€By dawn's early light€- this is the Sanskrit meaning of Aroon which is a day trading indicator invented by Tushar Chande in 1995. One of the characteristics of the aroon indicator, which is to expose the starting of a new trend, is revealed by the name itself. In day trading, this indicator exhibits the path and strength of a specific trend. It also permits a day trader's recognition of uptrending,downtrending or a market that is not sticking to any trend at all. The aroon indicator reveals one important information in day trading which is the market mode.

The aroon indicator has basically a pair of formulas and these are used to determine the aroon up and aroon down numbers. Aroon up pertains to periods of highs or bullish periods as aroon down pertains to periods of lows or bearish periods. Each aroon indicator formula is just like each other but with small distinctions:

Aroon Up= [(# of periods) - (# of periods since highest high)] / (# of periods)] x 100
Aroon Down= [(# of periods) - (# of periods since lowest low/ (# of periods)] x 100

The aroon indicator figures are portrayed in % form and are usually plotted on a chart. Aroon up and down figures may range between 0 to a hundred. The aroon numbers may arrive at around zero - one hundred. About three indicators are important to a day trader while dealing with aroon indicators. The first takes place when the indicator gives off extreme figures. The purchasing signal is shown by an aroon up value of between 70-100 and an aroon down value of between 0-30. These values signify an imminent uptrend. A 70-100 value of an aroon down and 0-30 value of an aroon up, on the contrary, is a selling signal. Numbers like these are downtrend warnings. The day trader must also pay attention to the next sign which is the parallel movement of aroon up and down traces on a chart. A period of consolidation is about to occur when this sign turns up. A cross over of the aroon up and aroon down in a chart confirms if the market is about to get bullish or bearish.

Despite the efficiency of the aroon indicator as a tool in day trading, it still can't be utilized alone. A day trader has to have one other tool to be used in addition to this indicator. A day trading blog will give you other useful indicators fit to be used with the aroon indicator. Along with these, trading tips and techniques are also found in a day trading blog.