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The Elder Ray Index was developed by the famous trader and author Dr. Alexander Elder. The two main components are the Bull Power indicator and the Bear Power indicator. These indicators show whether it is the bulls or the bears, which are currently the dominant force in the markets.
These are the advantages of the Elder Ray Index signal:
The Bull Power and Bear Power indicators are shown below the main chart. The Bull Power is calculated by subtracting that day's exponential average (EMA) from the day's high. If the daily high is above the EMA, then the Bull Power is positive and the histogram is above the zero line. The Bear Power is calculated by subtracting that day's EMA from the day's low. If the daily low is below the EMA, then the Bear Power is negative and the histogram is below the zero
This example shows Dr. Alexander Elder’s Bull Power indicator (green) and Bear Power indicator (red). These indicators would be shown below the main chart.
For a buy signal the following conditions must be met:
For a short sell signal the following conditions must be met:
For traders, who want a strong confirmation for the trading
signal, Dr. Alexander elder added an optional fourth
condition. The fourth condition reduces the number of trading
signals but increases the quality of the signals.
For the buy signal:
4. The Bear Power indicator shows a bullish divergence with the market price. This means the indicator goes up and the price down.
For the short sell signal:
4. The Bull Power shows a bearish divergence with the market price. This means the indicator goes down and the market price goes up
This example shows a chart with several buy signals (green) and short sell signals (red) generated by the Elder Ray Index. This trader uses the optional fourth condition. The condition is set to seven periods. There are some very nice trading signals.
This is the same example as above. The fourth condition postulated by Dr. Alexander Elder is not activated. More trading signals are given, but the quality of the signals is clearly inferior. It is therefore highly recommended to activate the fourth condition.
Open the chart of the instrument you wish to trade.
In the WHS Signals folder, select the Elder Ray Index.
Set the fourth condition for a trading signal. If you do not want a fourth condition, select 0.
To trade semi-automatically, activate TradeGuard+AutoOrder in the chart. To trade automatically, activate AutoOrder in the chart.