October 19 - Aroon Indicator
Here's a very common indicator that I found out recently which supposedly helps with identifying trends. I have always had trouble identifying the market trend so this has helped a little bit and I have back-tested it with EOD data and seems to work out MOST of the time..
Try on your own and leave any comments if you come up with anything new.
How it works:
1. The green line(Aroon up) is the major line which seems to go in the direction of the trend.
2. When the green line crosses above or blow the 50 level that should be the entry or exit in a perfect world but you can buy sell in and around that area.
3. If it crosses down/above the 50 level and bounces off even when few green/red candles are in the making against the trend.. you should stay in the market and try to relax (yeah right, day trading is a mental torture).
4. Works well on trending days but can easily wipe out you account on ranging days or when the market is choppy. (Use other indicators to find out when the market starts to get choppy to avoid losses)
5. I would use my own exits even if they cost me some profit because all exit signals with most indicators eat away some of your profits anyways before they flash.
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