My June Currency Trader Magazine Article: Getting More Out of Elder Ray

As many of you may know through the past few years I have become a very frequent contributor to currency trader magazine – an important publication dealing with spot and futures currency trading – with more than a dozen contributions to the magazine already published within past issues. On today’s article I want to share with you some information about my latest article which – as always – can be download for free from the magazine’s website here. Please remember that although the past two editions are always available for free you will need to pay the magazine if you want to read or access some of my previous articles which include contributions dealing with the descriptions of many different systems, studies on money management and the statistical characteristics of the Asian trading session.

This month I decided to write an article about a new indicator I created to give a better interpretation of what most people know as the “Elder Ray Index”. This trading tool has been described previously on my “indicator series” of posts where I did an in-depth discussion of what the indicators that form the index mean and how the index can probably be used to build long term profitable algorithmic strategies. In summary the Elder Ray Index is formed by three indicators, a 13 period EMA (showing price consensus over the past 13 periods), and bull and bear power indicator lines (these lines simply show the distance between the EMA and the high/low of the candle). As you can see the Elder Ray Index is an interesting tool which attempts to show us how price pulls away or towards the moving average.

Going deeper into the concept of measuring this “pull” and obtaining a long term perspective of how this pull has been relevant for a given instrument I created an indicator called “Total Power” which shows a much more in-depth description of the Elder Ray concept in the sense that it allows you to get a longer term condensed perspective of what is actually going on as price pulls away or towards the consensus. Please read my article to learn more about the way in which the “Total Power” indicator works and why its interpretation gives the trader power beyond what the pure Elder Index can say. The Total Power indicator is therefore a very useful tool for either manual or algorithmic traders as it condenses a wide amount of information in a very easy-to-interpret way.

Certainly I didn’t want to just publish the indicator with a set of rules and no results – since this often does not help traders get something “real” out of the indicator – and therefore I decided to code a preliminary strategy using the concept in order to demonstrate how the Total Power indicator works and how it can indeed lead to long term profitable results, even across a multiple currency portfolio without any optimization. This analysis shows you just how powerful this way of looking at the market is as even a very preliminary trading technique such as the one published is able to achieve good results. I also give some suggestions throughout the article of how the Total Power indicator may be useful for the capturing of counter-trending as well as trending opportunities and how traders can refine the logic of their strategy to achieve more success when attempting to follow long term trends.

Overall it is VERY important to remember that the Total Power indicator is merely a calculation done over price and its variations over a consensus and in order to use it successfully it becomes VITAL to understand how it works, how the calculations are derived and what the interpretation of the values is. As always failure or success when using indicators does NOT depend on following some color change, line cross or other such signal but it depends on the overall interpretation of what the numbers on the screen are telling you and how well you UNDERSTAND their meaning.

That said, hopefully the Total Power indicator will prove to be a useful tool for all traders who are looking for information regarding changes over consensus and ways to improve their Elder Ray trading methodologies. This new indicator provides a very good tool to make your view of the Elder Ray index much more complete, giving you the opportunity to generate a much more in-depth market analysis which might end up with much more successful algorithmic and discretionary trading approaches. Certainly if you would like to learn more about my work in automated trading and how you too can get a true education around algorithmic trading please consider joining, a website filled with educational videos, trading systems, development and a sound, honest and transparent approach towards automated trading in general . I hope you enjoyed this article ! :o)


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2 Responses to “My June Currency Trader Magazine Article: Getting More Out of Elder Ray”

  1. Rod Grenell says:

    very interested in your article on the TPI. Is it available to purchase?

    • admin says:

      Hi Rod,

      Thank you for your post :o) It is available for free on the Currency trader magazine website till August 2011. Thanks again for posting!

      Best regards,


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