QStick Momentum Indicator : NobleTrading Blog

Wednesday, October 28, 2009

QStick Momentum Indicator

QStick or Q-Stick is a momentum indicator developed by Tushar Chande. It is a simple indicator used to identify the trends over a period of time. QStick indicator shows the numerical value of a trend. It is calculated by taking the moving average of the difference between opening and closing prices for a period.

With QStick momentum indicator, values below zero indicate that the trend has a bearish bias, which increases with increase in negative values. Values above zero indicate that the trend has a bullish bias. Crossings of the zero level are used to identify trend changes. Traders may also use a short-term moving average of the indicator as a trigger line.

QStick is an easy to trade momentum indicator, trading signals can be generated in many ways.

Crossovers: Buy signals are generated when the indicator crosses zero line from below and sell signals are generated when indicator crosses zero line from above.
Extreme Values: Buy signals are generated when the indicator is in extreme low levels but turning up and sell signals are generated when the indicator is in extreme high levels but turning down.
Divergences: Buy signals are generated when the indicator is moving up but price is moving down and sell signals are generated when the indicator is moving down but price is moving up.