Advanced Trading Methods

[gloe]

I am working on a second market direction indictor that is a good guide to determining when to buy dips or sell rallies. It sometimes gives a different signal from the volatility indicator I have been posting about (the long term signal). The volatility indicator is better (faster) at picking bottoms after a hard sell-off than the other smoother market direction indicator. So I'll call one the MVI (market volatility indcator) and the other SMDI (smoothed market direction indicator). I cannot really call the MVI a long term indicator as it does switch around a bit, yet keeps you in strong trends up or down.

As an example of their signals, both went into SELL mode last June, during which one could short rallies, or, (looking at various market structure considerations) hold a short for a while. But then the SMDI went into BUY mode last October, while the MVI chopped around a bit until the BUY signal just before Christmas, when both signals were on BUY and stayed on BUY for awhile. Then the whippier MVI had a SELL in mid-Feb, flipped back to BUY in early March, then another SELL, and finally a flip back to BUY recently. All during this time since last October, the smoother SMDI has been on a BUY.

I haven't decided how I will take into account their differences. One could make a good argument for GO TO CASH when they are on different signals, maybe except for an MVI BUY signal after a significant sell off.

Just thinking out loud.