How to use Momentum Indicators for Directional trading for Indexes in a week time frame?

E

Erick Gomez

Hi everyone,

I have been experimenting with some momentum indicators for long term investment. However I would like to start trading week by week in some swing trades. I have been noticing that the Momentum indicators are not very useful when the timeframe has been reduce to 3~5 days. I had tried using the following:


ROC: http://stockcharts.com/school/doku....al_indicators:rate_of_change_roc_and_momentum

RSI: http://stockcharts.com/school/doku....hnical_indicators:relative_strength_index_rsi

Stochastic: http://stockcharts.com/school/doku....tors:stochastic_oscillator_fast_slow_and_full

I have been using different time frames 3, 5, 14 days but no luck I am following indexes SPY, Russell, Nasdaq, DJ etc.

Does any of you have good luck with swing trades during a week using these indicators or is there a better indicator/oscillator out there for this purpose?

Many Thanks in advance to the community.

EG
 
I am wondering if you have tried the Magic Oscillator by Bill Williams. This strategy uses the 4Hour Time frame. How I use it:
I apply it to the 4Hour time frame chart and I use this indicator to create three Buy and Sell signal each. The columns are set up in Red and Green, representing Sell and Buy respectively. It is easy to understand.
 
Just keep in mind that if you at all believe in the random walk theory of the markets (geometric brownian motion, with discontinuities (i.e. jumps), and stochastic volatility), then indicators and all of TA is bullshit.

The areas where random walk really breaks down of course are trading on inside information and HFT front running. However, I might be convinced that there is something to be found in extreme value/reversion type strategies, but only just maybe.
 
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