This is the seventh email in our series, "What the Signals Mean."
If you missed the previous six emails you can view them here:
The DecisionBar Bias Bar
The DecisionBar Bias Bar is an indicator we use to confirm trades, but it is a very powerful indicator on its own. The Bias Bar is a proprietary indicator. You will not find anything like the Bias Bar anywhere else.
The BiasBar is a "consensus indicator." It is made up of eight proprietary algorithms or "Advisors" that attempt to predict the future direction of the market. At the close of each bar these Advisors "vote," and the results of the vote is tabulated and posted as a color on the Bias Bar.
The Bias Bar has no adjustments. Since you have the final say, you don't get a vote.
If the Bias Bar is gray, the Advisors are evenly split and the market bias is considered neutral.
If the Bias Bar is light green, it indicates that a small majority of the Advisors are Bullish. Increasingly darker shades of green indicate a greater consensus of the Advisors are Bullish.
If the Bias Bar is light red (pink), it indicates that a small majority of the Advisors are Bearish. Increasingly darker shades of red indicate a greater consensus of the Advisors are Bearish.
Just like the "talking heads" on TV, sometimes the advisors get too Bullish or too Bearish.
So, when the Bias Bar turns dark green after an extended upswing, you should be wary of a reversal to the downside.
And, when the Bias Bar turns dark red after an extended down swing, you should be wary of a reversal to the upside.
At times you will see that the Advisors have no clue what will happen next, and the Bias Bar will change color frequently as they re-evaluate their positions. This indicates a choppy market you should probably stay out of.
Let's take a look at some charts with just the DecisionBar BiasBar applied.
This first chart of the EURUSD is from MetaTrader 4. As you can see, the Bias Bar colors are all over the place, indicating a choppy market and one you should probably stay out of. Due to programming limitations, MetaTrader only uses six Advisors.
The BiasBar is mainly used for entering trades. An ideal long entry occurs when the Bias Bar moves from gray (neutral) to light green to a darker shade of green, as shown on this chart from NinjaTrader.
On this daily chart of the S&P 500 eMini from MultiCharts I've added the DecisionBar Strategy Indicator.
Notice the transition from a choppy to a trending market.
I've included this daily chart or AAPL from 2006 just so you could see the Bias Bar transition from an up trend to a down trend. It looks like it was a little late on this one.
Putting Things in Perspective
As I mentioned earlier, the final decision on any trade is always yours. No indicator or collection of indicators is perfect.
Many traders waste their entire trading lives in a quest for perfection. This is a futile endeavor.
Trading is all about making the best decisions you can with the information you have. We have done our best to give you the information you need with DecisonBar Trading Software.
DecisionBar is not a trading system, but it is an information management system. Instead of you having to keep track of everything all at once, DecisionBar keeps track of everything for you, and alerts you when there is something you need to pay attention to.
If you are ready to become a successful DecisionBar trader, there will never be a better time than right now to get my DecisionBar trading software.
For details and to sign-up, please visit our website at:
Les Schwartz and the Staff at DecisionBar Trading Software.