How to Use Google Documents : How to Make a Chart in Google Documents

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There are several indicators that I use that are truly unique and helpful. The put/call ratio is one of those indicators that, on certain days, can give you a wealth of information and some insight into the market. Though I seldom use the put/call ratio as a primary indicator, I often use it to give me an overall view of what the traders are buying and selling. This kind of information is invaluable in ascertaining the overall mood and trend of the market.

There are three flavors of the put/call ratio:

1. The equity P/C ratio: This particular ratio is not terribly useful because it generally reflects what the retail buyers are doing and it is us biased toward the long side.

2. The Index P/C ratio: This ratio generally reflects what the institutional buyers are doing, which is hedging activity. This ratio will often reflect a bias towards put buying.

3. The Combined equity/index P/C ratio: This ratio is a combination of the first two ratios and gives a very accurate reflection of put buying versus call buying and is the put/call ratio you want to keep your eye on.

The mechanics of P/C ratios are fairly simple. The ratio is simply the number of individuals or institutions buying puts divided by the number of individuals or institutions buying calls. In essence, you get a unique insight into how many people are betting the market is going long and how many people are betting the market is going short. What better information could you have?

Generally speaking, a P/C ratio higher than 1.0 reflects a high degree of bullishness in the market and is good reason to ignore any potential short trades. As trend traders, you should also notice that the price action on the market indices should be trending upward since there will be an overwhelming number of buyers in the market, as opposed to sellers.

Conversely, I put to call ratio at.6 or lower indicates the wrong bearishness in the market and is good reason to ignore any potential long trades. Again, as trend traders you should also notice the price action on the market indices should be trending downward since there will be an overwhelming number of souls in the market, as opposed to buyers.

I would like to quickly note that the put/call ratio spends a tremendous amount of time in neutral territory and should be used when determining the strength of a trend in a given situation as opposed to a primary trading indicator.

As I said earlier in this article, I don’t necessarily use the put/call ratio as the primary indicator in my trading. More importantly, the put/call ratio is an excellent tool to confirm a protracted or strong move either long or short, depending upon the reading. In other words, if the market is rallying I would prefer to have the market rally confirmed by the proper put to call ratio, and conversely if the market is breaking down, I would like to have that breakdown confirmed by the put call ratio.

Again, one of the basic premises of my trading which is convergence and divergence comes into play here. And if the market is in a weak rally and the put to call ratio does not confirm this rally with the reading of 1.0, there is good reason to believe that the rally is weakening or might reaching the end of the cycle. Just the opposite is true when evaluating a market breakdown and put/call ratio doesn’t confirm the strength of the breakdown.

The P/C ratio is especially helpful in day to day trading, as opposed to intraday trading. It is important to know and understand the overall trend of the market and provide a perspective that is not short-term in nature. In other words, we use three minute charts to trade and a three-minute chart rally is, at best, a transient event and not indicative of overall longer-term market move. It’s important to understand the overall trend of the market from several different perspectives and the P/C ratio is an excellent tool to help a trader understand what the general trend in the market is over a two or three day period.

So what is the significance of the put/call ratio? As a trader who is deeply interested in how the trend in the market is behaving I want to use every available tool at my disposal to gain a deeper and more complete understanding of what is actually occurring in the market. The put/call ratio gives me that understanding from a different perspective than any shorter-term indicator. It is important to understand that trends exist in longer period times than just a day and that is the exact use of the put/call ratio. Try it and see if it doesn’t help you in your trend determination and give you a better overall look at how the market is functioning.

I am a long time retail and institutional trader who now only trades part time, usually in the morning. I enjoy writing informational articles about my style of trading so others may benefit.

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Tutorial 32 | Creating a daily moving average indicator on an intraday chart

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One of the crucial pieces of currency trading knowledge that you should have if you are going to have any possibility of making money with forex trading, is how to set up your trading strategy. Having a good coherent plan that you can stick to, will make all the difference between profit and loss for many traders. Get yourself a good forex ebook and study the different forms of forex trading. Remember that the majority of traders beginning out in forex trading lose money, so it is essential to carry out everything you can to make certain that you are one of the profitable ones. Having a strategy will provide you a good start over most traders who merely start trading with no notion of where they are heading. Having a profitable method is important of course and there are many forex ebooks out there that will give you this currency trading information. Most beginners think that the trading system is the one thing that matters and exhaust all of their time searching for a spot on system that is guaranteed to make money for everybody. But no such trading system exists. Although there are a bunch of fine systems, no system will be successful without a trading plan that is tailored to the single trader. This means that you need to figure out your trading plan for yourself. Do not be alarmed however since it is quite straightforward. Your plan just needs to include three things:

1. Size of Lot This can be measured in the number of positions that you will take on every trade. It may vary according to the strength of your signals or it may possibly be the same for each trade, but it must be clearly set out. Do not vary your lot size according to intuition, and do not vary it according to whether your preceding trade was profitable or not. When you are deciding on your lot size, you must also consider your gearing and what proportion of your total funds will be committed to a trade. This is part of your risk management plan and it is crucial currency trading knowledge that you must always have by your fingertips.

2. Stop Out Losses Your strategy must include a stop loss, measured in terms of pips. Again you must consider the risk that you are taking as a proportion of your overall funds. In most cases you should target for a risk of around 2% for every trade. However, with selected systems or if you have a very low initial pot, you may well want to go higher than that to get around your stop loss being triggered too often. Just be wary that if you do that, you have a greater chance of going bust.

3. Profits You must also establish the exit place for a winning trade, i.e. how many pips you are aiming to achieve. If you do not establish this you will often be tempted to hold out as long as possible, praying that the trend will remain your way. Often times you will be caught out by a unexpected reversal and a profitable trade can be turned into a loss. So it is very vital to decide ahead of time how much profit you will take. Once you have your currency trading information embedded in your strategy, it is crucial to keep to it consistently. Avoid the temptation to trade when the signals are not quite right, or to stick to your gut feelings in anything, at least until you have many years’ experience of the market.There are a number of forex ebooks that can help you with the mental aspects of trading. Also, reduce interruptions whilst you are trading. This will help you to stay away from making daft mistakes and keep you concentrated so that you can make the best of all of the forex trading information that you have acquired.

Trading Strategies Interview with Nial Fuller

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