Intraday Indicators
- Thread starter saschabr
- Start date
hsanson & vvv,
I used certain indicators from June of 2000 to Feb 2001 to trade higly liquid stocks. Mostly I traded JNPR using RSI. This basic system along with a very deep understanding of the way the futures trade I was able to make a ton of money.
I felt the same way as you guys until June last year when I stumbled on this system. I thought that if any indicator actually worked then the institutions would have discovered the system, and eventually killed it. What I didn't understand is that certain indicators only work under certain circumstances.
Examples:
<i>What time frame does the indicator work for?</i>
For my old RSI system it only worked in the 2&3 min time frame, whereas my new system is looking best in the 5 or 10 min.
<i>Does the indicator work on stocks or fut's? What stocks...what fut's?</i>
I find that my systems work great on fut's, but found that my losses were bigger with fut's trades when I was wrong, so I stuck with stocks.
My point is that because of all these variables the institutions will not have the time or the patience to figure out where each indicator is working at that point in time, only to have it not work months later. That is where we have the edge.
Once you find YOUR system, you can trade it to death, then move on to the next system.
Keep looking. There are combo's out there that can make you a bundle. I am currently working on my next system with RSI, StochRSI, OBV, and ADX...my next gold mine ;-)
Good Luck,
Dustin
I used certain indicators from June of 2000 to Feb 2001 to trade higly liquid stocks. Mostly I traded JNPR using RSI. This basic system along with a very deep understanding of the way the futures trade I was able to make a ton of money.
I felt the same way as you guys until June last year when I stumbled on this system. I thought that if any indicator actually worked then the institutions would have discovered the system, and eventually killed it. What I didn't understand is that certain indicators only work under certain circumstances.
Examples:
<i>What time frame does the indicator work for?</i>
For my old RSI system it only worked in the 2&3 min time frame, whereas my new system is looking best in the 5 or 10 min.
<i>Does the indicator work on stocks or fut's? What stocks...what fut's?</i>
I find that my systems work great on fut's, but found that my losses were bigger with fut's trades when I was wrong, so I stuck with stocks.
My point is that because of all these variables the institutions will not have the time or the patience to figure out where each indicator is working at that point in time, only to have it not work months later. That is where we have the edge.
Once you find YOUR system, you can trade it to death, then move on to the next system.
Keep looking. There are combo's out there that can make you a bundle. I am currently working on my next system with RSI, StochRSI, OBV, and ADX...my next gold mine ;-)
Good Luck,
Dustin
Remember we are talking only about daytrading
I agree with Price/Volume being the key.
I use systems and indicators. And no, surely I would not use a system widely available and 'public'.
I see Price/Volume and their fractal movements as the internal structure of the market. To make profits and generate income [usually the goal of daytrading] you need a systematic approach indeed.
What worked for me is this :
- base a system on price/volume action
- find the logical reasons it would work [ie the psychology behind it]
this first two, many call 'patterns'. Patterns exist in life and in human activities. Let's assume the markets are a human activity.
- test historically the system performance and the key parameters : win ratio, risk/reward, drawdown, gross and net profit, impact of commissions and slippage.
- filter with indicators [that's where they come handy in my opinion]. indicators often give me a context, a climate. a pattern is slightly [or hugely] different depending on the context.
- Add the money management, the position sizing, capital protection parameters. I always use a pyramid too.
This part is the arguably the most important. A bad system can be profitable with good management and sizing. A good system can be a disaster with bad management and sizing. Never, ever underestimate that is an important lesson the market taught me [the hard way].
- test again. then, when it prooves to have an 'edge', test live in simulated trading.
- after adjustments [no optimization EVER!], trade live with small size. Practice the proper execution a lot which also deals with the psychology and auto sabotage.
- Then when everything matches simulation go full size.
That's what I do, very systematic. I know discretionnary 'gut feeling' traders too. Few make money, but some do. In fact they have the system in their head and the gut feeling is just big experience [I use software to assist me]. But I still see it as a systematic approach.
Nothing spectacular in this approach. But I hope it illustrates, without the details obviously, where the emphasis is : Price/Volume logical patterns, indicators to filter and give climate, Position Sizing/Pyramid/Capital Protection, and test, test and practice, practice, practice.
Again, that's for me making money. If you make money another way, that's great. It is what the poster of the thread wants to know.
vpiNeo
I agree with Price/Volume being the key.
I use systems and indicators. And no, surely I would not use a system widely available and 'public'.
I see Price/Volume and their fractal movements as the internal structure of the market. To make profits and generate income [usually the goal of daytrading] you need a systematic approach indeed.
What worked for me is this :
- base a system on price/volume action
- find the logical reasons it would work [ie the psychology behind it]
this first two, many call 'patterns'. Patterns exist in life and in human activities. Let's assume the markets are a human activity.
- test historically the system performance and the key parameters : win ratio, risk/reward, drawdown, gross and net profit, impact of commissions and slippage.
- filter with indicators [that's where they come handy in my opinion]. indicators often give me a context, a climate. a pattern is slightly [or hugely] different depending on the context.
- Add the money management, the position sizing, capital protection parameters. I always use a pyramid too.
This part is the arguably the most important. A bad system can be profitable with good management and sizing. A good system can be a disaster with bad management and sizing. Never, ever underestimate that is an important lesson the market taught me [the hard way].
- test again. then, when it prooves to have an 'edge', test live in simulated trading.
- after adjustments [no optimization EVER!], trade live with small size. Practice the proper execution a lot which also deals with the psychology and auto sabotage.
- Then when everything matches simulation go full size.
That's what I do, very systematic. I know discretionnary 'gut feeling' traders too. Few make money, but some do. In fact they have the system in their head and the gut feeling is just big experience [I use software to assist me]. But I still see it as a systematic approach.
Nothing spectacular in this approach. But I hope it illustrates, without the details obviously, where the emphasis is : Price/Volume logical patterns, indicators to filter and give climate, Position Sizing/Pyramid/Capital Protection, and test, test and practice, practice, practice.
Again, that's for me making money. If you make money another way, that's great. It is what the poster of the thread wants to know.
vpiNeo
Hsanson
(QUOTE)I have never found any indicator to be useful for intraday trading. I have tried everything, from Stochastics to 3 Line break and seems everything is a marketing gimmick. Moving averages are for guidance only and works 50% of the time which is similar to a coin flip.(/QUOTE)
I wish you a good luck in finding Holy Grail
You said you have read Dr.Tharp's books.Then you have probably missed one of the most important points he made in his books (especially the first one). (QUOTE)The entries are less important than exits(/QUOTE). For the same reason I doubt, he is going to write a book on the subject of the trading system development.
Do you really think you can find a system better then random? Even if you could how long it would be working? Then you would have to find another and another....
Dustin
You say(QUOTE)Once you find your system, you can trade it to death, then move to the next system(/QUOTE). If you can switch from one system to another at the right time you are the genius. To know that system doesn't work anymore, I think, you need to make at least 20-30 trades(or more) to be sure it is not working(statistically). By then you went through bunch of losses anyway.
To me, value of any system is in giving you a systematic approach to trading. I am not talking about entries but systematic managing of the trades. Dustin if you have to incorporate the cutting losses into your systems I do not think your entries are much better than random. If not I'd like to know how much better than random your entries are.
My conclusion is,the endless talk about entry set ups is a waste of time.
(QUOTE)I have never found any indicator to be useful for intraday trading. I have tried everything, from Stochastics to 3 Line break and seems everything is a marketing gimmick. Moving averages are for guidance only and works 50% of the time which is similar to a coin flip.(/QUOTE)
I wish you a good luck in finding Holy Grail
You said you have read Dr.Tharp's books.Then you have probably missed one of the most important points he made in his books (especially the first one). (QUOTE)The entries are less important than exits(/QUOTE). For the same reason I doubt, he is going to write a book on the subject of the trading system development.
Do you really think you can find a system better then random? Even if you could how long it would be working? Then you would have to find another and another....
Dustin
You say(QUOTE)Once you find your system, you can trade it to death, then move to the next system(/QUOTE). If you can switch from one system to another at the right time you are the genius. To know that system doesn't work anymore, I think, you need to make at least 20-30 trades(or more) to be sure it is not working(statistically). By then you went through bunch of losses anyway.
To me, value of any system is in giving you a systematic approach to trading. I am not talking about entries but systematic managing of the trades. Dustin if you have to incorporate the cutting losses into your systems I do not think your entries are much better than random. If not I'd like to know how much better than random your entries are.
My conclusion is,the endless talk about entry set ups is a waste of time.
Cesko,
I am not sure this thread is only about entry setups.
At least it moved beyond that.
I agree with you the exit is the most important. It is related to what I wrote about money management and position sizing. They are related to the risk [in other words : the exit]. I pyramid IN and OUT !
By messing up this part you mess up the exit. If you don't have any exit strategies, well, it is even clearer, you're doomed !
vpiNeo
I am not sure this thread is only about entry setups.
At least it moved beyond that.
I agree with you the exit is the most important. It is related to what I wrote about money management and position sizing. They are related to the risk [in other words : the exit]. I pyramid IN and OUT !
By messing up this part you mess up the exit. If you don't have any exit strategies, well, it is even clearer, you're doomed !
vpiNeo
Since this was a scalping system I was doing 30-50 trades per day anyways, and my losses were always small. 20-30 losers would only cost me $1-2k which is a small price to pay. In this case the system stopped working when my best trading stocks became priced too low (<$50) and too liquid.
Of course, cutting losses is a big part of any trading system. And maybe you are right that my system was random...but somehow I made that randomness work for me.
Also, I should clarify something. There is no such thing as a holy grail, as vvv has said. BUT, I strongly believe in using indicators to aide you with your basic trading strategies. I think for someone to competely ignore all indicators because you can't find one that works for you is turning your back on a huge advantage.
I saw the Holy Grail for sale at the Las Vegas Money Show last week. It is called RaceCom. For $500 a month, you can buy their "Holy Grail Indicator" which forecasts the movement of an index or a stock 15 minutes before it takes place. Its error rate is 0.18%.
I spent about 45 minutes in their booth and was ready to write them a check. Then, this guy came to the booth and argued with the vendor for about 15 minutes tearing his indicator apart.
I was so close to being fooled. I was saved by this guy, who basically made the vendor look so stupid. I later attended a seminar and to my amazement, the guy who saved me from falling in the trap was the surprise guest speaker. I think it is amazing how much I still have to learn in this business, and how many sharks are out there trying to take advantage of us.
I spent about 45 minutes in their booth and was ready to write them a check. Then, this guy came to the booth and argued with the vendor for about 15 minutes tearing his indicator apart.
I was so close to being fooled. I was saved by this guy, who basically made the vendor look so stupid. I later attended a seminar and to my amazement, the guy who saved me from falling in the trap was the surprise guest speaker. I think it is amazing how much I still have to learn in this business, and how many sharks are out there trying to take advantage of us.