TRADERSIGNALX

TRADERSIGNALX

Tradersignalx is a tool for the Prediction of the Trend with a High Probability. It is used to Predict the Movement of any INDEX or STOCK of the Stock Market.

The Tradersignalx tool is based on the signals generated by the SIGNALX Prediction Method. The fundamental advantage of Tradersignalx is that it is applicable to any INDEX and STOCK of the Stock Market.

Tradesignalx can be used in any time frame. Tradersignalx generates predictions of the movement of the price with high probability.

SIGNALX

The SIGNALX method is based on the instantaneous calculation of Technical Trend Indicators and Price Levels based on Pivot Levels, Support Levels and Resistance Levels.  SIGNALX method generates the signals based on the following Technical Indicators:

  • Type of Representation System: Japanese Candles or Heikin-Ashi Candles,
  • The crossing of three Exponential Moving Averages (EMA) of 14 periods, 20 periods and 40 periods,
  • RSI or Relative Strength Index of 14 periods,
  • Stochastic (STOCH) of 14 periods,
  • MACD of 12 periods.

Type of Representation System: Japanese Candles or Heikin-Ashi Candles

The following graph shows the Movement of the price in a Time Frame of 1h for the Stock of the German Market Index: DAX

We have selected among the different Representation System of the Price Movement the one corresponding to Japanese Candles also known as Candlestticks.

The SIGNALX Trading System can also be used with Heikin-Ashi candles. Remember, in this example, each candle represents the Price Movement for a period of one (1) hour.

The candles or Candlesticks of GREEN color, represent bullish movements of price and the candles or Candlesticks of RED color, represent bearish movements of the price of the Stock.

The Crossing of three (3) Exponential Moving Averages (EMA)

The first indicator of the SIGNALX System is formed by three (3) Exponential Moving Averages of periods 14, 20 and 40, respectively. This indicator is very powerful. It informs us if the Market is bullish or bearish. The indications that we must interpret of the crosses are the following:

  • Ascending EMAS Crossing. It means that the Market is Bullish,
  • Descending EMAS Crossing. It means that the Market is Bearish,
  • Horizontal or Sideway EMAS Crossing. It means that the Market is Lateral.

Representation of the Crossing of three (3) EMAS in the SIGNALX Graph

In the attached graph we have represented with a letter “C” inside a BLUE CIRCLE, the crossing points of the three (3) EMAS for the DAX index within a time frame of 1 h.

We have represented with a GREEN UP ARROW, the sections corresponding to BULLISH CROSSINGS. We represent with a RED DOWN ARROW, the sections corresponding to BEARISH CROSSINGS.

Remember, that in low intensity sideways markets, it is preferable not to enter the market and wait for a clear trend to be declared, be it bullish or bearish. We must always operate with the Trend.

The Trend is our friend. Operating against the Market Trend inexorably means losing our investment.

RSI or Relative Strength Index of fourteen (14) periods

The RSI indicator or Relative Strength Index, is a Relative Strength Index, as its name indicates. This Technical Indicator is an oscillator type and measures the force of the price movement. Its objective is ultimately to measure the speed of the Price Movement whether it goes up or it goes down, in a given Time Frame.

RSI or Relative Strength Index Formulation of fourteen (14) periods

This indicator was developed by the analyst J. Welles Wilder who presented it in a book called “New Concepts in Technical Trading in 1978“. The RSI or Relative Strength Index indicator of fourteen (14) periods is defined by the following formulas:

  • RSI = 100 – (100 / (1 + RS))
  • Average Profit = Total Profit / Number of Periods
  • Average Loss = Total Loss / Number of Periods
  • First RS = Average Gain / Average Loss
  • RS = A / B
  • A = (Previous Average Gain * 13 + Current Gain) / 14
  • B = (Previous Average Loss * 13 + Current Loss) / 14

The RSI or Relative Strength Index is graphically represented by a vertical scale between zero (0) and one hundred (100). When the value of the indicator is above the value seventy (70), it means that the price of the Stock is OVERBOUGHT. In the case where the value of the Indicator is below thirty (30), it means that the price of the Stock is OVERSOLD.

RSI Representation in the SIGNALX Graph

On the previous graphic, we mark with a rectangle of LIGHT RED color the areas corresponding to OVERSOLD. We represent with a LIGHT GREEN rectangle the areas corresponding to OVERBOUGHT.

Within each rectangle we have included the letters “SV” within a RED CIRCLE, to name the areas corresponding to OVERSOLD. We include the letters “SC” in a GREEN CIRCLE, to name the areas corresponding to OVERBOUGHT.

In this way, we obtain the attached graph in which the indicators are overlapping: Crossing of three (3) EMAS and the RSI.

Stochastic or STOCH Index of fourteen (14) periods

The Stochastic indicator or STOCH Index, is an oscillator type indicator was developed in the 50s by George C. Lane and is a technical indicator of market momentum that shows the relationship between the closing price in each time frame with respect to the range between the maximum price and the minimum price, during a specific set of periods.

Stochastic Formulation or STOCH of fourteen (14) periods

The Stochastic or STOCH indicator of fourteen (14) periods is defined by the following formulas:

  • % K = (Current close-Minimum lowest) / (Maximum highest-Lowest below) x 100
  • % D = Simple moving average of 3 periods of% K.

Where:

  • Lowest Minimum: It is the lowest value of the set of periods analyzed.
  • Highest Maximum: It is the highest value of the set of periods analyzed.
  • % K is multiplied by 100 in order to obtain the percentage value.

The Stochastic or STOCH index of fourteen (14) periods is represented graphically by a vertical scale between zero (0) and one hundred (100). When the value of the indicator is above the eighty (80) value, it means that the price of the Stock is OVERBOUGHT. In the case where the value of the Indicator is below twenty (20), it means that the price of the Stock is OVERSOLD.

STOCH representation in the SIGNALX Graph

On the previous graphic, we mark with a rectangle of LIGHT RED color the areas corresponding to OVERSOLD. We represent with a LIGHT GREEN rectangle the areas corresponding to OVERBOUGHT.

Within each rectangle we have included the letters “SV” within a RED CIRCLE, to name the areas corresponding to OVERSOLD. We include the letters “SC” in a GREEN CIRCLE, to name the areas corresponding to OVERBOUGHT.

In this way we obtain the attached graph in which the indicators are overlapping: Crossing three (3) EMAS, the RSI and the STOCH.

MACD of twelve (12) Periods

The Indicator MACD is defined as the difference between two (2) exponential moving averages (EMA) of different periods. The first EMA is calculated with twelve (12) periods, being more sensitive to short-term price movements, while the second EMA is calculated with twenty-six (26) periods, being more sensitive to medium-term price movements.

MACD formulation of twelve (12) periods

The MACD indicator of twelve (12) periods is defined by the following formulas:

  • MACD (12,26) = EMA (12) -EMA (26)

The MACD indicator has a second component called SIGNAL. This corresponds to the exponential moving average of the MACD of twelve (12) periods used for this moving average nine (9) periods, the formula being the following:

  • SIGNAL = EMA (9, MACD (12.26))

The last component of this indicator is the MACD Histogram, which corresponds to the difference between the MACD and the SIGNAL, the formula being the following:

  • Histogram = MACD (12,26) – SIGNAL

When the MACD line, represented by a GREEN line, crosses over the line of the SIGNAL, represented by a RED line, a BUY indication is produced.

When the MACD line, represented by a GREEN line, crosses below the line of the SIGNAL, represented by a RED line, a SELL indication is produced.

One way to confirm the MACD indication is to wait for the MACD line to cross “LINE 0” or WATER LINE up, which would confirm the BUY indication, or down, which would confirm the SELL indication.

MACD representation in the SIGNALX Graph

On the previous graphic, we mark with a rectangle of LIGHT RED color the areas corresponding to SELL indication and with a LIGHT GREEN rectangle the areas corresponding to BUY Indication.

Inside each rectangle we have included the letter “V” inside a RED CIRCLE, to name the areas corresponding to SELL Indication. We include the letters “C” in a GREEN CIRCLE, to name the areas corresponding to BUY Indication.

In this way we obtain the attached graph in which the indicators are overlapping: Crossing three (3) EMAS, the RSI, the STOCH and the MACD.

Combination of Indicators

Once the different areas determined in the previous sections have been analyzed, we proceed to combine the results obtained in order to establish the SIGNALX chart that is included below.

Representation of the Combination of Indicators in the SIGNALX Graph

On the previous graphic, we mark with a rectangle of LIGHT RED color the areas corresponding to SELL indication. We mark with a LIGHT GREEN rectangle the areas corresponding to BUY indication.

Inside each rectangle we have included the letter “V” inside a RED CIRCLE, to name the areas corresponding to SELL Indication. The letter “C” is included in a GREEN CIRCLE, to name the areas corresponding to BUY indication.

In this way we obtain the attached SIGNALX graphic.

Rules of Entry and Exit of the Market

Once the SIGNALX chart is represented, we proceed to implement our Entry and Exit Rules included in our Trading System on the chart.

Representation of the Entry and Exit Rules in the SIGNALX Graph

Within the SIGNALX Chart we represent with the letter “B” inside a GREEN CIRCLE, the instant in which our system indicates the BUY operation.

We represent with the letter “S” inside a RED CIRCLE, the instant in which our system indicates the SELL operation.

We represent with the letter “C” inside a BLACK CIRCLE, the instant in which our system indicates the CLOSURE of operation.

Between each indication of BUY and CLOSUREGREEN LINE color is drawn. Analogously, between each SELL and CLOSURE indication a RED LINE color is drawn.

GOLDEN RULES

  • Represents the SIGNALX chart before starting the Trading Day with a Time Frame of 1h and 4h.
  • Represent on the chart your Rules of Entry and Exit.
  • Never operate against the Trend.
  • Never operate with more than 5% Risk.
  • If your operations do not evolve properly do not blind yourself. Close them immediately.
  • Operates exclusively in Opportunity Windows.

DISCLAIMER

This website and its content is intended to technically and psychologically train new traders. Our Content is aimed at those people interested in becoming PROFESSIONAL TRADERS.

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Professional Traders recommends the advice of a qualified Stock Market Professional before making any investment. The user must fully understand all the risks inherent in the Trading Process before investing.