs and RSI making lower lows showing that the relative strength is

20:12 actually weaker and wants to drive down. So um in general you're just going to be looking for uh you can even look at it just like over the center line like over 50 is bullish, under 50 is bearish. Um so nothing too advanced here. So, you're going to be finding a lot of similarities in all of the uh actual technicals of these oscillators. Another reason why I think you don't necessarily need to have a bunch on your screen, but I wanted to talk about uh the uh how how you would trade a reversal strategy with these. And remember, these are going to be risky without stops. Always use stops. And remember, just being overbought is not a reason to short. So, uh first off, you want to identify that the RSI is overbought. So 70 or over or oversold,

20:58 you know, 30 or under, and you wait for RSI to reverse and cross back through that threshold level there. So 7030, maybe you're a little more aggressive and do the 8020, but you know, like I said, I this is good talking out for myself. I just told you guys if everybody has it on your on their screen, it's probably a good thing to uh to keep an eye on as well. So let let's say 70 and 30. Um so wait for the RSI to reverse and cross back through the threshold level and then confirm with price action. So that'll be candlestick patterns. Um you know reclaiming or sorry losing a resistance or reclaiming a support something like that. Maybe a moving average or a cluster of moving averages. Something that tangibly says okay price wants to kind of catch up and play ball or you know revert to mean and play ball back up to that VWAP so to

21:47 speak or that MACD 50% line or RSI in this case. Um, so for entry rules here, the RSI is going to rise above 30 after being oversold and you're going to have that bullish price confirmation that we talked about if you're going to want to try to long an oversold position or an oversold chart. And on the other side, you are going to be uh essentially if RSI falls below 70 after being overbought and then you get that confirmation bearish, you're going to obviously go short. So, uh, management is super key on these, like I said. So, the stop loss should be bel, uh, basically beyond the recent swing high or low. That's pretty standard. And I I like to also just I like to see it stay below the candle where it flipped um,

22:34 you know, where where where it kind of broke that uh, what do you call it? The the level of interest, you know, that 70 handle on the RSI. So uh risk-reward ratio is uh you always want to target 2 to1 for these because you know you're not going to be right all the time. You are fading a trend. You know ideally you are identifying that trend being reversed. But hey you know there's always uh plenty of instances where the buyers just step back in full force and uh if you don't protect yourself you're going to be in danger and if you don't look for trades where there is a decent trade you know to be made then obviously it's not going to work out in the long run. So yeah, minimum 1 to2 riskreward and let's get on into MACD's. And I'm actually going to get my water a little early this week. Sorry guys, I'm

23:22 going hard in the paint. Be right back. [Music]

24:44 All right, boys. We are back. MACD moving average convergence divergence. That is what it stands for. So, it was created by Gerald Gerald Apple in the 1970s. combines trend following and momentum oscillating features. So, it's a little bit um more uh diverse than uh than just RSI. Um and it shows the relationship between two moving averages essentially. So, uh this is why you'll hear people talk about crossovers a lot. It's a very key aspect of a MACD strategy. So, the components of the MACD itself, you have the MACD line, which is a 12 period EMA minus a 26 period EMA. And then the signal line is the nine period EMA of the MACD line.

25:31 So that sounds a little hard to kind of grasp, but it is basically just showing two two moving averages, a shorter term one and a more stable trend uh setting one. Right? So when you have a crossover of the short term over the trend setting longerterm moving average then you're basically saying that short-term price action has flipped bullish compared to the longer look back period of the uh the MACD line itself as opposed to the signal line which is that shorter one that we're talking about. So uh the histogram is uh it's like the MACD line minus the signal line essentially. So, we're going to show all these in the charts in just a sec, but I want to go through them first and then we can go into actual examples. Um, the visual

26:17 elements here are that you know the oscillator or it is an oscillator so it oscillates above and below the uh zero line and the histogram shows the momentum strength and then the signal line crossovers are what generate the actual trade signals that we take off of this. So, those actual trade signals look like this. Um you have the MACD crossover obviously bullish over the uh when the signal crosses over the uh we'll call it the baseline the the baseline or the longer time frame and then you also have zero line crossovers too which are when they uh the MACD or the signal remember crosses above the zero right above that that you know median or sorry the mean the uh middle

27:02 of the of the range. So bearish obviously on the other side of that if it crosses below zero. And so uh again none of these are you know put put the farm on any one position because you got one one signal but you know you you use these you're like a detective building a case right? So this is all this is all evidence. So you have the divergences when uh price and MACD move in opposite directions and that often will signal trend weakness or a reversal. So look look for look for some change in the tape when you see those divergences for sure. Uh just in general when you see divergences start kind of honing in a little deeper and just just keeping keeping your uh your head on a swivel for potential uh reversals. Um so the

27:50 histogram analysis uh is going to be essentially if it is growing that momentum is increasing and shrinking the momentum momentum is decreasing. Pretty straightforward stuff. So, how we would use these in a strategy looks like this. We would use the MACD on maybe a daily or a 4 hour chart. I really like these for swing trading. I feel like they're very comfortable time periods and they give you just about all you need for framing a trade. And then you can go into the hourly or 15 minute or whatever to uh really pinpoint your entry. But uh yeah, I like the 4 hour or the daily. I think the MACD uh signals are pretty strong on these time frames. And then you combine this with, you know, just basic trend analysis on higher time frames, which is always a huge part of any any good system, right? We can't focus on any one time frame. We got to zoom out and kind of build our

28:37 confluence and our directional bias through the time frames. So when you have that uh when you've done that trend analysis and you have a uh overall direction and then you pinpoint a reversal towards that overall direction using the 4 hour or the daily then you can get a really really nice move off these. So the entry rules are going to be looking like something like this. The MACD line crosses above the signal line. Uh both lines are should be above zero I would say unless you're really kind of like trying to bottom bottom pick something. Um histogram is starting to turn positive and then the price is above a key moving average as well. So that's where the multiple confluences come in, right? So we can't just have uh the signal trigger line. can't uh just

29:24 have both lines over zero and we can't just have the histogram starting to turn positive either because they need to be backed up by either maybe a big volume spike that gets us back over a key moving average or you know something something that actually is meaningful maybe a prior higher low that had a lot of volume come in on the daily chart something like that. So yeah these are areas of interest to watch and you should always mark those out on your charts. So uh for short positions same thing in reverse you know the line crosses below both lines should be below zero the histogram should be going negative and price should be below a key level. So the exit strategy for these is when the opposite MACD crosses over. And this is nice because it gives you like predetermined profit targets you know and you can uh you can just trail your

30:09 stops basically you know off of the recent swings that it's reclaimed on the way up. So, nothing too revolutionary here, but these are just really really good. Uh, you should have one of these on your screen because just catching a divergence, it's so much easier on one of these indicators than it is just I mean obviously without them. Can't catch a divergence if you're not looking at something to diverge from something else. Uh, so yeah, really good stuff there. And the last one I want to talk about is stochastic oscillator. So this was developed it by George Lane in 1950s and it compares closing price to the price range over a specific period. So um the same kind of look back thing there and it's just comparing the closing price as opposed to the MACD comparing two different ranges and the difference between them. So the assumption with the stochastic

30:55 oscillator is that prices will close near highs and uptrends and near lows and downtrends. And before we get into the nitty-gritty, just going to check the comments again. Uh Pier, yes, we are going to go through some examples. I'm just uh getting through the bulk of it and then I'll focus on the charts there and I can take any questions you have on the charts and we can work through the examples in person there. Um see what else we got. RNA mentioning that Apple is under 30 RSI. We'll definitely take a look at that chart. Mom dropping some wisdom on us. Appreciate you. Let's see. I like using divergence when RSI is curling down or curling up after a trend reversal.

31:40 Usually, you get multiple bull bear divergences on RSI before trend reversal. Awesome. Okay, I'm going to work that in to my uh to my systems here. Let me All right. All right. I think I got it. I like it. Cool. Let's see. Good morning. Welcome in, Pauline. Thanks to Thanks for uh for joining. And your Let's see. My lovely face is covering some of the slides. Oh, no. That's a problem. Let's fix that. I got so caught up in the uh the front-loaded nice things that I didn't even realize I made a mistake. So, let me fix that for you guys. Sorry about

32:26 that. How about this? That works. All right, we're in the arena. We're trying things. Okie do. Just going back on through here. Appreciate that, Tyler. Yeah, I think that was a good one. A good one. I I'm a big Ballinger band and Kelner guy. That's a system that I use probably in my top like three or four, you know, kind of playbooks. So, yeah. Uh, if you guys like this stuff, you'll love that. Uh, highly recommend checking that out. Appreciate the shout out. And mom saying there's a divergence indicator in Trading View. Okay, interesting. I'll have to check that out. I'm just old school. I don't like like uh I don't

33:11 like like green and red arrows popping up on my charts, you know? I like I like to find it myself, but no, those those can be really good. I'll check it out. Okay, going on through here. Yeah, talk making it philosophical. Figuring out when stocks will revert to the mean has always been one of life's questions. I I will add life's big questions for me. Yeah, it's u it's really interesting. I mean, everything reverts to mean eventually, right? So, it's uh the the amount of time it takes to revert to mean, I don't know why I'm saying this, is a sign of how strong it is. What what a useless thing to say. Okay, sorry. It's been a long week, guys. Let's get back into it here. Um, making sure I didn't miss anything.

33:57 Tyler asking, "What time frame do you use the Ballinger and Kelner setup on?" All time frames. Um, but what I really like to look for is I like to look for weekly Ballinger band squeezes. So, charts that are in uh Ballinger band uh Kelner squeezes. So, the Ballinger band is under the Kelner on a weekly time frame. And then what I look for is for the daily Ballinger to break out and kind of break back over the Kelner. So then you get the nice squeeze on the daily time frame and that should push up on the weekly and if you if you catch it perfectly then you catch the actual weekly Ballinger band breakout of the Kelner channel and that's when you get really really explosive trends. So, uh, yeah. Yeah, definitely start with the weekly, look for the daily, and then just keep on honing in and burrowing in

34:42 until you find your, you know, your your key level that aligns with something, you know, a small low time frame pullback, and then that's where you can get the real snipes. Yeah. Yeah. Uh, DJ2 mentioning uh we we talked about this in a coaching session that in general, start with one. You don't really there are some things you can glean from multiples but I found that a lot of people will psych themselves into believing they have a confluent a confluential long signal when in reality they just have a single long signal and you know so um yeah personally I use RSI MACD is great too um start with one if you like it add another see if that gets you more information but in general I'm just a

35:27 big less is more kind of guy uh you you wouldn't believe it looking at my charts some days but uh in general I find that works well. So, uh, yeah, Tyler saying he likes RSI more than MACD. Me, me, too. I think RSI is just so simple. It's just very clean. It tells me what I need to know. You know, I don't get too caught up in false signals from it. So, I like it. But let's talk about stochcastics here. Whoops. So, uh, the actual technical details of the stochastic is that essentially it has two lines. The, we'll call it the K line, the fast, and the Dline slow. So the K line, the fast line is raw stochcastic value and then the D line is so this is just price and then this is a trailing look back period a three period moving average. So it's ve a very short period, right? So we're catching shorter term divergences. So

36:13 this will probably be the first one that gives you a signal before RSI and MACD. So uh default settings 1433. Don't worry about it. Don't change it. Don't mess with it. But just adding it there in case anybody does want to mess with it. Um, but yeah, key levels for this one above 80 overbought, below 20 oversold. I mean, you could say 17 and 32. I I guess on my stochastic it had these. I'm actually not sure why it's 80 and 20 on these and 1730. So, that's something for me to do some homework on. But, in general, those are the key levels. And this is how you are going to look to trade them. The trading signals are going to be uh if it's overbought, it's going to be above 80. and you'll be looking for selling opportunities. If it's oversold below 20, looking for buying opportunities and remember like

36:59 all these more reliable in a ranging market. So, uh the signal types are a bullish fast or K line crossing above the slower look back D line and bearish is when the K crosses below the D. So essentially bullish is when price is moving up faster than uh it was in the previous three look back period average. So it's starting to get a little boost from a short look back period just starting to turn up essentially. Um so uh in terms of divergences so it can help you find the hidden strength and weaknesses and trends and uh price versus a stochcastic direction could be conflicting as well. And that's another uh divergence you can

37:46 look for as well. So, if the stochcastic's telling you that we're going to be curling up here, but price hasn't done it yet, maybe this is just giving you a good entry. Or maybe maybe it's a false stochcastic signal and you need to wait for that confirmation. Uh but either way, just just something to keep an eye on. Remember, whenever you see divergences, just just make a note of it either on your chart or in your journal or just mentally at the very least. But uh yeah, divergences are well worth uh talking about and I think we'll probably do a full episode on those in the future. Uh I think they definitely deserve it. So um sastic reversal strategies would look something like this. You would need to identify clear support and resistance levels on the shorter time frames like one or four hours for day trading or if you're doing a swing trade, you know, maybe four hours probably a day or a weekly chart

38:31 um for you know more position trading or just investing. Um, and you combine this with trend direction on a daily chart as always. You know me, got to have the uh multiple multiple time frames in my favor if I take a trade because otherwise you're just fighting fighting against the current, so to speak, right? I I always want to be in the same lane as the big boys and I ideally also the short-term traders, but if there aren't if there isn't big money just passively pushing a stock up, I probably don't want to be long it. So, uh, the buy signal trade process will look like this. On a stochcastic setup, we'll be waiting for stochcastics to enter, uh, the oversold territory. Then, we're going to be looking for that K, the fast line to cross above the D while both are still over 20. So, that's a really important part. They both still

39:17 need to be I'm sorry, I said over, I meant below. They know they both still need to be below 20 because you're looking for that really uh the big push up there essentially. Um, so you confirm this with bullish price action at the support level that we mentioned and then you enter when the stochastic rises above 20. So that's why it's important that they're below 20 here because we're looking for the setup to confirm when it rises above. So uh, sell signals here look like this. Uh, you're going to wait for the stochastic to enter overbought territory. You're going to look for the same cross that we looked for to the upside previously to the downside. And then same same confirmation. I could have probably combined these screens uh slides, but always good to cover your bases, I suppose. So, um, talking about combinations here, let's talk about

40:04 combining oscillators. So, you know, I've I've talked about confluence a lot already. I should have probably waited till now, so I'll just I'll just touch on it briefly. But, you know, it really is one of the most important things that I can tell you guys that you you just really got to work on um building those confluences and combining things to help stack the cards in your favor. So, it reduces false signals and it increases your confidence in a trade. You'll be less likely to mentally stop out of a position before you should because you're uneasy because you have multiple things in your corner supporting your decision. And so, that'll that provides the confidence and your stop provides the uh overconfidence barrier, you know, and between the two, you're setting yourself up for success. You're not going to take uh take profit too soon. You're not not going to stop out before it's time to stop out. And most importantly uh just you know the

40:50 multiple confirmation layers will increase your win rate and overall just make you money. What else can you want right? So um let's talk about some effective combinations. Uh we will talk about multiple oscillators briefly here. Uh so you could do RSI plus MACD and you could for example use RSI for the overbought oversold levels and then MACD for the trend direction momentum. And when they both align and you get that crossover signal on the MACD and everything's looking fine on the RSI, you know, then you can then you can start to consider that a confluent a confluence. That being said, you know, there's still a lot of factors that will influence both RSI and MACD that won't influence other indicators nearly as much. So that is where you can fall into the trap of false confirmation

41:36 bias where you think you have a confluence of signal bullish signals but really you mostly just have one. So um the MACD plus stochastic is another one you can look for. So the MACD for more of an overall trend bias and then you can use the stochcastic for that precise entry that we mentioned because like I said it's a really short look back window and you're just comparing what price is doing now to what it was doing just a little bit ago you know so you get that really really clean uh turn when when it does occur you know it'll be very clean on this uh on this indicator a very clean signal I should say um so yeah uh this is a good setup for for swing trading you get a nice kind of combination of a good tight entry and an overall all uh you know directional bias. Uh what I'm more of a fan of though is combining these oscillators with other key levels. Uh

42:22 usually support or resistance levels, but also uh you know uh moving averages or ju just anything that I think is a relevant level of support or resistance. Sorry, I'm a little uh repeating myself here today, but uh I I think the information is pretty solid. So um when the oscillator shows oversold conditions um while price approaches that major level then you get that really high probability setup that we're talking about um and the confluence is essentially going to be a combination of like pure technical stuff but also like the momentum is what we're really getting from the oscillators. So, I don't know. I always associate uh oscillators with like vibes traders. Like, it feels like vi vibes traders are really good at picking up on what

43:08 oscillators actually quantify. So, I don't know if that's um of any value, but it is something I've noticed. Um, so it can give a it can give a a nice little extra bit of um of overt confirmation to maybe subconscious trends that that these people may be picking up on. So, um, the last one just, you know me, I'm a volume trader, so volume spikes plus oscillators. That's a really nice setup for me. I love to see a volume spike accompanying that oversold RSI or um, you know, if I if I can add a MACD bullish crossover, that's always great, too. But in general, like a big volume spike, we're oversold on RSI and price can't post a big red candle. Like that is something

43:54 I'm majorly bullish on. So, um I I'll take that setup every single time. You know, wait for the uh you know, that volume to confirm and then just just take the trade, put a stop under that volume spike, and it's I I feel like I hit three out of four of these, you know, roughly something like that. So, this is like a very very breadandbut setup for me. I'm a big fan of this. And uh yeah, going on to mistakes. Don't have to trade every signal. It's very easy to trade every signal and chop yourself out. So remember, that's why we're waiting for the confluences to stack. And we're also especially waiting for the higher time frame, you know, to to set up and then we take the setup that the higher time frame setup gives on a smaller time frame if that makes sense. So um really is a quality over a

44:40 quantity approach here. You do not need to take a lot of trades to do very well. A lot of the best traders I know, they trade half as much as I do. You know, I'm like, I'm working way too hard. I'm not working smart enough. They're working smarter. So, uh, yeah, always strive to be like that. Less trades, better trades. And, uh, yeah. Uh, number two, I'd say is just ignoring that market context. This is a very common mistake for a lot of different setups, uh, or indicators, all that kind of stuff, just because it's so important. uh everything is dependent on the context in which it exists in. Um which is essentially just a lot of words to say that it matters what the market is doing. It affects your setup. I don't care if it's a one minute setup. Like it's really important to kind of have an

45:26 overall feel of what the market's doing. And if you know, if we're way into euphoria like we were last week, that is something to keep an eye on, but it's not a signal. Right now, that euphoria is starting to fade. People are still very bullish, but now we're starting to get some technical signs that maybe this this uh pullback does have some more legs. So, um you know, where was I? Um I don't know, but always consider the bigger picture. Uh yeah, it really is that simple. Um you got to have risk management, especially with these kinds of trades where you're doing reversals and you're trying to catch a big trend. If you are wrong, you will be catastrophically wrong. This is like shorting Nvidia at,

46:11 I don't know, 70, 100 bucks and now it's double that, right? So do not go down with a sinking ship or a, you know, mooning rocket, I guess. Um it's important to know when you're wrong. It's important to have a hard stop over that, you know, that previous swing high that you thought was the top. Uh, and then here's the thing. So, say price makes a high like it did on Wednesday or, you know, this week. We got the oscillator showing uh, you know, that happened or that was going to happen. It did follow through. Um, why do I keep losing my train of thought? I'm sorry. Um, I think it'll probably be easier to show on charts. I think we're probably at that point where we can get some charts up here. Um, essentially

46:58 just just end this screen uh this slide here. Uh, you got to manage risk on these because they will balloon in the direction that you're wrong if you are wrong. Um, so last one here is over optimization. Like I mentioned, you don't have to tweak the signals too much. Um, they're default settings for a reason. They work well and they're on most people's screens. So just keep it simple. Um, so, uh, we can talk about, yeah, this will be quick. We'll talk about best practices and then we'll get into the charts. So, um, before you trade, you just want to identify overall trend direction, mark the key support and resistance levels, you're going to check multiple time frames, and then you're going to confirm with the price action. So, nice and simple, just distilling what we talked about. During the trade, you're going to stick to your plan, monitor that risk management, make sure

47:45 you're not getting oversized or anything like that. Uh, make sure you have your stops in place. You do not add to losing positions. We are not here to cut the flowers to water the weeds. Any capital that we put towards a losing position is capital that we cannot put towards a winning position. So, simple as that. Uh, make your money work for you and not against you. Uh, keep your emotions in check. As always, if your emotions are not in check, it is your job as a trader to identify that and regulate that. Usually, that means taking a break. uh whether it's five minutes or a week, that depends on how messed up you are, right? So, uh be honest with yourself and don't underestimate this because this is going to be the most important. You can not stick to your plan if your emotions aren't in check. You cannot

48:31 manage risk management or monitor risk management and you're probably going to add to losing positions. So, this is a big one. Uh after the trade, just review what worked and what didn't. We're all about gathering data and then refining based on that data. So the trading journal helps a ton for that. And you learn from both your wins and your losses. Often I'd say you learn a lot more from your losses. A win is just when what you think happens does happen, right? So that that doesn't teach you a ton. You know, it gives you uh conviction, but you learn a lot more from your losses. So how I look at it is when you take the loss, you take the monetary loss, and then it's like you get a chance to get a rebate. you're not going to get your money back immediately, but you will get education for it if you take the time to figure out what the lesson was and actually

49:18 learn from it. So, um I don't think it's bad to lose money on a trade. I do think it's bad to lose money on trade and learn nothing from it. So, let's let's try to avoid that and then we're in good shape. So, if you're doing this, if you're doing what we just talked about, then you're continuously improving your improving your approach and you're on the on the track to consistent profitability. So, uh, really quick, we'll do time frame time time frame considerations just because it's so important. So, uh, for scalping, uh, I think that probably stochastic is going to be the most effective for the reasons that I mentioned, short look back period and really responsive because of that. Um, you're going to look for quick reversals from extreme levels. You're just going to be taking a small, you know, a small kind of easy move when you get that oversold, uh, what would you call it? Oversold uh, conditions that we mentioned. Another thing to look for is

50:04 the time of the day. Often you will see these in a overall bullish environment. You'll see these quick reversals um you know in the morning like in the first half hour to hour and then you know trade will kind of die down in the afternoon and then you'll see another kind of push towards the end of the day. So I always like to try to time my day trades and my setups or especially my scalps you know with these high liquidity periods. So either the morning or the or the power hour. So uh these are high frequency you'll get a lot of entries uh lower lower uh reward to potential risk. So you know you just this is a this is a grinding kind of strategy like a lot of scalping uh less really uh attractive risk-to-reward profiles but you'll be able to stack these and uh you know do do pretty okay.

50:51 Um, let's see really quick. I I definitely said where was that slide? Oh, now I'm really going crazy. There it is. Okay. Um, so I I misspoke. I meant to say uh so you'll get a lot of setups. these essentially you will get stopped out more but the wins can be pretty explosive because you're basically catching a liquidity raid. So sorry I said that backwards there. Um so moving on to day trading talking 15 minutes to hourly charts. Uh all three can be useful but I really like the RSI for meum uh for momentum and then sometimes I'll add that MACD for just the kind of trend bias. You know I like having the

51:36 two moving averages and seeing that crossover as well. Um, and in general, you will get multiple opportunities. Um, so it's it's not quite as high frequency as the uh, you know, the scalping, but you'll still get multiple looks, usually multiple looks a day. Um, so yeah, if this is your style, just just keep this in mind. Uh, where I think these really shine are the swing trading and um, you know, longerterm position trading type stuff. So, MACD probably most reliable. I see that on most people's charts. I I still use RSI. Uh but I'll definitely look at the MACD when I'm doing my daily, weekly, monthly overviews. Um so the RSI for major major reversal points is great. Uh this has been super super responsive for crypto in particular through this uh bull cycle. Uh I don't

52:21 know if you're in here uranium, but my friend uranium has been tracking the RSI on these very closely and he has an amazing hit rate doing it. So, uh, look for things like, um, you know, higher lows on RSI or double bottoms on RSI. You can look for it. You can read it like a chart, you know. So, that's super cool, too, which is a different showing different information. Um, so on these swing trading ones, these signals will be a lot clearer. Um, they'll hold longer and better usually. So, yeah, longer holding periods and higher rewards always a good thing. Uh for the longer term stuff like on weekly charts, you really want to focus on those major divergences when monthly RSIs are at extremes. Um so this is where you can get like these. This feels bad if you look at your portfolio every day. So if that's you, probably don't do this. But you know, it

53:08 historically does play out well to just buy when things look pretty crappy at the bottom of a range and RSI is at extremes on a monthly and nobody wants the damn thing, you know? Uh so as long as there's some signs of uh bottoming, you know, like we talked about, then this can be this can be a good place to just take a starter position and uh if it starts to work for you, then you can build into it. If you get stopped out through the recent low, then you just don't look back, you know, wait for it to reclaim that level or whatever. Uh but yeah, in general, I think that uh I really like these oscillators for longer time frames. Um but I find them very useful, especially that stochastic for really shortterm stuff like scalping. So, there's something for everybody. Always useful. But I just want to leave you with a few uh multiple time frame

53:53 like just just always remember these. It's kind of like a cheat sheet. So, you always look for the higher time frame for trend bias and uh you look for the lower time frame for entry timing and then you exit signals from the time frame that you entered on. So, if you get a sell signal on the time frame that you entered on, then you got to get out. Um, just these three rules uh, honestly will save new traders a ton of of heartache and time and money. So, yeah, keep them keep them in mind. And now we're going to be talking about putting it all together and building your trading plan. Let me catch up on some comments here. Oh, whoops. I had this comment up the

54:41 whole time. Apologies there. Okay, glass half full says uh I use momentum to confirm direction on the Ballinger band and Kelner strate Kelner channel strategy. That is awesome. Yeah, awesome. So, I love the combination of multiple multiple systems to kind of find your own little niche, your own what works for you and what you can kind of use to see through the matrix there. So, that's great. Uh glass asked half full asking are you a day trader or a swing trader? Which emas? Great question. Um I am both. I do position trading in my longer term port. I do some swing trading. That's probably what I do the most of. And then I do a little scalping mostly for fun though. Um just to keep me engaged in the market and

55:27 aware of what's going on. But really really most of my most of my profits come from the swing positions. Um, and in terms of which EMAs I use, I use a 10, a 20, and a 50 and a 200. Nice and simple. I use the EMAs for the 10 and the 20. I use simple moving averages for 50 and 200. Um, I also have a custom EMA trigger system which is focused on a 27 EMA on multiple time frames, but I use that differently. Um, if you want to learn more about that, you can come talk to me on my Discord or Twitter. Happy to talk about that, but I want to keep this one focused on this system. So, yeah. Okay. Do I dig the California honey drops? I

56:15 look at look like this dude that goes to all their shows, huh? That's not me, but I will listen to them after this. I might like them. I am in California. Uh, let's see. Yeah, robot saying price action is king. Good to see you in here. Okay. Tend to use Fibonacci sequence when analyzing longer trades. Uh talk, are you talking like time like Fibonacci on a time horizon? That's something I still definitely need to explore more. So I might pick your brain on that later. Very cool. Um cool. Awesome. Just catching up there. Appreciate you guys. And let's see. We're in the home stretch here, guys. I know it's been a long week. Appreciate you sticking with me. We are going to put it all together. We're going to build a little trading plan out of this now. So, uh, step one

57:02 is to choose your markets. So, start with just I I think I said one to three. Just start with one. You know, you can fine, three is fine, whatever. Uh, you know, choose choose what you like to trade. Uh, different markets can require some different approaches. So, don't trade forex unless you understand forex, for example. You know, stuff like that. Don't trade crypto unless you understand crypto. Um, and practice on demo accounts. It's just it's going to save you a lot of heartache if you're a new trader. If you're experienced, do your thing. But, you know, um it's the amount of times I've said, I don't need to do a trade. I don't need to demo this strategy. I can just I can just go for it. And then, you know, uh long story short, I should I should have probably demoed them. So, save yourself some some trouble. Just demo the strate. Uh you can also back test it if you don't want to actually live trade it. You can see

57:49 that it works without uh you know, spending all that time. Um, and now on to step two where you define the strategy. So, which oscillators are you going to use? For me, it's the RSI and with a little bit of MACD. And if I'm scalping, then I'll sometimes flip on the uh the oscillator or the stoastic, but not too much. Um, so pick your fighter, learn it, get it, get used to it, have it on your screen, and just start absorbing price action and see what it does and how it starts to affect it. And just um another thing to note if you've added a lot of indicators recently, you know, just may maybe maybe you don't need all of them at once, right? So like just if you're adding a new indicator like a oscillator, focus on it, see what it gives you, you know, spend time with it. So uh the last thing in this step is how will you manage your risk? You got to find the level you

58:36 whether it's a usually probably the previous uh swing high that got rejected and then the oscillator started curling under. Um and you got to already have your position sizing, you know, and accounted for for your max potential loss. And then yeah, you're good to go to step three, which is creating your checklist. So, uh the pre-trade analysis that we talked about earlier in the episode, just going to go through those there. And then you're also going to go through the entry criteria that we mentioned for each uh each indicator. So, you got to meet those criteria. I won't bore you. You know where they are. I've probably said them five times in this lesson already. Um, but yeah, so got to meet it. And then you already have your exit rules based on the three the three indicators that we went over. And then you got to do the post-trade review process. And so that's that's your checklist there. And then it just

59:22 comes down to the practicing and the refinement. So always start small if you're trading with real money. Um, this is a proof of concept thing. It's a confidence building thing. It just think about it like this. If what we're saying is true, this is like the golden goose egg, right? I can learn how to pull money out of the ether essentially consistently, you know? So, you don't have to rush into this. Start small, learn the system, make mistakes, don't lose the house while making those mistakes, and uh keep records because you're going to want to look back um when you trade bad. And you're going to want to look back when you trade good, too. But it's really important to look bad or look back at the bad periods and to learn from them. Can't do that if you don't know what you did bad. Um, in terms of uh how to kind of modify this going forward from there, you just got

1:00:08 to adjust based on your results and uh it can't be uh I with the caveat that uh it should still be um processoriented as opposed to resultsoriented but if the results are working you can assume the process is working and uh you know keep uh keep keep working with it there. For example, if you're running the system and it's working and you're doing this with 1% risk and you do this for a month or two successfully and consistently, then you can probably bump it up to 2%. Um, but you shouldn't bump it up to 2% because you're trying to make the money back or some other emotional thing, you know, it should be based on the numbers. So, uh, key takeaways here and then we're going to jump into charts and talk about

1:00:54 whatever you guys want to, um, is that they measure momentum, not just price direction. They're going to work best in ranging markets and uh they require confirmation from the price action itself. So the big three are RSI which is best for overbought or oversold conditions. You have MACD which is excellent for trend and momentum kind of like a combination of the two and stochastic is really nice for that precise timing for entries and exits. Um, some su gez some success factors here are going to be combining multiple indicators for confirmation um and always managing your risk of course and practicing a lot before you risk that real money and then adapting your approach to the market conditions. So, for example, we're probably going to be looking for

1:01:39 uh we need before we go go long, we need to look for the market to stabilize and probably make a new swing high. Um or at least, you know, reclaim something important. So, I'll be watching the 20-day moving average uh for a reclaim or for a rejection and I will be uh you know, trading what I see. Um, okay. I think yeah, we are we are ready for questions and we are ready for charts. So, I'm going to pull up my charts here and start talking about what I'm seeing and how these indicators fit in and then whatever you guys want to talk about, we can get into it from there. And talk saying, sorry, Steve was talking about using Fibonacci sequence as a complimentary tool to identify potential support and resistance levels. Okay, absolutely. I'm 100% with you. Big

1:02:26 fib guy here. Big fib guy. love fibs. Um, catching up again here. Yeah, Nomi mentioning uh Whoops. That she or they trade uh crypto crypto through ETFs. The actual coin is too volatile for me. I I'm with you. I trade IBIT a lot. I've been trading ETHA. I like that better. It's easier. I can trade it in my trade the pool account. That's been doing well for me. So, yeah, I'm with you. Yeah, and plus it's the only way I can short it with no margin. There you go. Okay. Glass half full has a question.

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