Let The Indicator Fit The Market by Martha Stokes, CMT
Oscillators are often the first indicators to signal a breakout,
but most traders donít notice. Hereís how you can interpret
oscillator patterns with confidence.
Traders are taught that there are three types of
trends: up, down, and sideways. They attempt to
select strategies and indicators based on these
types. However, there is another approach that
makes trading easier and more reliable.
A far more successful approach is to let the market condition dictate what indicators you should use.
Market condition is not only the analysis of the relationship
between the primary (long-term) trend, the intermediateterm
trend, and short-term trend but also the analysis of the short-term bias and the intermediate- and long-term strength
and direction, as well as the analysis of the market participants.
Who is trading, how are they trading, and what are they
trading? By understanding these facts you can read the
current market condition to determine whether it is a velocity,
moderately trending, platform-building, trading-range, bottoming,
or topping market condition.
MARKETS IN AN UPTREND
Uptrending markets have basically three modes: valueoriented
or accumulation by institutional investors, a moderate
investing and trading growth trend where more
market participant levels enter, and speculative short-term
trading for profits by institutional traders along with newsdriven
emotional buying by inexperienced investors and