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John's eSignal Chart Window
Set-Up
To get a good feeling for what's going on with a stock, I divide
my main eSignal chart window into four clips, each emphasizing a
different view of the data.
The top clip occupies half
the window and contains
a candlestick chart of price with 20-day, 2-standard-deviation
Bollinger Bands. The candles are a really good depiction
of the trading process, and the bands define high and
low on a relative basis.
The second clip contains a volume indicator,
14-day money flow. This helps diagnose tags of the bands. The idea
is to look for confirmation, or a lack of it -- strong money flow
and a tag of the upper band is confirmed strength while strong money
flow and a tag of the lower band is unconfirmed weakness, and so
forth.
The third clip contains a volume plot. By relating volume to price
action, you can get a feel for strength and conviction. This is
especially important on breakouts, where you want to see strong
volume confirm price action, or on pullbacks where you want to see
volume dry up.
A symbol overlay
is placed in the bottom clip to assess how the stock is doing in
relation to the market. I use the S&P 500, $SPX, most of the
time, but another index might be better in some situations. For
instance, use the NASDAQ Composite, $COMPQ, if you are looking at
over-the-counter stocks.
This stack of data views in the chart window lets you get a handle
on what's happening with a stock in short order. For variations,
try plotting accumulation distribution instead of money flow. Or,
try adding a fifth clip with a momentum indicator, such as a stochastic
or rate of change. Another improvement might be to add a longer-term
average to the price plot to aid in trend determination, for example,
a 50- or 200-day average.
For colors, I prefer a black background with a dark-gray grid. The
idea here is to pick something that lets the data stand out clearly
without being jarring.
Finally, I don't like to have too many data points on the screen;
it just gets too cluttered. To see greater time spans, I prefer
to use weekly or monthly bars rather than squeezing a lot of daily
bars onto the screen.
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