USE THE BIAS INDICATOR TO HELP YOU WITH YOUR DAY TRADING
What is the 30 Minute Bias Indicator and how can I use it? What is the Bias Indicator (BI) The Bias Indicator is basically based on the share price opening range We will investigate: How to select stocks to trade Entry tactics Stop loss settings
The Bias Indicator is defined in terms of time and price. The time element is simply the first X number of minutes in the trading day. The number of minutes used to define the Bias Indicator is your decision as a trader. I define the Bias Indicator as the first 30 minutes of the trading day. I have found this period to work the best for my strategies that are geared towards day trading.
I will focus on the 30 minute BI because I think that this is the best time frame to use for Day trading. I believe that the market tends to experience a reversal period around 10:30 A.M., as many reports are released between about 9:30 A.M. and 10:30 A.M. Fund managers also seem to start their daily inputs around this time. So the 30 minute BI includes both of these factors.
The price component of the BI is the day’s trading range at the end of the BI time period. This means that the 30 minute BI is defined as the stock’s high and low for the day at 10:30 A.M.
The BI is not the opening price. In fact, the opening price is not a factor in calculating the BI. For example, if BHP were to open at $26.49 and then sell off to $26.06 at 10:15 AM and then reverse and rally to $26.86 at 10:30 A.M. the 30 minute BI would be the day’s range at 10:30 A.M. or $26.06 - $26.86. This is because during the 30 minute BI period $26.06 and $26.86 were BHP’s low and high, respectively.
Note: I said the day’s range at 10:30 A.M., not the range for the whole day.
The easiest way to mark the Bias Indicator Range is to use an intraday candle chart, set at 30 minutes interval. The first complete candle then gives you the Bias Indicator Range. Draw a line on top of the candle and one on the bottom of the candle and you have today’s BI marked on your chart.
As you can see, defining the BI is easy. The 30-minute BI is strictly the high and the low of the first 30 minutes of trading. I find that the BI often reveals the bias of a stock for the day.
Why is the Bias Indicator so powerful?
prowadzenie kadr wrocław that the BI is assessing such an informative period means that it can often determine the bias for the day as being bullish, bearish, or neutral. The BI represents how the bulls and bears establish their initial positions for the day. A move away from the BI indicates that one side is stronger than the other. A stock moving above the BI means the prevailing sentiment in the stock is bullish. The manner in which the stock breaks above and trades above the BI will indicate the strength of the bullish sentiment. The same but opposite analysis applies when a stock moves below its BI.