Coffee Grounds Trading System by Tournis PK

Author:Tournis, PK [Tournis, PK]
Language: eng
Format: epub
Published: 2023-01-23T00:00:00+00:00

The price turning from under SMA 10 on one day to above SMA 10 on the other gives you the perfect entry point for a long position. It's a "precision" indication compared to all the others that take into account averages and price movements for several days. It’s just as effective when you are looking for the perfect entry point for a short position.

The Waddah Attar Explosion blends one of the indicators we are already using, i.e., MACD with Bollinger Bands. Bollinger Bands is more than just a technical indicator. The idea of combining them with MACD was already quite prevalent, but the Waddah Attar Explosion formalized it.

In the Coffee Grounds Trading System, we are interested in both the green bars, i.e., the so-called uptrend bars, and the red bars, which indicate a down-trend. Getting at least ten green or red bars signifies a strong momentum that's still growing rather than a short-term growth spurt that can die down at any moment. You may use it in conjunction with the explosion bar as well for additional info on the trend that you may be getting into. However, that’s redundant as per the system and many other technical indicators that we are using.

There are two other indicators that can be used in conjunction with the other technical indicators – The Elder-Ray index’s “bear power” and “bull power.” This index and the two indicators it's made up of leverage the 13-period Exponential Moving Average (EMA). The Elder-Ray index, which is also called the Elder-Ray indicator, is plotted as histograms, with separate lines indicating bull and bear power (though it may be different based on your platform). In order to identify an up or down trend (so you can enter a long or short position), you need both the bear/bull power and a 13-day EMA. Here is how the Elder-Ray indicator helps you identify potential long and short positions:

Long Position: With the help of the Elder-Ray indicator, you might consider taking a long position in a security when the bear power has dropped below zero, but it's on the rise instead of going further into the negative territory. And the latest bull power peak is higher than the last peak, which indicates upward momentum. You can augment these findings, i.e., sign to go long on security with the EMA. If the EMA is rising, indicating/confirming an upward trend identified using the Elder-Ray indicator, it may make the buy signal (for a long position) even clearer. If it’s not there yet, you may consider waiting for the EMA to catch up.

Short Position: The Elder-Ray indicator can also be used to identify the perfect time to short a stock. If the bull power is falling, but it's still in the positive territory, and the current bear power low is deeper than the last low, it might be time to take a short position in a stock. You can use the EMA’s direction to confirm the trend.

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