Qstick Indicator

What is the Qstick Indicator

The Qstick indicator is a technical analysis indicator developed by Tushar Chande to mathematically distinguish trends on a price chart. It is calculated by taking an 'n' period moving average of the difference between the open and closing prices. A Qstick value greater than zero means that the majority of the last 'n' days have been up, showing that buying pressure has been expanding.

The Qstick Indicator is likewise called Quick Stick. It isn't widely accessible in trading and charting software.

The Formula for the QStick Indicator is

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There is the option to add a simple moving average (SMA) of the QStick indicator. This makes a signal line.

The most effective method to Calculate the QStick Indicator

1. Record differences between the close and open price for every period.
2. Settle on the number of periods to use in the EMA or SMA. The more periods utilized, the smoother the indicator and the less the signals, better for distinguishing the overall trend.
3. Compute the EMA or SMA once there are sufficient (close-open) data points.
4. Option: work out a SMA of the Qstick computations. This gives a signal line. Three is common period utilized for signal lines.

What Does the Qstick Indicator Tell You?

The QStick is measuring buying and selling pressure, taking an average of the difference among closing and opening prices. At the point when the price, on average, is closing lower than it opens, the indicator moves lower. At the point when the price, on average, is closing higher than the open, the indicator climbs.

Transaction signals happen when the Qstick crosses over the zero line. Crossing over zero is utilized as a buy signal since it is demonstrating that buying pressure is expanding, while sell signals happen when the indicator moves below zero.

Furthermore, an 'n' period moving average of the Qstick values can be drawn to act as a signal line. Transaction signals are then generated when the Qstick value gets through the trigger line. Three is a common 'n' period for signal line.

At the point when the QSticks moves over the signal line it demonstrates that the price is starting to have more closes over the open, and hence price might be starting rise. At the point when the Qstick crosses below the signal line it demonstrates price is starting have more closes below the open. Price might be starting to trend lower.

The indicator may likewise feature divergence. At the point when price is rising yet the QStick is falling, it shows that momentum might melt away. At the point when price is falling and QStick is rising, this shows buying momentum in price might happen soon. However, the indicator can create peculiarities. It doesn't account for gaps, just intraday price action. Consequently, on the off chance that the price gaps higher, yet closes below the open, this is as yet set apart as bearish even however the price might have still closed higher than the prior close. May could bring about divergence which doesn't be guaranteed to show a convenient reversal in price.

Illustration of How to Use the QStick Indicator

The accompanying chart shows a 20-period QStick applied to the SPDR S&P 500 ETF (SPY).

At the point when the price is choppy, so are the buy and sell signals. On the left half of the chart there are many zero-line hybrids that didn't generate beneficial trade signals, nor distinguished the trend definitively.

On the right-half of the chart, there were additional trending periods in the price. During this period the QStick improved in the area of recognizing the trend, remaining over zero when the price trend was up, and remaining below zero when the price trend was down.

The Difference Between the QStick Indicator and Rate of Change (ROC)

QStick takes a gander at the difference among open and closing prices, and afterward takes an average of that difference. The ROC indicator takes a gander at the difference between the current closing price and a closing price 'n' periods back. That amount is then separated by the close 'n' periods back and afterward duplicated by 100. The indicators are comparable however take a gander at marginally various data are calculated in an unexpected way, so they will have somewhat unique trade signals.

Limitations of Using the QStick Indicator

The QStick indicator just glances at historical data, and takes a moving average of it. In this way, it isn't innately predictive, and its developments will normally lag behind the actual developments in price.

The QStick can create oddities when the price is gapping in one course yet the intraday price action moves the other. This might cause divergences between the price and the indicator however may not be guaranteed to show a convenient reversal in price.

The trade signals may not really be great, and frequently should be combined with some other filter. In choppy conditions the price will whipsaw across the zero line or potentially signal line, generating various losing trades.

Features

• A falling QStick signals the price is closing lower than it opened, on average.
• A rising indicator signals the price is closing higher than it opened, on average.
• The QStick works out a moving average of the difference among closing and opening prices.
• The QStick can generate trade signals in light of signal-line or zero-line hybrids.