Faster Technical Analysis by Adjusting Standard Technical Indicators: RSI, CCI, Stochastics

Difficulty Rating: 2/4 (Intermediate)

**This is a video tutorial from Indicator Warehouse (for NinjaTrader) featuring TraderHelpingTraders.com Erich Senft explaining how to adjust basic technical analysis indicators to have trade signals sooner.  These standard technical analysis indicators are so common you can find them on any stock chart website or stock charting software.

PRESENTER: Erich Senft, TradersHelpingTraders.com

I know a lot of you are not really interested in trading indicators. And that’s probably because you’ve been left out by Tracy if you could pass let’s face it, indicators always lagging. With a few exceptions, the signals was coming after the price action. But let me show you a little something that might restoring your faith in using indicators. Now as a support and resistance trader, I don’t usually trade the indicator on it’s own. Remember, I don’t mind using an indicator as a confirmation signal or something to help my timing. A standard RSI indicator is 14 periods. The oversold and overbought regions of the RSI (Relative Strength Index) indicator are usually 60% and 40%. Like a lot of indicators, the RSI is measured on a percentage scale. So the higher the market gets, or the more overbought the market gets, most indicators are going to get to 100%. As the market gets lower, or more oversold, most of the indicators are going to get to zero. This is true for RSI, stochastics, although CCI is slightly different because it ranges from a scale of -200 to +200, but the principle is the same. MACD signals overbought and oversold conditions in a different way, but the MACD is used more to indicate momentum and shifts in momentum. However, it is plotted on a zero-scale where the zero-line is the halfway and essentially anything above the zero-line is bullish and anything below the zero-line is bearish.

Adjusting Settings of Technical Indicators

How do you tweak these standard technical analysis indicators so they become more effective for you as a trader?

The first thing to consider is cut the standard settings in half. That would make the indicator just that much more responsive. Remember, there’s a lot of traders out there using the standard settings, and by cutting the settings in half, we’ll make ourselves that much faster than the typical trader. With RSI, we will change the standard setting from a period of 14 to a period of 7. All of a sudden, you will see the RSI graph has become a lot more erratic, OR SO IT WOULD SEEM.

The second part of the key to using an indicator effectively is you need to use it with the TREND. For a lot of these indicators such as RSI, stochastics, MACD, CCI (basically all the standard technical indicators) are all oscillating indicators. What does that mean? Oscillating indicators go high and go low then high and low just like a seesaw (oscillating up and down). This is where a lot of people learn to HATE indicators. The usual complaint by inexperienced traders is that indicators don’t give them a good sell signal because they get a sell signal and the market only moves down a couple of ticks before it heads higher again.

Yes. But WHERE does it take off? It usually takes off WITH THE TREND!

Part 2: How to correctly use technical indicators with the trend

0 Users Collected

Post Topics

Post Details

Download Our Free eBook

25 Stock Market Indicators To Know

And subscribe to our MarketHeist Guides newsletter!

Free Brokers, Software, & Tools to Start.

Start with Brokers that have free accounts and professional grade software. Software that's the same whether you're practicing with fake money or trading real money.

Submit a Service

Avatar Image

TD Ameritrade Online Broker

With free thinkorswim, Trade Architect, & mobile software. Practice with virtual money. Invest and trade in stocks, ETFs, mutual funds, bonds, options, futures, and forex. No minimum and no maintenance fees. $0 to start.

☆ Collect Launch

Avatar Image

tradeMONSTER Online Broker

Free browser & mobile software. Easy to use technology including strategySeek and paperTRADE. Invest and trade in stocks, ETFs, mutual funds, bonds, and options. No minimum and no maintenance fees. $0 to start.

☆ Collect Launch

Avatar Image

optionsXpress Online Broker

optionsXpress offers an innovative suite of online brokerage services for investor education, strategy evaluation and trade execution. No minimum requirements.

☆ Collect Launch

Learn The Business. Take A Course.

What is the market and how it works
Finding Opportunities (with Technical Analysis & Fundamental Analysis)
Planning & Safety (with strategies to make smart decisions.)
Plan Execution: Buying & Selling

Submit a Service

Learn Stocks

Avatar Image

Investools Investing Foundations Program

Get trained in the foundations of the stock market and stock trading with two courses, a wealth of easy-to-use tools, and top-tier coaching support, in the program that helps you start managing your own portfolio. In the Investing Foundation Program, you’ll enjoy live and online workshops that can help you quickly overcome fears and learn [...]

☆ Collect Launch

Learn Options

Avatar Image

OptionsAnimal Apprentice Options Education Program

Description Build your knowledge from the ground up. Understand key concepts and learn the basic spread trades that will give you a foundation to trade successfully. Learn how to properly structure a trade using the Protective Put, Covered Call, Collar Trade as well as applying the Straddle/Strangle. Trade Adjustment Spread Trades OptionsAnimal Trader Professional Program [...]

☆ Collect Launch

Learn Futures

Avatar Image

OpenTrader Professional Training Program

The industry’s only training program built by professional full-time traders. You used to have to get hired by a professional trading firm to get world-class training. Not anymore. If you’ve been a losing trader, getting beaten down by the market again and again, low on confidence and full of doubt, things are about to change [...]

☆ Collect Launch

On-The-Job Training. Earn While Learning.

Follow Live Trades, Step By Step
Detailed Trade and Market Analysis
Explanations of Strategies and Tactics
Questions Answered in Webcasts & Chatrooms
Learn by Copying The Pros At Every Step

Submit a Service

Learn Stocks

Avatar Image

Mish’s Market Minute Premium Stock Picks Video Subscription

Live-in-the-market instruction showing you how to trade in the afternoon the choice stock and ETF picks vetted by MarketGauge’s tools earlier in the day. Video up to 15 minutes: 4 times a week (M/T/W/Th) by 1:30PM ET $124.97/month Includes ETF Monitor & Nuggets List Private real-time Twitter Alerts 2 week FREE trial Learn as Mish: [...]

☆ Collect Launch

Learn Options

Avatar Image

stockguy22 Live Trading & Education for Part Time Traders

What You’ll Get Learn stocks and options trading at your own pace from a group of full time traders dedicated to teaching through live trading, education, and mentoring.  See how trading is done methodologically as an occupation on a daily basis, from beginning to end.  Start with the daily in-depth analysis of stocks, the overall [...]

☆ Collect Launch

Learn Futures

Avatar Image

Emini Wizard Trading System & Live Trading Chat Room

Thanks for considering The Emini Wizard System: This system is available for purchase for people who want to make a one time investment for the entire program. You get: Access to the Member’s website Spreadsheets Common plays Special plays Trade logic explained Chart patterns Chart settings we prefer Separate active chat area (30 days free [...]

☆ Collect Launch

Some Partners We've Worked With

  • Download Our Free eBook

    25 Stock Market Indicators To Know

    And subscribe to our MarketHeist Guides newsletter!