Anyone using indicators successfully for day trading?

[Howard]

As expected, this turned into a useless debate. I'd just recommend ignoring Rob's comments and getting back on topic.

FWIW, my current approach is to utilize indicators to confirm my signals and supplement my current methodology by assisting in creating hard rules for my entries and exits. In other words, reduce discretion.

I'm not using indicators to try and carve out an understanding of the market or figure out how the markets work or a methodology. It's the other way around. I know how the market works and how they move. I know my aim. But I need more clarity and objectivity particularly for intraday trading.

I'm already seeing interesting results and am playing around with various filters to reduce whipsaw. Hopefully, I can be somewhere in a month or two with intensive studies.

 

[El OchoCinco]

Pure price action is how I trade but S/R lines to me are indicators I use to trade daily with success. I might not use MACD or stoachastic crossovers but the lines on my charts are indicators that allow me to interpret and react to price action. And if someone IS making bank using MACD I am not going to poop all over it just because I don't see its utility.

 

[tommcginnis]

Trading is based on disagreement and there are many methods that you can use to make money. I'm saying is: if a trader is looking at indicators and doesn't have much success, he should try to look at the pure order flow instead, and he'll see it's more predictive of future movement than any indicator ever will.

You do realize, don't you, that order flow is history? ("History": that thing you denigrate?) Much as was pointed out by D08, schweiz, TheMickey, et.al?

Your trading horizon is not special, it's just short.

When your algos fail (as they are going to), and you start telescoping out from the picosecond scalpel to the 1-second forests and the 1-minute hinterlands, keep this discussion in mind.

Innovate. Adapt. Overcome.

Step #1: [from schweiz??] Be flexible: order flow IS history.
(And, borrowing from Uncle Milty,...) the rest is just elaboration.

 

[tommcginnis]

I'm already seeing interesting results and am playing around with various filters to reduce whipsaw. Hopefully, I can be somewhere in a month or two with intensive studies.

I have eased into [trend-following] over this calendar year, and WOW I like the results.

As far as whip-sawing go, I see it as opportunity for writing credit spreads (subject to tests/hurdles for which I have a clue, but am unwilling to code quite yet...), but I *really* like the idea of a rolling hedge vehicle, that is
1) entry-triggered off of the [primary] trend algo's exit,
2) selected from a pool of alternatives with implicit or explicit negative correlation to the [primary], and
3) rather than being exit-triggered by a T/A indicator (or any such price action), is instead triggered by time (informed by 3months-6months of past similar market moves).

For example, working with an ES future contract, and entering long, chug-chug-chug, and when a T/A exit is triggered:
1) SELL 1 ES; BUY 100 of bearish ETF
2) {SH;SDS 2x;SPXU 3x;SPXS 3x;SPDN 1x}
3) SELL 100 ETF at 48 hours.

Thus, the purpose of the ETF is not to take a long-term stake, but to assuage any dent made to the [primary] vehicle's long-or-short exit -- to whatever degree is available. It's driven from the fact that in multiple tests, of multiple vehicles and multiple lengths of review (and via multiple indicators, just to be topical), it seems the vast majority of positive trades were 7-8 days, while losers ~3 days, whether long or short. Fine, then! "I'll have some of that."

So, the [primary] vehicle is driven by T/A indicator, but the [hedge] is driven by the T/A-exit of the [primary] for its entry, but its own exit is simply the ticking clock.

I was hoping to have all of this automated by now, but JEEZ......

 

[murray t turtle]

Yes. Even though the indicator lags, it helps determine direction or trend. So as long as we are in a strong trend, the lag does not matter.

So the benefit of the indicators is determining the trend when the market is trending. Obviously, if the market is ranging we don't want to take a trend trade. So for example if price is moving above and below the moving average, then why take a trend trade.

However, if price is respecting a MA, then maybe you will see a trade setup that you can take.

%%
Dont l know if this will help op daytrade, but moving averages can help '' other wise read the day'' Even one of the most hated-RSI- could work , in 2008 if a trader/investor worked.But since i like more data than one bear market bottom i seldom use it.In theory, they should be selling in small caps much more below 200 dma;if it weren't for historic strong seasonals ...... Small caps {IWM} have been weaker in OCT.

 

[robthequant]

You do realize, don't you, that order flow is history? ("History": that thing you denigrate?)

I'm not talking about ticker tape only. I'm talking about limit order flow in and out of order book. There are imbalances, spoofing and icebreak orders... Some orders are sitting there, some orders are canceled and some added. All have a potential to drive price. This is not a history. You're watching the building and collapsing of the potential energy that is the ONLY thing that really drives price. This is how the big boys trade.

Watching chart history is like driving a car using the rear-view mirror. Looking at the L2 order book is like driving a car looking forward. I wish someone told me this early, hope this can help someone who is reading this.

 

[Howard]

Watching chart history is like driving a car using the rear-view mirror. Looking at the L2 order book is like driving a car looking forward. I wish someone told me this early, hope this can help someone who is reading this.

At least that's what the order flow vendors are teaching...

You're analyzing patterns and price history even when using order flow. If you're trading larger swings intraday or even multi-day, I think order flow is not the first priority.

There are specific patterns intraday that can be exploited. Not necessarily chart patterns.

 

[schweiz]

I'm not talking about ticker tape only. I'm talking about limit order flow in and out of order book. There are imbalances, spoofing and icebreak orders... Some orders are sitting there, some orders are canceled and some added. All have a potential to drive price. This is not a history, this is how the big boys trade.

Yes it is history, as this happens already many years. It would not be history if it would occur now for the first time.
The fact that we even have names for these things means they already exist, otherwise nobody would know how to call these things.
You cannot see or observe future, only past.
As we don't know future there is no way to build a system for what you don't even know will happen. Imbalances occur when data (which means past information) is available.

 

[robthequant]

Yes it is history, as this happens already many years. It would not be history if it would occur now for the first time.
The fact that we even have names for these things means they already exist, otherwise nobody would know how to call these things.
You cannot see or observe future, only past.
As we don't know future there is no way to build a system for what you don't even know will happen. Imbalances occur when data (which means past information) is available.

I should probably delete my elitetrader account now

 

[robthequant]

There are specific patterns intraday that can be exploited. Not necessarily chart patterns.

ok cool. What kind of patterns?