Track ‘n Trade 5.0 includes twenty-five indicators that are displayed in a window below the Chart Window. This window is referred to as the Indicator Window. (There are also eleven Overlay Indicators that are displayed directly on your chart in the Chart Window that are explained in the next chapter.)

Many of the indicators included in Track ‘n Trade 5.0 have buy/sell signals. You will be able to select the indicator to view these signals on the chart. The indicators that have buy/sell signals are indicated by an asterisk (*) in the following list of indicators included in your program.

The Indicator Buttons are found on the bottom of your screen below the chart window. The Indicator toolbar can be closed or opened by selecting View on the Menu bar and clicking on "Indicator Buttons." Display an indicator by clicking on its corresponding button.

The One Button on the left end of your Indicator toolbar allows you to have as many indicators selected as you like, but only view them one at a time in the indicator window. To switch between each selected indicator click the Indicator Information Display to the right of the Indicator Window.

When you click on the Indicator Information Display window the indicator information will rotate to the next indicator you have selected (as simulated above).

The All Button will display all the indicators you have selected on the Indicator toolbar in the Indicator Window. You will still be able to rotate the information for each indicator to the right of the Indicator Window.

Note: The One and All buttons can be specified for each chart you have open.

Larry Williams created this indicator in an attempt to measure market pressures. It specifically looks for a difference in price and measures it through market sentiment and strength. The key is to look for strong differences between what the market does and what the indicator does. Looking for substantial divergence from the AD index versus the underlying chart is the key to future price direction.

The main thing to look for is a difference between the AD and the market trend. If a market were to make a matching or lower low, or a matching or higher high and the AD fails to follow the market trend, this is divergence. Divergence implies that a reversal in the dominant trend may be near.

A series of lower lows would read as a decreasing AD. The pattern created by the AD and the differences in the chart are what the trader looks for. Divergence, or a difference from the pattern, is what you want to see. For example, if the market continues to march to higher territory and the AD follows by doing the same, then there is no divergence. However, if the market makes several new highs but the AD fails to make new highs, it is a warning signal of a market about to reverse direction.

The AD index is computed several different ways. Some computations normalize the index, while others add extra smoothing factors through the use of moving averages.

The first comparison checks for accumulation. (Is the current close higher than the previous close?) If the market is accumulating, subtract the difference between current close and low. Add the difference to the Accumulation/Distribution Index. Traders perceive an undervalued market and they buy.

Right-click on the AD button in your Indicator toolbar and select AD Settings. The Preferences Tab will open in the Control Panel and the AD preferences will be displayed. (Once you click on the chart, the Preference tab will go back to chart settings.)

Restore Settings: TNT Default will change your settings back to the original software settings. My Default will change current settings to your personalized default settings. Apply To All Charts will apply your selected settings on all open charts. Save As My Default will save your current personal settings.

Line: Choose the color, line style, and line thickness of your line and MA line. You can also choose to show/hide the MA line and use Williams AD.   View up to four Thresholds at values and colors of your choice. Choose when you want Buy/Sell Arrows to show and what color.

The Average True Range Indicator was developed by Welles Wilder to work with the commodity industry. The purpose of the ATR is to recognize the level of volatility in a market. Volatility is a measurement of the change in price over a given period. It is often expressed as a percentage and computed as the annualized standard deviation of the percentage change in daily price.

When a market is going sideways, it typically exhibits low volatility and is difficult to trade. A market with higher volatility is typically trending better which would produce more opportunities to get into a trade. If a market’s volatility is too high, traders find that the market is too erratic, and it becomes difficult to trade. In using the ATR, traders hope to measure the level of volatility to help them interpret the different markets they are watching. It is important to remember to consult other indicators or analysis so that you are not relying on only one indicator to determine market entry or exit.

The ATR is a moving average of the True Ranges defined below. The default period interval in Track ‘n Trade 5.0 is 5 days. The ATR is calculated based on the largest of the three distances from the following:

Right-click on the ATR button in your Indicator toolbar and select ATR Settings. The Preferences Tab will open in the Control Panel and the ATR preferences will be displayed. (Once you click on the chart, the Preference tab will go back to chart settings.)

Restore Settings: TNT Default will change your settings back to the original software settings. My Default will change current settings to your personalized default settings. Apply To All Charts will apply your selected settings on all open charts. Save As My Default will save your current personal settings.

Period: Specify the number of days to be used in calculating the ATR.   Line: Choose the color, line style, and line thickness of your line.   View up to four Thresholds at values and colors of your choice.

Bollinger Bands measure volatility by placing bands on either side of a moving average. These bands are charted two standard deviations away from the average. As the average changes, the values of the two standard deviations also change. The Bollinger Bandwidth, developed by John Bollinger, represents the expanding and contracting of the bands based on recent volatility.

During a period of rising price volatility, the distance between the two bands will widen (BB Width will increase). Conversely, during a period of low market volatility, the distance between the two bands will contract (BW will decrease).

The calculation of the BW is here:

Right-click on the BW button in your Indicator toolbar and select BW Settings. The Preferences Tab will open in the Control Panel and the BW preferences will be displayed. (Once you click on the chart, the Preference tab will go back to chart settings.)

Restore Settings: TNT Default will change your settings back to the original software settings. My Default will change current settings to your personalized default settings. Apply To All Charts will apply your selected settings on all open charts. Save As My Default will save your current personal settings.

Period: Specify the number of days to be used in calculating the BW.   % Deviation: Define the displacement between the bands.   Type: Choose from Simple, Linear Weight, or Exponential.   Data: Choose from either Open, High, Low, or Close.   Line: Choose the color, line style, and line thickness of your line.   View up to four Thresholds at values and colors of your choice.

The Commodity Channel Index (CCI) is designed to detect beginning and ending market trends. The formula standardizes market prices to help spot market trend deviations.

Donald Lambert, the creator of this indicator, says that 70% to 80% of all price fluctuations fall within +100 and -100 as measured by the index. The calculation for CCI measures the average daily price’s distance from a moving average of average daily prices.

Followers of the CCI generally look to establish long positions when the CCI exceeds the -100 level, indicating that prices are in a strong up trend. Most users of this indicator also try to look for patterns within the indicator, such as higher highs, and look for CCI movements to be confirmed by general price readings as well.

The purpose of the CCI index is to keep you out of the market during consolidation, or weak trending periods. By measuring the difference between average prices and mean average prices, this indicator attempts to isolate only strongly trending markets, similar to momentum and MACD.

The proper calculation of the CCI requires several steps in the proper sequence. You must first compute the typical price using the high, low, and close for the interval. Simply, take the average of the three values.

For a line drawing, a buy signal occurs when the CCI line crosses from below the lower threshold to above the lower threshold. A sell signal occurs when the CCI line crosses from above the upper threshold to below the upper threshold.

For a histogram drawing, a buy signal occurs when the CCI value crosses from below the 0 line to above the 0 line. A sell signal occurs when the CCI value crosses from above the 0 line to below the 0 line.

Right-click on the CCI button in your Indicator toolbar and select CCI Settings. The Preferences Tab will open in the Control Panel and the CCI preferences will be displayed. (Once you click on the chart, the Preference tab will go back to chart settings.)

Restore Settings: TNT Default will change your settings back to the original software settings. My Default will change current settings to your personalized default settings. Apply To All Charts will apply your selected settings on all open charts. Save As My Default will save your current personal settings.

CCI Period: The number of bars, or interval, used to calculate the study. Default is 20.   CCI: Choose the color, line style, and line thickness of your line. Select Standard and choose between a line or a histogram from the dropdown menu. Select W-CCI to display a histogram divided in the middle and choose two colors from the dropdown menu.   View up to four Thresholds at values and colors of your choice. When calculating buy/sell signals, Threshold 1 is used as the upper threshold and Threshold 2 is used as the lower threshold (default values set at 100 and -100).   Choose when you want Buy/Sell Arrows to show and what color.

The Chaikin Money Flow Indicator is an oscillator developed by Marc Chaikin. An oscillator is an indicator that is used as a counter trend showing when the market is overbought or oversold. These indicators are momentum based. The CMF is based largely on the Accumulation Distribution Line; it compares the close value with the high and the low for that same day.

By comparing the close to the high and low, the CMF is determining if the market has pressure to sell or buy. In doing this, the CMF is giving an indication of overbought and oversold by using these comparisons. If the market is consistently closing in the top region of the price bar and there is an increase in volume (showing an increase in the number of trades) then CMF exhibits a positive value. If the market is consistently closing in the bottom region of the price bar and there’s an increase in volume, CMF exhibits a negative value.

The calculation of the CMF is here:

A buy signal occurs when the CMF value crosses from below the 0 line to above the 0 line. A sell signal occurs when the CMF value crosses from above the 0 line to below the 0 line.

Right-click on the CMF button in your Indicator toolbar and select CMF Settings. The Preferences Tab will open in the Control Panel and the CMF preferences will be displayed. (Once you click on the chart, the Preference tab will go back to chart settings.)

Restore Settings: TNT Default will change your settings back to the original software settings. My Default will change current settings to your personalized default settings. Apply To All Charts will apply your selected settings on all open charts. Save As My Default will save your current personal settings.

Period: Specify the number of days to be used in calculating the CMF.   CMF+/CMF-: Choose the color, line style, and line thickness of your lines.   Display as: Choose between displaying CMF as a histogram or a line.   View up to four Thresholds at values and colors of your choice. Choose when you want Buy/Sell Arrows to show and what color.

Wilder’s DMI is similar to the historic volatility indicator because it shows market tendencies. The main use of this tool is to show the strength of a trend. This could direct the trader to use a trend following system or a counter trend system in their trading. It also indicates possible price reversals.

Directional Moving Index is plotted as three lines on a scale of 0 to 100. This scale is a measure of market trend. The two lines of DMI show the amount of positive and negative movement. The positive line is called D+ and the negative D-. The direction of these lines and the use of crossovers can show the changes in the current market. The key to this indicator is the ADX, or average of the difference of these two lines. The ADX is the main factor in using this indicator. During periods of extreme price variation the two lines can become very volatile, and the ADX is used to compensate for this.

The best application of DMI is present when used with another indicator. DMI should either confirm or contradict the indicator being used. It is also best to use DMI in long-term trade situations. Because the study is not as sensitive as other indicators it is appropriate to use it as a confirmation tool. When the DMI is advancing, the average is higher on the 0 to 100 scale, trend following systems are best employed. Likewise, with a decreasing DMI average, the line is lower on the scale, closer to 0, so a counter trend system might be best. These traits represent the fact that as the average line goes higher in the scale the strength of the trend is gaining, and as the ADX goes lower the trend is losing strength. It is also important to look at the individual lines for changes in price movement.

The other application for DMI is to look at the D+ and D- lines themselves. When the D+ line crosses above the D- line a buy signal is initiated. This indicates that the positive price direction is greater than the negative. Conversely, once the D+ line crosses below the D- line, a sell trigger is present. The negative price movement is overtaking the positive.

The computations needed to generate the final figures for the DMI are not complex but are numerous and lengthy. The following discussion attempts to unravel the computational mysteries of the DMI. If you need further explanation, please refer to the author’s original work. The book titled New Concepts in Technical Trading Systems by J. Welles Wilder, Jr., explains this indicator and several others.

You must first compute the directional movement, DM, for the current trading interval. Directional movement can be up, down, or zero. If directional movement is up, it is labeled as +DM, and -DM refers to downward directional movement. Wilder defines directional movement as the largest part of the current trading range that is outside the previous trading range. From a mathematical view, it is the largest value between two equations:

A buy signal occurs when the DMI+ line crosses from below the DMI- line to above the DMI- line. A sell signal occurs when the DMI+ line crosses from above the DMI- line to below the DMI- line.

Trend Strength: The DX or ADX line must be above the target number before a DM+,- cross will give a buy/sell arrow. The theory is the DX/ADX lines indicate trend strength (not direction) and if it is below 20 there is practically no trend. Values above 40 indicate a strong trend. Different articles would use values between 20 and 40 as targets to look for. This box must be selected for this rule to be available.

Right-click on the DMI button in your Indicator toolbar and select DMI Settings. The Preferences Tab will open in the Control Panel and the DMI preferences will be displayed. (Once you click on the chart, the Preference tab will go back to chart settings.)

Restore Settings: TNT Default will change your settings back to the original software settings. My Default will change current settings to your personalized default settings. Apply To All Charts will apply your selected settings on all open charts. Save As My Default will save your current personal settings.

DMI Period: The number of bars, or interval, used to calculate the study. Default is 14.   ADX Period: Specify the number of price bars used in calculating ADX.   DMI+, DMI-, DM: Choose the color, line style, and line thickness of your line. Select Use Relative Scaling to change the 100% location to the highest point value in the DMI indicator.   View up to four Thresholds at values and colors of your choice. Threshold 1 is used for Trend Strength (default value set at 40).   Choose when you want Buy/Sell Arrows to show and what color. Select if you would like to view Extreme Point Validation, Trend Strength, or Turning Point Validation filters.

The Stochastic Process was invented by Dr. George C. Lane under the basic premise that during periods of decrease, daily closes tend to accumulate near the extreme low of the day and, conversely, during periods of increase, daily closes tend to accumulate near the extreme highs of the day.

This indicator is designed to show conditions of overbought and oversold markets. Stochastics are divided into two types: Regular Stochastics, often referred to as Fast Stochastics, and Slow Stochastics. Fast Stochastics are more sensitive to price changes and can give a lot in the short-term, hence the need for Slow Stochastics.

The first step in computing the stochastic indicator is to determine the n period high and low. Suppose you specified twenty periods for the stochastic. Determine the highest high and lowest low during the last twenty trading intervals. It determines the trading range for that time period. The trading range changes on a continuous basis. The calculations for the %K is here:

A buy signal occurs when both lines are below the lower threshold and the %K line crosses from below the %D line to above the %D line. A sell signal occurs when both lines are above the upper threshold and the %K line crosses from above the %D line to below the %D line.

Right-click on the FSTO button in your Indicator toolbar and select FSTO Settings. The Preferences Tab will open in the Control Panel and the FSTO preferences will be displayed. (Once you click on the chart, the Preference tab will go back to chart settings.)

Restore Settings: TNT Default will change your settings back to the original software settings. My Default will change current settings to your personalized default settings. Apply To All Charts will apply your selected settings on all open charts. Save As My Default will save your current personal settings.

FSTO Period: The number of periods to be used to determine the highest high and lowest low. Default is 14.   FSTO Smoothing: The number of periods to be used to determine the moving average for the %D value.   %K/%D: Choose the color, line style, and line thickness of your %K and %D lines.   Calculation: Choose between Exponential, Simple, and Wilder’s Smoothing calculations.   View up to four Thresholds at values and colors of your choice. When calculating buy/sell signals, Threshold 1 is used as the upper threshold and Threshold 2 is used as the lower threshold (default values set at 80 and 20).   Choose when you want Buy/Sell Arrows to show and what color.

Fractal geometry and nonlinear dynamics is used to create the method of calculations for the Gator Indicator. Used in combination with the Alligator, an Overlay Indicator, the Gator has proved to be effective at pinpointing large market trends.

The Gator was created on a relative scale; what seems to be a large move in the market today may well be just a small move on the historical scale, since the Gator graphically represents itself only against its own historical price line. As the market trends, the Gator will also trend, causing historical representations of market momentum and movement to pale in comparison.

Right-click on the GTR button in your Indicator toolbar and select GTR Settings. The Preferences Tab will open in the Control Panel and the GTR preferences will be displayed. (Once you click on the chart, the Preference tab will go back to chart settings.)

Restore Settings: TNT Default will change your settings back to the original software settings. My Default will change current settings to your personalized default settings. Apply To All Charts will apply your selected settings on all open charts. Save As My Default will save your current personal settings.

Jaws, Teeth, Lips: Specify your periods and shift specifications.   Type: Select Simple, Linear Weight, or Exponential.   Data: Choose the data you would like to be calculated.   Up/Down: Select the color of the histogram when the value is up or down.   View up to four Thresholds at values and colors of your choice.

The Historic Volatility indicator is used mainly as an option evaluation tool. It does not give trading signals like those given with other technical indicators. It gives the trader an idea of how volatile the market has been for a previous period of time.

Changing the period of time the study observes allows the trader to finetune options prices. If a market has been extremely volatile for the past 3 months, for example, near term options should be more expensive. If the market has been calm for an extended period of time, longer term options should be reasonable. In futures, we use it for observation. It tells us if prices are calming down or becoming more erratic.

The key to using historic volatility is determining the correct period of time for each market. The market you are looking at may show a history of volatility years ago, but has been relatively calm the last few months. Getting an idea of the markets behavior recently may be of no use to the trader that is looking at distant options.

For the futures trader, this tool is useful as a guide for order placement. Changing market volatility may indicate that it is time to move stops closer or farther away. If the trader is profitable with the trend and volatility is changing, it might be a time to move stops closer to protect profits. If a trader is trading against the trend, he might want to move stops further away to avoid getting bumped out prematurely.

The calculation for the historical volatility is rather involved. The number of periods per year vary depending on the type of price chart used for the study. The following table lists the number of periods for each type of chart:

When using variable charts, you must first calculate the number of trading periods per year. To do this, you must determine the trading time of the selected commodity. The formula is as follows:

TP: The total number of trading periods per year.

Right-click on the HVOL button in your Indicator toolbar and select HVOL Settings. The Preferences Tab will open in the Control Panel and the HVOL preferences will be displayed. (Once you click on the chart, the Preference tab will go back to chart settings.)

Restore Settings: TNT Default will change your settings back to the original software settings. My Default will change current settings to your personalized default settings. Apply To All Charts will apply your selected settings on all open charts. Save As My Default will save your current personal settings.

HVOL Period: The number of bars, or period, used to calculate the study. Default is 20. You may use any number greater than 1 for the close.   HVOL: Choose the color, line style, and line thickness of your line. Click to Show Relative Scaling if you want the 100% location to be changed to the highest point value in the indicator.   View up to four Thresholds at values and colors of your choice.

The Know Sure Thing (KST) Indicator is an oscillator developed by Martin J. Ping that gives bullish and bearish momentum signals. The difference between this indicator and other oscillators is that it takes into consideration four time periods instead of only one. Each time period is smoothed using a moving average. Also, each time period is weighted differently depending on length, so a longer time period would have greater weight. Because of the consideration of the various time periods, the KST is able to react quicker to price moves.

Watch for bullish and bearish momentum signals in the KST indicator. When the KST turns upward, this is a bullish signal, and when the KST turns down, this is a bearish signal. More confirmation is given when the trigger line crosses the KST line as a result of the change in direction.

A buy signal occurs when the KST line is below the 0 line and crosses from below the trigger line to above the trigger line. A sell signal occurs when the KST line above the 0 line and crosses from above the trigger line to below the trigger line.

Right-click on the KST button in your Indicator toolbar and select KST Settings. The Preferences Tab will open in the Control Panel and the KST preferences will be displayed. (Once you click on the chart, the Preference tab will go back to chart settings.)

Restore Settings: TNT Default will change your settings back to the original software settings. My Default will change current settings to your personalized default settings. Apply To All Charts will apply your selected settings on all open charts. Save As My Default will save your current personal settings.

MA: Specify the number of days used in calculating the period and ROC period of the 1, 2, 3, and 4 moving average lines.   Trigger Period: Specify the number of days used in calculating the trigger period. Choose between a histogram or line.