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THE NEW TRADING OF A LIVING- OTHER STOCK MARKET INDICATORS

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THE NEW TRADING OF A LIVING OTHER STOCK MARKET INDICATORS Only a handful of general market indicators have stood the harsh test of time. Many  that used to be popular in previous decades have been swept away by the flood of  new trading vehicles. The New High–New Low Index and Stocks Above 50-day MA,  reviewed above, continue to work because of their clear logic. Several other indica tors are listed below. Whatever tools you choose, be sure to understand how they  work and what exactly they measure. Select a few and track them on a regular basis,  until you come to trust their signals. Advance/Decline The Advance/Decline line tracks the degree of mass participation in  rallies and declines. Each day it adds up the number of stocks that closed higher and  subtracts the number of stocks that closed lower. While the Dow Jones Industrials track the behavior of the generals and the New  High–New Low Index focuses on the officers, the A/D line shows whether soldie

THE NEW TRADING OF A LIVING- THE DIRECTIONAL SYSTEM

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THE NEW TRADING OF A LIVING THE DIRECTIONAL SYSTEM The Directional system is a trend-following method developed by J. Welles Wilder,  Jr., in the mid-1970s and modified by several analysts. It identifies trends and shows  when a trend is moving fast enough to make it worth following. It helps traders to  profit by taking chunks out of the middle of important trends. How to Construct the Directional System Directional Movement is defined as the portion of today’s range that is outside of the  previous day’s range. The Directional system checks whether today’s range extends  above or below the previous day’s range and averages that data over a period of time.  These complex calculations are best performed on a computer. The Directional  system is included in most programs for technical analysis. FIGURE  Directional Movement. 1. Identify “Directional Movement” (DM) by comparing today’s high-low range  with yesterday’s high-low range. Directional Movement is the large