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| 1. Jesse Livermores Secret To Success
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| 2. Home page investor image explanation
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| 6. How to win in the stock market
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| 7. Commandments to follow
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| 8. 10 Rules for Investing
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| 9. How to survive a stock market crash
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| 10. William J ONeil, CANSLIM
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| 11. Barry Ritholtz keep it simple stupid
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| 12. Gerald Loeb how to win
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| 20. Indicators Introduction
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| 22. Richard Wyckoff method
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| 23. Richard Wyckoff Waves of Price and Volume
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| 24. Richard Wyckoff is a success story
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| 25. Richard Wyckoff logic not working, this maybe why?
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| 26. Richard Wyckoff studied Jesse Livermore
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| 27. Bob Evans, renowned Wyckoff teacher
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| 28. Tim Ord, Secret Science of Price and Volume
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| 30. William Gann life story
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| 31. William Gann Law of Vibration
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| 33. Wyckoff method improved1
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| 34. Wyckoff method improved2
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| 35. Original Wyckoff and Wyckoff 2.0
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| 36. Wyckoff 2.0 vs Others
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| 37. Wyckoff 2.0 and Volume Spread Analysis
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| 42. Cycles for short term speculation
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| 48. RTT Wyckoff Short Term model
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| 51. Proprietary Indicators (PI)
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| 52. Multi Time Frame (PI)
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| 55. PI: RTT TrendPower OBV
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| 56. PI: RTT On Balance Volume
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| 58. PI: RTT Rainbow Bands
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| 61. PI: RTT Steps of Cause and Effect
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| 62. PI: RTT Wyckoff Strength Weakness
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| 63. PI: RTT Wyckoff Price Waves
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| 64. PI: Proprietary Indicators Caution
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Indicator Library
PI: RTT TrendPower OBV
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RTTTrendPowerOBV and RTTTrendPowerOBVBase is a proprietary indicator, part of the RTT Indicator set.
Important Disclaimer: None of the proprietary indicators give specific signals of BUY and/or SELL prices or signals for investment decisions. They do however bring your attention to price action for further analysis only. Any BUY or SELL decision is purely your own responsibility. Please understand that we find favor with our proprietary tools, but they do not work all the time, nothing is 100% accurate. Please review our terms of use.
The RTT TrendPower responds to bullish and bearish price action weighted by volume. Many have called this type of indicator a 'smart money tracker' or 'bull bear', in the end it is simply a 'true trend' indicator as price direction is weighted by volume.
The calculation from each days high, low, close and volume.
Bar Mid Point (BMP): (High+Low)/2.
Bullish Close: When close is above BMP.
Bearish Close: When close is below BMP.
Neutral Close: When close is equal to BMP.
The above is then weighted by volume, and then added to the previous bar result.
The output is:
1) When price closes well above the BMP, with good volume, the indicator will move higher.
2) When price closes well above the BMP, with poor volume, the indicator may or may not move higher.
3) When price closes slightly above BMP, with good volume, the indicator will move mildly higher.
4) When price closes slightly above BMP, with poor volume, the indicator may or may not move higher.
5) When price closes well below the BMP, with good volume, the indicator will move lower.
6) When price closes well below the BMP, with poor volume, the indicator may or may not move lower.
7) When price closes slightly below BMP, with good volume, the indicator will move mildly lower.
8) When price closes slightly below BMP, with poor volume, the indicator may or may not move lower.
If you are a student of Richard Wyckoff you will recognize that this indicator supports the tape reading law that a healthy uptrend trend requires rising volume on the upswing and falling volume on the down swings as price makes higher highs and higher lows (vice versa for down trends).
This indicator highlights buying and selling pressure, buying pressure can be seen when there is increased volume with frequent closes in the top half of the bar range and selling pressure can be seen when there is increased volume and with frequent closes in the bottom half of the bar range.
This indicator is ideal to judge the price trend power after a break out through support or resistance. This indicator is not a signal tool for buy and sell decisions, price action should guide you there, however if this indicator shows weakness or divergence then your stops should be tightened.
How to read the indicator:
1) Bullish: When indicator breaks zero or is above zero or is rising higher or maintaining a constant level above zero (like a channel).
2) Bearish: When indicator breaks zero or is below zero or is falling lower or maintaining a constant level below zero (like a channel).
3) Use a trendline on the indicator swings as a 'heads up' to a change in behavior.
4) Divergence with indicator peaks and troughs compared to price peaks and troughs is material.
5) Understanding Wyckoffian logic (low, average and extreme volume, supply and demand, composite man, market phase, weak and strong hands, mark up, mark down) is essential to interpreting the correct market message from this indicator.*
*Please read the book by Tom Williams 'Master The Markets', see our education page for more, and all other related Wyckoff books.
Trend Change
If you expect price to undergo a trend change then you will require this indicator to move from bearish to bullish (or vice versa). In most cases this will involve the indicator crossing and testing the zero line, and or breaking a short term trendline pattern within the indicator.
Hurst Cycles and Gann Angles
The health of a trend (or change of) is of great interest to the cycles analyst. If you expect price to roll over in line with a cycle, then you should see a confirmation via this indicator. If the indicator does not confirm the cycle rollover then it may be confirming a cycle inversion. The same applies to angles, if you expect to see price bounce off an angle then you should see a confirmation via this indicator, other wise a angle break may be confirmed.
Wyckoffian Logic
Wyckoff students know that price moving with average volume is best, and low or extreme volume can lead to price reversals. As this indicator is weighted by volume, extreme volume readings will accelerate this indicator in either direction, therefore you can conclude that very fast movements by this indicator should be considered the same way as Wyckoffian logic treats extreme volume, with due care.
Consider this, a markup bar is a bar that is wide in range, supported by good volume and the close is near the high. However this type of bar can have two consequences, the first that if it is true demand by the strong hands (ie composite man), and higher prices are to be expected, the second is that if it is false demand, by either the weaker hands who are mistaken about the trend, or it is a pump up by the strong hands to fool the weaker hands so they can sell into it. The point is that a mark up bar requires confirmation by the immediate bars that follow it. This indicator will rise over time with the markup bars that are true, and fall when markup bars are false. A strong bullish trend, has many true mark up bars, thus when this indicator is trending well or maintains a decent elevation above zero the price trend is true and well supported by the strong hands (to cover mark down bars is the inverse of this paragraph).
This indicator will be useless to you if you do not understand Wyckoffian logic, start your true stock market education and learn as much as you can about Wyckoffian Logic. You will find our favorite books on the subject listed under the 'Richard Wyckoff Method'. Unfortunately not a single book covers all of the Wyckoffian logic aspects in total, you need to read them all, and then you will know as much as we do.
Richard Wyckoff used an indicator called the optimism and pessimism index which is very similar to RTTTrendPower, both are price action adjusted by volume action.
See more here :
A indicator that Richard Wyckoff would add to his tool chest
Citigroup and Toyota review
RTT TrendStatus
The RTT TrendStatus is calculated purely on price, it is NOT the volume weighted, and therefore viewing the RTT Trendstatus with RTT TrendPower will help you determine how powerful the price trend with volume is. Remember, that price action has priority over volume, price action leads, but for price to maintain its desired trend it will eventually require volume to confirm it.
Period Setting
The default setting is 21. If you are using it with Hurst Cycles then use the half cycle period (ie Hurst Cycle is 80, use this indicator with 40 periods.). The period selected sets the average volume time span that the current day volume is compared to, therefore viewing a stock with 11, 21,81 and 121 periods (half a month, one month, four months, six months) will give a better picture of the stock true trend (or trend power). If you trade shorter time frames settings of 7 to 12 will give you an excellent view of the immediate bull or bear focus.
Volume Data
As this indicator is weighted by volume, low volume stocks may not produce the best readings. Take due care.
Examples
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And also RTTTrendPower merged with the standard On Balance Volume (OBV) indicator produces are great price volume trend check.
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Here is an important indicator RTTTrendPowerOBVBase (now named RTTWyckoffNeyVolume), this is a internal calculation from within RTTTrendPowerOBV. Evaluate the red and blue volume bars using Richard Wyckoff Law of 'Effort vs Results'.
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NOTE: readtheticker.com does allow users to load objects and text on charts, however some annotations are by a free third party image tool named Paint.net
Investing Quote...
.."At long as a stock is acting right, and the market is right, do not be in a hurry to take profits"..
Jesse Livermore Trading Rule
..“The key to successful investing is having everyone agree with you — LATER.”..
Jim Grant
..“I buy on the assumption they could close the market the next day and not reopen it for five years” and “Much success can be attributed to inactivity. Most investors cannot resist the temptation to constantly buy and sell.”..
Warren Buffet
.."There is only one way to kill capitalism - by taxes, taxes, and more taxes"..
Karl Marx
..“Investing should be like watching paint dry or watching grass grow. If you want excitement…go to Las Vegas.”...
Paul Samuelson
Created on: 5/4/2011 1:57:38 AM Last Update: 9/30/2020 10:01:00 PM Posted by: RTT
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We at readtheticker.com hold the view that a mix of stock chart technical analysis, Richard Wyckoff, William Gann and Jim Hurst methods plus market fundamentals allows the investor to formulate a very sound market opinion. These attributes are mutually inclusive and must be weighted equally before investing or trading in any Stock, ETF, Currency, Bond, Commodity, CFD or Mutual Fund
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