Advanced Studies

To help you use charts to their fullest advantage, Advanced Studies are provided. These technical analysis tools provide quick insight into chart data.

Some studies can be overlaid onto your chart. These studies include: Bollinger Bands, Moving Averages, Average Price Lines, Linear Regressions, Envelope Studies and VWAP.

Some studies can be added below your chart (Lower Studies). These studies include: ADX, Average True Range, CCI, Fast Stochastics, MACD, MACD & signal, Momentum, Money Flow, Money Flow Index, On Balance Volume, Rate of Change, Relative Strength, Relative Volatility Index, Slow Stochastics, Standard Deviation, Volume Plus, and Williams %R.

Two studies can be attached to the bottom of a chart at the same time.

Overlay Studies onto Your Chart

1. Right-click on the Charts window and select Properties.
2. The Properties window will appear. Click the Studies tab
   
   
   
   
3. Select a Chart Type:
   
   Candle Stick: Displays a stock's open, high, low, and closing prices. Data for each time is represented by a vertical bar (colored red or green) with a line behind it. The top of the line represents the highest price traded. The bottom of the line represents the lowest price traded. Red bars represent falling stock prices (the top of the colored bar represents the stock's Open price, and the bottom, its Close). Green bars represent rising stock prices (the bottom of the colored bar represents the stock's Open price, and the top, its Close).
   
   No Outline: Removes the black outline from around Candlestick data. Removing the outline is an especially good idea if your chart backgrounds are black.
   
   Line On Close: A line chart with points plotted on the Close price (the last price the stock traded during the period).
   
   Line On Open: A line chart with points plotted on the Open price (the first price the stock traded during the period).
   
   Line On High: A line chart with points plotted on the High price (the highest price the stock traded during the period).
   
   Line On Low: A line chart with points plotted on the Low price (the lowest price the stock traded during the period).
   
   Bar: Displays a stock's open, high, low, and closing prices. A vertical line represents data for each time. The top of the line represents the highest price traded. The bottom of the line represents the lowest price traded. The small horizontal line or "tick" on the left side of the bar represents the stock's Open price. The "tick" on the right side designates the stock's Close price.
   
   
4. Overlay Moving Averages onto your Chart:
   
   Moving Averages: The average price of a security at a given time. Moving Averages are helpful for spotting trends (especially in a volatile market).
   
   To add Moving Averages to your chart, check the box next to Moving Averages and select a number of Lines. "Lines" are the number of Moving Averages you wish to display on your chart (from 2 to 4). Enter a Period for each average (from 1 to 60). Averages will appear as colored lines on your chart: Box 1 data appears dark blue; Box 2 data appears light blue; Box 3 data appears red; Box 4 data appears green.
   
   Check the Exp . box under your times if you want the average to be figured "exponentially." Exponential Averages are figured to give added weight to the most recent prices. If left unchecked, "straight averages" will be displayed.
   
   
5. Click Show Open Orders to add open order data to the chart.
   
   
   
6. Overlay other studies onto your chart:
   
   Average Directional Index (ADX): The Average Directional Index (ADX) measures trend strength as well as whether movement exists in the market. The ADX is measured on a scale of 0 to 100.
   
   Average Price Line: A line bisecting a stock's highs and lows to identify the direction the price is trending.
   
   Linear Regression: Used to determine when prices are overextended. A Linear Regression consists of a "trend line" plotted through a stock's high and low prices, and two "channels," one above the trend line and one below. The top channel shows resistance. The bottom channel shows support. Moves above or below the trend line usually indicate overzealous buyers or sellers. However, if prices remain outside the channel for a longer period, a reversal in trend may be imminent.
   
   Envelope Study: Defines the upper and lower bounds of a security's normal trading range. The logic is that overzealous traders push the price to the extremes (i.e., the upper and lower bands), at which point the price often stabilizes by moving to levels that are more realistic. Each envelope consists of two moving averages: one shifted upward and the second shifted downward. When a stock reaches the upper band, a sell signal is generated. A buy signal is generated when the stock reaches the lower band. The optimum percentage shift depends on the volatility--the more volatile the stock, the larger the percentage. Unlike Bollinger Bands, Envelopes are plotted at a fixed percentage above and below a moving average.
   
   To add an Envelope Study to your chart, set a Period of time (in days) and a Percentage above/below the moving average.
   
   Bollinger Bands: The same as Envelope Studies, except that they are plotted at standard deviation levels above and below a moving average. Since standard deviation is a measure of volatility, the bands are self-adjusting. Band spacing is wide when prices are volatile and narrow when they are not.
   
   Pivot Lines: Pivot Lines help to identify important support and resistance levels based on calculations from the previous trading day. First and second tier resistance lines are laid above the Pivot Point (PP) and support lines are laid below it.
   
   VWAP: "Volume-Weighted Average Price" is calculated by adding the dollars traded for every transaction (Price multiplied by Shares traded) and then dividing by the total shares traded for the day. Theoretically, if the price of a buy trade is lower than the VWAP, it is a good trade. The opposite is true if the price is higher than the VWAP.

To add VWAP to your chart, check "Daily" or leave it unchecked and insert a number (from 2 to 200) to calculate VWAP by "Units." Your chart sets units. (Example: In an Intraday Chart spanning 3 days at 15 minute intervals, the "Unit" would be 15 minutes.)

5. Add any desired Lower Studies to the bottom part of your chart, and click OK to apply. For more information on Studies, see "Adding Studies to Your Charts" below.
   
   
6. Click OK to apply your changes.

Add Studies Below Your Chart (Lower Studies)

1. Right-click on the Charts window and select Properties.
2. The Properties window will appear. Click the Studies tab.
   
3. Add studies to the lower part of your chart:
   
   Average True Range: Measures a security's volatility. ATR does not provide an indication of price direction or duration, simply the degree of price movement or volatility. High ATR values indicate high volatility and may be an indication of panic selling or panic buying. Low ATR readings indicate sideways movement by the stock.
   
   To add an Average True Range study to your chart, insert a number of days (from 7 to 28) in the "Length 1" box. The usual period for this study is 14 days.
   
   CCI: The "Commodity Channel Index" is an indicator used to identify cyclical turns in commodities—but can also be applied to stocks or bonds. This indicator assumes that commodities move in cycles--with highs and lows coming at periodic intervals.
   
   To Customize CCI, click the "Advanced" button. Insert a period of time (from 2 to 200 days). The Reference Lines section will fill automatically. If you wish to smooth the data, check the Smoothed CCI box, enter a number of days (from 2 to 30) in the Period box, and select "Simple" or "Volume Weighted" from the "Type" box. Click "OK" to apply.
   
   Fast Stochastics: Used to determine whether a stock is overbought and oversold. The underlying principle is that stock prices move toward the center of the trading range, or to the opposite extreme. Stochastics display two lines that move in a vertical scale between 0 and 100% based on the Close Price. A reading of 50% indicates that the Close Price is in the middle price range for the current time. When both lines move to an area below 20%, they are said to be oversold. Conversely, when both lines move to above 80%, they are said to be overbought. Stochastics come in two varieties: Fast Stochastics and Slow Stochastics. Fast Stochastics are more sensitive to price and can vary greatly in the short-term. Slow Stochastics are therefore commonly believed to be a more reliable indicator.
   
   To add Fast Stochastics to your chart, insert a number of days (from 10 to 40) in the "Length 1" box and a number of days (from 3-12) in the "Length 2" box.
   
   MACD: The "Moving Average Convergence/Divergence" is an indicator calculated by subtracting the 26-period exponential moving average of a stock from its 12-period moving average. By comparing averages, MACD reveals trends. By plotting the difference of the averages, MACD shows.
   
   To add a MACD to your chart, insert a number of days (from 13 to 52) in the "Length 1" box and a number of days (from 6-24) in the "Length 2" box.
   
   MACD & signal: "Moving Average Convergence/Divergence & signal" plots the difference between a 26-day and 12-day exponential moving average and includes a 9-day average, called the "signal" (or "trigger") line, to show buy/sell opportunities.
   
   To add a MACD & signal to your chart, , insert a number of days (from 13 to 52) in the "Length 1" box and a number of days (from 6-24) in the "Length 2" box. Check the "Histogram" box to add a histogram to your chart.
   
   Momentum: Measures a security's rate-of-change and displays it as a ratio. The ongoing plot line moves above and below 100. By looking for divergences, centerline crossovers and extreme readings, bullish and bearish interpretations are found.
   
   To add a Momentum Study to your chart, insert a number of days (from 7 to 28) in the "Length 1" box.
   
   Money Flow: Calculated by averaging the high, low, and closing prices, and multiplying by the daily volume. Comparing that result with the number for the previous day tells you whether money flow was positive or negative for the current day. Positive money flow indicates buying pressure. Negative money flow indicates selling pressure.
   
   To add Money Flow to your chart, insert a number of days (from 10 to 42) in the "Length 1" box.
   
   Money Flow Index: Compares "positive money flow" to "negative money flow." Compare this indicator to price in order to identify the strength or weakness of a trend. The MFI is measured on a 0 - 100 scale and is usually calculated using a 14 day period. It is related to the Relative Strength Index, but where the RSI only incorporates prices, the Money Flow Index also accounts for volume.
   
   To add Money Flow Index to your chart, insert a number of days (from 7 to 28) in the "Length 1" box.
   
   On Balance Volume: Shows whether volume is flowing in or out of a security. The concept behind the indicator is that volume precedes price. OBV is a simple indicator that adds a period's volume when the close is up and subtracts the period's volume when the close is down. When the security closes higher than the previous close, all of the day's volume is considered up-volume. When the security closes lower than the previous close, all of the day's volume is considered down-volume.
   
   Rate of Change: Identical to Momentum, except that the Price ROC indicator displays the rate-of-change as a percentage whereas the Momentum indicator displays the rate-of-change as a ratio.
   
   To add ROC to your chart, insert a number of days (from 6 to 24) in the "Length 1" box.
   
   Relative Strength: Related to the Money Flow Index, but incorporates only prices, not volume. RSI is plotted on a vertical scale from 0 to 100. Values above 70 are considered overbought and values below 30, oversold. When prices are over 70 or below 30 and diverge from price action, a warning is given of a possible trend reversal.
   
   To add RSI to your chart, insert a number of days (from 7 to 28) in the "Length 1" box.
   
   Relative Volatility Index: Used to measure the direction of volatility. RVI is identical to the Relative Strength Index, except that it does not measure price as an indicator of market strength. RVI is plotted on a vertical scale from 0 to 100. Values above 50 indicate an increase in volatility.
   
   To add RVI to your chart, insert a number of days (from 7 to 28) in the "Length 1" box.
   
   Slow Stochastics: Used to determine when a stock is overbought and oversold. The underlying principle is that stock prices move toward the center of the trading range, or to the opposite extreme. Stochastics display two lines that move in a vertical scale between 0 and 100% based on the close price. A reading of 50% indicates that the close price is in the middle price range for the current time. When both lines move to an area below 20%, they are said to be oversold. Conversely, when both lines move to above 80%, they are said to be overbought. Stochastics come in two varieties: Fast and Slow. Fast Stochastics are more sensitive to price and can vary greatly in the short-term. Slow Stochastics are therefore commonly believed to be a more reliable indicator.
   
   To add Slow Stochastics to your chart, insert a number of days (from 10 to 40) in the "Length 1" box and a number of days (from 3 to 12) in the "Length 2" box.
   
   Standard Deviation: A statistical term that provides a good indication of volatility. It measures how widely values (closing prices for instance) are dispersed from the average. The larger the difference between the closing prices and the average price, the higher the standard deviation will be and the higher the volatility. The closer the closing prices are to the average price, the lower the standard deviation, and the lower the volatility.
   
   To add Standard Deviation to your chart, insert a number of days (from 10 to 40) in the "Length 1" box.
   
   Volume Plus: Shows the number of shares traded in a stock during a given period.
   Red Candlestick--Indicates a negative change in volume for the unit of time selected.
   Green Candlestick--Indicates a positive change in volume for the unit of time selected.
   Blue Candlestick--Indicates no change in volume for the unit of time selected.
   
   A Moving Average can be added to the Volume Plus study by checking the box provided.
   
   Williams %R: Much like Stochastics, Williams's %R is useful for measuring overbought and oversold stock levels. The scale ranges from 0 to -100 with readings from 0 to -20 considered overbought, and readings from -80 to -100 considered oversold. Typically, Williams's %R is calculated using 14 periods and can be used on intraday, daily, weekly, or monthly data.
   
   To Customize Williams %R, click the "Advanced" button. Insert a period of time (from 5 to 21 days). The Reference Lines section will fill automatically, but you can change the parameters if you wish. Click "OK."
   
   
4. Click OK to apply your changes.