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Description of Momentum, Direction, and Divergence

A guide to the latest, most promising technical indicators and their applications

Momentum, direction, and divergence are the three basic components of nearly all technical indicators used in the analysis of stock and commodities trading. And for those who understand them and their applications, they are also the pillars of a high–performance trading strategy. In this groundbreaking book, technical wizard William Blau schools financial professionals in all three. Combining the latest financial information with dozens of eye–opening graphics, Blau clearly, concisely, and with a minimum of complex mathematics:

• Introduces the principle of double smoothing and develops potent new indicators based on double smoothing techniques
• Describes the uses and limitations of a variety of notable technical indicators
• Explains momentum, direction, and divergence and new ways to apply them
• Presents the True Strength Index and shows how it can dramatically improve most directional indicators
• Provides new ways of identifying divergence that make implementation far simpler than ever before

MOMENTUM, DIRECTION, AND DIVERGENCE

The Wiley Trader′s Advantage is a series of concise, highly focused books designed to keep savvy traders in tune with the latest successful strategies and techniques used by the keenest minds in the business.

In this latest volume, technical expert Bill Blau shows you how momentum, direction, and divergence form the basis of most technical indicators and how they can work for you to provide a considerable competitive advantage. Clearly, concisely, and with a minimum of complex mathematics, Blau shows you how to understand and apply them. Integrating the latest financial insights with more than 75 easy–to–follow graphics, Blau describes the uses and limitations of many of today′s most notable technical indicators. He then demonstrates a variety of ways in which the principles of momentum, direction, and divergence can be used to create a versatile new set of technical indicators or to improve the effectiveness of the most widely used traditional indicators.

Focusing on the groundbreaking double smoothing concept, which he introduces for the first time in this book, William Blau:

• Develops reliable new momentum indicators based on double smoothing techniques
• Shows how these indicators improve the effectiveness of most popular oscillators, including the RSI, MACD, and stochastic indicators, by solving a host of timing problems
• Combines the standard Welles Wilder techniques with his original True Strength Index to improve the effectiveness of most directional movement indicators
• Introduces new ways of identifying divergence that make implementation simpler than ever
• And much more

A complete guide to the most potent new indicators and their applications, Momentum, Direction, and Divergence is an indispensable resource for traders, portfolio managers, and all financial professionals.

Title Information

ISBN:

9780471027294

Pages:

160 pages

Format:

Hardback

Product Code:

4714

Publisher:

John Wiley & Sons Ltd

Published:

21/04/1995

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About William Blau

WILLIAM BLAU is a trader with expertise in momentum indicators and their applications. His articles have appeared in Technical Analysis of Stocks and Commodities, and he was a speaker on the Dow Jones/Telerate 1993 World Tour. Prior to becoming a trader, he founded his own engineering firm, specializing in technical consulting for government, industry, and manufacturing prototypes and small production run machines. William Blau holds a bachelor′s degree in electrical engineering from NYU and a master′s in systems engineering and operations research from the University of Pennsylvania.

About the Series Editor: PERRY J. KAUFMAN has been designing and developing trading strategies and hedge and arbitrage programs in derivatives markets since 1970. He is the author of six books, including The New Commodity Trading Systems and Methods and Smarter Trading. Mr. Kaufman is part of Kaufman Diamond & Yeong, an international consulting firm with offices in Vermont, Chicago, and Singapore.

Contents of Momentum, Direction, and Divergence

1. Introduction

2. True Strength Index

3. Stochastic Momentum

4. Tick Volume Indicator

5. A Detrending Indicator

6. Candlestick Momentum

7. Directional Trending

8. True Strength Directional Trending

9. Stochastic Trade Filtering

10. TIV- Trade Filtering

11. ADX-Type Filtering

12. Slope Divergence

Appendix A - Wilder's ADX

Appendix B - TradeStation and SuperCharts Code

References

Index