A Straightforward Indicator for Day Trading

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The Bullish Percent Index was made in the 1950s by Abe Cohen. Then in the 1970s and 1980s, it was polished by Earl Blumenthal and Mike Burke, respectively. It is a simple indicator that demonstrates half a dozen clearly defined signals valuable in day trading. These signals include the bull alerts, bear alerts, bull confirmed, bear confirmed, bull correction and bear correction.

Getting the BPI is not hard. To get the BPI, divide the number of stocks on P&F purchase signals by the all-in-all amount of stocks. On a Point and Figure chart, a particular stock is plotted which has a logarithmic scale of 2% and a classic three-box reversal. Samples are available at day trading blogs.

When a Bullish Percent Index is viewed falling under 30% but then goes up to form a brand-new X line, it reported to be a Bull alert in day trading. It is a day trader’s omen of a market improvement. A day trader usually takes long positions but usually with caution. However, the contrary state is termed the Bear alert. This will show as a three box decrease of 0s after the bullish percent index of above seventy percent. In this day trading condition, a day trader is okay to consider short positions but constantly with care.

In the event the Bullish Percent index is on a Point & Figure buy signal and it is rising, it regarded as a Bull confirmed signal. A P&F buy signal that is increasing is a Bull confirmed signal. The buy signal is represented by an X line that's maxed an earlier X line. The Bear confirmed signal is merely its opposite when the Bullish Percent Index is on a Point & Figure sell signal and is particularly falling. In this case, a day trader should go short.

A buy signal matched with a column of Os or is decreasing is regarded as a corrected bullish market or a Bull correction signal. A sell signal that is increasing is a bear correction signal. In day trading, these are not essentially reversal warns. It is simply a bullish percent index showing the day trader that market is about to lose steam and buying soon enough is recommended.

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A Straightforward Indicator for Day Trading

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A Straightforward Indicator for Day Trading

This article was published on 2012/04/09