Volatility-Based Technical Analysis: Strategies for Trading the Invisible

by Kirk Northington

Overview

A framework for creating volatility-based technical analysis and trading it for profit

Volatility-Based Technical Analysis bridges the advantage gap between resource rich institutions and individual traders. It is a no-calculus, plain-English text that reveals original, highly technical, mathematical-based volatility indicators, complete with MetaStock® and TradeStation® code. With this in hand, any trader can "trade the invisible" by seeing a hidden mathematical structure on the price chart. Author Kirk Northington reveals his proprietary volatility indicators that serve as a market early warning system. Northington extensively teaches you how to build your own indicators, test them, and incorporate your original components into your specific trading methods.

• Walks traders through the mathematical techniques needed to create indicators that fit their own style
• Illustrates volatility-based entries and exits with over 170 descriptive chart examples
• Introduces two new concepts in technical analysis: Volatility Shift and PIV

Written with the serious trader in mind, Volatility-Based Technical Analysis has what you need to successfully trade today's institutionally dominated markets.

Product Details

ISBN-13:	9780470522301
Publisher:	Wiley
Publication date:	08/11/2009
Series:	Wiley Trading , #396
Sold by:	JOHN WILEY & SONS
Format:	eBook
Pages:	480
File size:	15 MB
Note:	This product may take a few minutes to download.

About the Author

KIRK NORTHINGTON is the President of Northington Trading, LLC, a developer of technical analysis systems based on adaptive volatility for swing trading. The company's flagship software product, MetaSwing, is an add-on toolkit for users of MetaStock technical analysis software. In addition to system design, Northington Trading trades stocks on the NYSE and NASDAQ exchanges. Kirk has previously held positions in several Fortune 500 companies, with experience in engineering, digital control system design, and project management.

Table of Contents

Preface.

Intended Audience.

What's Inside?

Acknowledgments.

Part One Are You Prepared?

Chapter 1 The Challenges.

The Brain Power.

The Horse Power.

Options and VaR Ascendancy.

Rain Clouds or Urine?

News Folly.

Eyes on the Goal.

Chapter 2 The Opportunities.

Choose Your Battles.

Take the Offensive.

Prepare and Perform.

Quiet the Noise.

Opportunities Outnumber Challenges.

Chapter 3 The Foundation: Preparations for Exploring Volatility-Based Technical Analysis.

The Preparations Needed.

Trading the Invisible Indicators: Original Development.

Tenets of Volatility-Based Technical Analysis.

Component Testing.

MetaSwing QuickStart.

Discover by Doing.

Part Two Seeing the Invisible.

Chapter 4 New Volatility Indicator Design.

Volatility Unmasked.

Standard Deviation.

Example: Volatility-Based Support and Resistance.

Average True Range.

Molding a Volatility-Based Indicator.

The Whole Picture.

Building Blocks.

Chapter 5 Integrated Volatility Indicator Design.

Volatility Pointed Forward.

Projected Implied Volatility.

More from the Math Toolbox.

Using Tools to Leverage TTI ATR Extreme.

Development Efficiency.

Inventing Wheels: You're Not Alone.

Onward.

Chapter 6 The Framework: A Structural Approach for Cross-Verification.

Adopting a Structure.

Think and See Volatility.

The Framework Components.

Constructing a Compound Derivative.

The Framework.

Going Forward.

Chapter 7 Traditional Technical Analysis: What Works, What Doesn't, and Why.

Line Studies.

Chart Patterns.

Oscillators.

Choose the Best.

Part Three Trading the Invisible.

Chapter 8 Bull Bear Phase Prediction: The Intermediate and Short Term Market Swing.

Why Swing With the Market?

Intermediate-Term Market Direction.

Short-Term Market Swing.

Seek the Advantage.

Chapter 9 Trading the Short-Term Reversal with Volatility-Based Technical Analysis – The Adeo.

The Adeo Point.

The Adeo Trend Rally.

The Meandering Adeo.

The Adeo Short.

Adeo and FOREX.

The Fractal Adeo.

Open Your Can of Spinach.

Chapter 10 Trading the Trend With the 1-2-3.

Rectangles Everywhere.

The Traditional Approach.

The 1-2-3 Construct.

The Daily 1-2-3.

The Weekly 1-2-3.

The 1-2-3: Inside and Outside.

As Simple as 1-2-3.

Chapter 11 Hidden Momentum with Adeo High Slope.

We Are Experiencing Technical Difficulties, Please Stand By.

Momentum Hide and Go Seek.

Momentum Found.

The Quick and the Broke.

Chapter 12 Designing the Exit.

The Objective: Optimize the Profit Target.

Using Time Slicing to Understand Your Time Frame.

First-Grade Arithmetic.

Exit Tactics.

Achieving the Objective.

Chapter 13 Correction and Surge: An Early Warning System.

Market Breadth.

The Correction Event.

The Surge Event.

The Best Free Advice.

Chapter 14 Trading System Design: Detecting the Invisible.

Seeing Through the Fog of War.

Nail It Down: Recognize the Specifics.

The Importance of Believing.

System Design Structure.

System Design Tactics.

Ask the Questions and Use the Advantages.

Appendix A: TradeStation Examples and EasyLanguage Code.

Average True Range.

The TTI ATR Extreme.

The TTI Stochastic Extreme.

The TTI Fabric LR.

The TTI Trend Strength.

The TTI RSIV.

The TTI Composite.

The Relative Exit.

Correction and Surge.

MetaSwing for TradeStation.

Appendix B: The PIV Options Advantages: Using Projected Implied Volatility to Trade the Butterfly, Coondor, Strangle, and Straddle. 

Appendix C: About the Companion Website.

Notes.

About the Author.

A Special Offer from MetaStock

Index.

Editorial Reviews

"While the book is written in an easy to understand style, Northington realizes that not every trader is a programmer. For that reason, he includes the MetaStock® and TradeStation® code for the original, volatility-based indicators that he presents in the book. With these examples in hand, any trader can apply the concepts which are explained in rich detail. Northington’s goal seems to be to teach the reader how to build indicators based upon unique market insights; test the indicators on a stand-alone basis; and incorporate meaningful indicators into trading methods that suit a trader’s personality. In doing so, he also provides a ready-to-go trading system that can be applied with days of beginning the book." (Market Technicians Association Technically Speaking, September 2009)

"Northington presents a credible framework for trading volatile markets. His creativity and advocacy merit attention. New and advanced traders alike will benefit from grasping these concepts."
—SFO Magazine

From the Publisher