In this Track 'n Trade Trading Training video, I want to talk to you about the Settings of the Seasonals Indicator.
Now, the Seasonal Indicator comes in three parts. The first part, of course, being the historical averages, that lay directly over the top of the chart. Now, these are price averages. The second part, being the Seasonals, (this is what we consider, when we say the Seasonal Average) This is the, this is the seasonal averages, that lay down in the underlay Indicator, or just the standard window. Notice that this one is based on a 0 to 100 scale. Whereas the one above, this is actually a price average. So, there's a difference in looking at these and how they work. Then, of course, the third part is the probabilities. This goes right down, to the daily time frame. Also, tells you the probability of a market closing higher than it opened in the previous day or closing lower than the previous day.
Now, we're going to go back to the Seasonals Indicator. This is what I call the Seasonal Indicator. So, when you hear me refer to the Seasonals Indicator, I'm generally referring to this Indicator, down in the bottom window. If I say the Seasonals Historical Averages, that's what I'm referring to, up in the upper window.
Now, the Settings are what I want to talk about in this, in this video. So, down here, when we click on the Seasonals Indicator, the Settings will come up as long as we have that third tab set. Now, over here, you'll notice that we have the different Trends. Now, we can come in here, and Trend 1 is set to 10 years. So, you'll see down here, in the right hand corner this is 10 years. Then, we've got it set as blue, and notice that the line (of course, there's a line there) the line is also...is also blue. So, that's why you see an outline of it, like this.
So, now we're going to come in here, and we have the 2nd Indicator, or the 2nd series, which is red. So, the red one is set at 15 years. So, these are the 2 averages. Now, the difference between the blue, which is all filled in and the red, which is not, is simply this little button right here. If we unclick it, you'll notice you'll just have two lines.
So, the blue is really there, it's more for looks, than anything else. It's the one that I think is the, is the one that, is the most important. So, that's the one that I like to have filled. I like to fill it with blue, the 10 year, for me! For you, you might like to look at a different average, and you can make those colors be whatever you want.
Now, the scaling is setup so we have the last 12 months, or the entire contract. Now, it depends on the contract. Because if you go into the entire contract, it changes the scaling, just a little bit. Depending on how long, or how old the contract is. So, in a contract, like maybe Crude Oil, or the Euro-Dollar, which are you know, very long contracts. If you scale it, so on the screen, the computer draws it in proportion to the entire contract, it kind of flattens it out, on those really long contracts. You'll notice on these shorter contracts, such as the 10 year T-Note, is really doesn't make much of a difference. In fact, it's hardly any noticeable difference at all.
But I like to have it scale to the last 12 months. Because that to me, is the most important time frame of any contract. It's the time frame in which we, for most of us, that's when we are trading this contract, is just through these last 12 months. So, we scale it to that year, is really what we're doing. We're scaling it to the year, the final year before expiration.
Now, the thresholds are just markers. We can come in here, and we can say, well, you know, this one is going to break, if it breaks above the 80%, we're up into the 80 percentile average. That's what these are; so, they're just markers on the screen. Now, if it drops down below the 20 percentile, this would be an area where we might be looking for a Buy opportunity; or an opportunity for the market to reverse and go once again.
When it's inside of those regions, this is considered that the market is, you know, not in an extreme either one way or the other. So, this is an example of the Settings for just the lower Indicator.