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Definition: Qstick Indicator
The Q stick indicator is a technical analysis indicator developed by a famous trader and author named Tushar Chande. It is sometimes also called as the Quick Stick Indicator. The popular work on Technical Analysis – “The New Technical trader” was co-authored by him along with Stanley Kroll. He holds nine US patents and is a Ph.D in Engineering and is a contributor to Stocks and Commodities magazine.
It is used to identify the underlying trends numerically using candlestick charts of stock prices. It is used to understand the strength or weakness of a given security over a period of time. The value of the Q stick indicator is equal to the moving average of the difference of the closing and opening prices of the previous “n” days. A positive value of Q stick indicates that the stock has gone up in the past “n” days more than it has gone down. While a negative value means that he stock has gone down on a net basis more than it has gone up
The Q stick indicator can be expressed as:
Crossovers: Since the Q stick indicator moves above and below zero, the common strategy employed is to go long on the security when the Q stick crosses the zero line to positive side and shorting when the indicator goes below the zero line
Extreme levels: It can also give a signal to extreme levels based on previous highest and lowest levels. Buy when the indicator turns to upside at the extreme lowest level and sell when the indicator goes down at the extreme highest level
Divergence: Go long when the indicator value is going up and price is decreasing. Short when the Q stick value is decreasing and price is increasing