Chande Trend Meter (CTM)

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technical_indicators:chande_trend_meter [2019/06/24 19:39] (current)
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 +====== Chande Trend Meter (CTM) ======
  
 +===== Introduction =====
 +The Chande Trend Meter (CTM), developed by Tushar Chande, assigns a numerical score to a stock or other security, based on several different technical indicators covering six different timeframes. Distilling all this technical information down into a single number provides an easy way to identify the strength of the trend for a given security.
 +
 +===== Calculation =====
 +The calculation of the Chande Trend Meter is based on the following technical indicators:
 +  * The positions of the high, low and close relative to the [[:​technical_indicators:​bollinger_bands|Bollinger bands]] in four different timeframes (20-day, 50-day, 75-day and 100-day)
 +  * The price change relative to the [[:​technical_indicators:​standard_deviation_volatility|standard deviation]] over the past 100 days
 +  * The 14-day [[:​technical_indicators:​relative_strength_index_rsi|RSI value]]
 +  * The existence of any short-term (2-day) [[:​technical_indicators:​price_channels|price channel breakouts]]
 +
 +The resulting score is converted to a 0-100 scale for ease of comparison.
 +
 +===== Interpretation =====
 +On the Chande Trend Meter scale of 0 to 100, stocks with a CTM score of 100 are in very strong uptrends. Conversely, stocks with a score of 0 are in very strong downtrends.
 +
 +This scale can be divided into 5 different levels:
 +  * Stocks with a score of 90-100 are in very strong uptrends
 +  * Stocks with a score of 80-90 are in strong uptrends
 +  * Stocks with a score of 60-80 are in weak uptrends
 +  * Stocks with a score of 20-60 are either flat or in weak downtrends
 +  * Stocks with a score of 0-20 are in very strong downtrends
 +
 +Momentum traders should look for stocks with a Chande Trend Meter score of 80 or higher. This indicates a strong uptrend. The stronger the uptrend, the more likely it is to continue that trend.
 +
 +The Chande Trend Meter can also be used with indexes and ETFs to get an idea of the relative trend for specific sectors and industries, or even entire markets.
 +
 +One advantage of the Chande Trend Meter is that the value is set on an absolute scale, not relative to other stocks in a group. So, when you compare CTM scores of several different types of securities, you are making apples-to-apples comparisons across all securities.
 +
 +===== Conclusion =====
 +
 +The Chande Trend Meter provides a simple way to determine whether a stock is in an uptrend or a downtrend, and makes it easy to gauge the strength of that trend. By combining several different proven technical trend indicators and boiling them down into one number, the CTM gives chartists a wealth of trend information at a quick glance.
 +
 +===== Using with SharpCharts =====
 +The Chande Trend Meter can be found in the Indicators section under the chart. The CTM indicator can be positioned above, below or behind the main price plot.
 +
 +When placing above or below the main price plot, the background is color-coded to indicate the different trend strength levels:
 +  * **Dark Green**: 90-100 (very strong uptrend)
 +  * **Medium Green**: 80-90 (strong uptrend)
 +  * **Light Green**: 60-80 (weak uptrend)
 +  * **Yellow**: 20-60 (flat or weak downtrend)
 +  * **Pink**: 0-20 (strong downtrend)
 +
 +{{:​technical_indicators:​chande_trend_meter:​chandetrendmeter.png}}
 +
 +===== Suggested Scans =====
 +
 +==== CTM Crosses Above 60 on Heavy Volume ====
 +This scan reveals stocks where the Chande Trend Meter has crossed above 60 with heavier than normal volume.
 +<​code>​
 +[type = stock] AND [country = US] 
 +AND [Daily SMA(60,​Daily Volume) > 100000] ​
 +AND [Daily SMA(60,​Daily Close) > 20] 
 +
 +AND [Chande Trend Meter x 60.0]
 +AND [volume > SMA(50,​volume) * 1.5]
 +</​code>​
 +
 +==== Stocks with Consistently High CTM ====
 +This scan reveals stocks where the Chande Trend Meter for a US stock is consistently high, averaging 80 or more over the last 50 trading days.
 +<​code>​
 +[type = stock] AND [country = US] 
 +AND [Daily SMA(60,​Daily Volume) > 100000] ​
 +AND [Daily SMA(60,​Daily Close) > 20] 
 +
 +AND [SMA(50,​Chande Trend Meter) > 80.0]
 +</​code>  ​
 +
 +
 +For more details on the syntax to use for Chande Trend Meter scans, please see our [[docs>​scans:​indicators#​chande_trend_meter|Scanning Indicator Reference]] in the Support Center.