Tradestation Price Leader Indicator, proprietary

This indicator was designed to be used on intraday tick charts and will be most accurate on those.  Play around with different tick values for the instrument you are wanting to use this on and you will soon find an interval that works well.  For the EC 200 ticks works well, for NQ 150.  The beauty of tick charts is that they smooth the price action.  In times of low volatility or trading volume the bars are compressed rather than generating every 15 minutes, even though there is nothing going on.  In times of high volatility the bars expand so systems and indicators can follow the price action, rather than getting a 100 point 15 minute bar after a report when the last bar had a range of 10 points.

This indicators main value is in showing the underlying trade pressure as defined by upticks vs. downticks over time.  This is frequently very revealing as you can see an instrument being accumulated or sold off many times prior to the move taking place.

I would recommend using this indicator in the following ways:

Ø      When the indicator is below the smoother selling pressure is greater than buying, so the likely price direction is down.  How far and how fast you don’t know, but that is the likely direction.

Ø      When the indicator is above the smoother following average buying pressure is greater than selling, so the likely price direction is up.  How far and how fast you don’t know, but that is the likely direction.

Ø      Watch for divergences, they are a good confirmation that a move is coming.  If you saw an upside divergence for example and then the indicator crossed above its smoother this would be a good place to take a long.