How to Use the Aroon Indicator to Measure the Strength of a Trend 📈

in this video we're gonna talk about the Arun indicator stay tuned a trade is a very warm welcome to you so I want to talk about this indicator called the Arun indicator now the Arun indicator comes from the word Arun obviously which means dawn's early light now this I research this kind of useful information guys so you don't have to the useful stuff is gonna come in a second when we can work out how we can make better trades with it but anyway let's look at the background of it let's look at how it all works and let's see you know what we can use it for and then like guys thought with all these indicators there's hundreds out there we've got a picked up odd one or two that's gonna suit what we're trying to achieve you know this is something that measures trend strength oh it's an uptrend or downtrend whether the stock worthy index with the currency pair is trending and how strong that trend is so it's quantifying what we can see on the chart very handy very useful if that's what we're looking for so let's have a look at it let's stick it on the chart here so got a chart of the Dow daily chart I'm gonna stick on the Arun indicator there we go it's on now we have two lines with a room we have what's called an upline and we have what's called a down line now first of all before we go into what each one of these is I need to change the colors on this because straight straight away I'm confused this is confusing my mind it's telling me you know the default the up is orange the down is blue whether this this is like just me or not but I like to sort of mirror what I'm looking at on my candlestick so I'm gonna change the up to my lime-green my down to red so that when I look at it I can visualize that a lot more and say okay well okay if we've got our up line is moving up gray it makes a lot of sense for me just just just for my mind obviously that's the whole point of of charging customized at hey like so that's why I'm gonna do first of all and the other thing you want to do is that looks a bit noisy to me let's just bring it back to some like a 25-day some knowledge because my my gut tells me that this indicator is more of a swing trading on the end of a long really nice steady trend kind of tool have to admit guys is not something I've looked at very intensely before I'm familiar with it I don't think I've ever used it to make a train decision so I'm gonna share with you now if you're learning fresh as well then we're both together because I'm going to show you the kind of things that I think is useful for where it maybe falls down and how perhaps we could integrate it into a trading strategy and I may use it myself in for certain circumstances you know that's the whole beauty of this game as we can pick and choose the tools that we want to use so how's the whole thing work let's get on with the game so what I've got now has got a twenty five period and what this is basically saying to us it's saying okay it's the number of days so a twenty five period Arun is measuring the number of days since a 25 day load for the load line and the number of days in to twenty five day high for the lot for the High Line but it's calculated with a multiplier of a hundred so it's not it relates between or and a hundred but it's never gonna be above 100 everything below zero its nominal eyes because it's in this case in this example it's 25 which is what we've got it set it to minus the days since the twenty five day high divided by 25 multiplied by a hundred the calculation doesn't matter so much in terms of we just want to know exactly what it's telling us you know that's really what it's telling us and what external is hey this trend is starting and that's that's where this some the word Arun comes from which is like the new dawn new dawn's early light to try and give us the idea that the trend is starting so the trend is starting and how strong is that trend so a couple of phases that appears to be what's happening with this is that phase number one then we get across from the up line let's say the example of non trainers keep it simple and where it can reverse it for a downtrend we'll get across the upper line crosses above the down line in other words we start to get a point now where we're getting more highs than lows we ate more fresh X day highs than we are lows and then the line is the up line is gonna go to a hundred no it's gonna max out another words gonna have multi multi highs you think about a trend you know trend is is a consistent uptrend is just I knew hi new hi new hi new hi the stronger the trend the more new highs new EX day highs we have and so that's represented as you expect in this aroun indicator by just literally hammering itself with a hundred okay sweet if we have kind of a little blip off and we kind of have a couple of day loads it will back off and ultimately you can have a scenario where and if we start shopping then these things are going to move quite erratically because it's gonna be all new high new low and then we can see that it's not really a training environment but if it's trending the first stage we look for is across from that from the upper the up line crosses the down line they want to see it cross like a mid point and the mid point that it was the obvious midpoint here is to have about 50 so 50 is gonna give us an idea that let me just stick it in 50 exactly as I like to have it accurate okay that's retailers okay things are picking up now and okay obviously you're gonna get scenarios I'm looking at this one Higgs a great example where you cross the 50 before you cross that but this was an extreme example wasn't it this day was an extreme example but the idea is that hey while the trend is strong the arune's gonna be up so if it crosses that down line across this above 50 then it goes for 100 there's your three phases the idea is to go long or cover your Shore any point of those that you think obviously is gonna be later on in the move when it's up at 100 but you're gonna have more confirmation that trend is solid so let's look at this chart in the doubt here and just see what's going on so we crossed above it here we're holding a high as you can see we're putting a new highs new highs new highs here we kind of shop around a bit let me zoom in a bit for you guys we can see here we kind of chop around a bit and that causes the aroond down to spike up because actually now we start to make new 25-day lows that kind of thing and it just giving us a bit of a chop indicator but then we push back up the Aroon down goes back down to zero indicating there's no real selling pressure arune up starts to push back to 100 indicating new highs new highs new highest in highs in this case 25 day highs guess what we've got it set to and then it just stays there and stays there now when we go when we're sitting there nicely and we're chugging along so the idea being is that we'd stay long we'd stay and would probably want to hold it until that I rude up came down through that fifty line or a midpoint line as soon as did that it would be a case of this is probably now the the trend is unwinding it's not a strong there's not as much strength in there we want to get rid of it so you know we come out of that position there and then if we consider it ashore if we're a short idea the idea would be to you know to be going short when the room down was spiking up and then coming out obviously when it spike down below fifty so if we were literally gonna do that we'd be going short here and then would be coming out here and obviously that cases a small profit or small loss or a scratch trade so you know it it is what it is but that's the theory of it a theory Oz it's the strength of the trend that's going to start the trend the medium kind of push the trend and then coming out when the trend is unwinding so I think it's a nice little tool actually I quite like in if you look it it does pretty much mirror trend strongly and you can see you know that area that we were talking about there on that shot that we just talked about that you probably are going sure you know if you go long on week one we do that cross again so we went long as we cross the up crosses above it down we would be staying long pretty much if we're using that strict criteria all the way up to this point here we cross down below the 50 to about here which is which is not a bad little thing and I guess it's about the time period as well several months move you know nice little uptrend this is where this indicator comes into its own a nice steady thing if you a commodity that's just not grinding a lower the Arun is just constantly with the up to down line or the upper highs 100 hundred hundred little blips off it but you're not gonna get a push back down below the 50 level until the kind of thing is wearing out a little bit sassy Arun indicator guys I learn a little bit from this I hope you did too maybe you can use it in your trading if you think that's quite interesting I hope you enjoyed the video take care see the next one bye-bye you

Channel: UKspreadbetting

Views: 42,709

Rating: 4.7252932 out of 5

Keywords: aroon indicator, technical analysis, aroon indicator system, trend analysis, trend trading, Aroon Oscillator

Id: qtisilkNxXI

Length: 8min 56sec (536 seconds)

Published: Thu Oct 19 2017