The best and worst indicators

DeltaRisk said:
There are edges available, you just need to read a billion pages to find them.
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Thats where we are different. I dont believe reading will help me. Ive read a lot of different books on trading, read countless online articles, watched youtube until my eyes went square and you want to know something? I dont remember a damn thing. What has stuck though are the lessons I taught myself through the many many mistakes I have made. I remember those because they hurt so much.

Not to be an utter nob and come across as being arrogant and dismissive, I must admit that there were 2 books and one trade methodology stood out for me:

  1. Mark Douglas - Trading in the zone (gave me so much confidence I actually lost money being cocky)
  2. Adam Grimes - The art and science of technical analysis (His stuff is real good I just dont like his use of indicators)
  3. Wyckoff VSA - I dont agree with the volume analysis portion but the explanation of price movement is invaluable imo. Absolute gold, it explains why the market moves like it does.
 
What I use on my charts:
Alligator
Awesome Oscillator
Candlesticks
Moving Average, Simple
Donchian Channel
MACD Oscillator

I screen with:
Barchart TrendSpotter
Bollinger Bands
Moving Average, Simple

I realize that every indicator theoretically has a use or it shouldn’t still be around, but…

What can these do that my indicators can’t do?
Aroon Oscillator
Aroon Up/Down
Average Directional Index
Average True Range
Chaikin Oscillator
Commodity Channel Index
Elder Ray (Bear & Bull Power)
Ichimoku Kinko Hyo
Keltner Channel
Parabolic SAR
Percent R
Pivot Points
Relative Strength Index
Stochastic, Fast
Stochastic, Slow
Stochastic, RSI
TRIX (Triple Exponential)
 
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Question for those knocking MACD...granted it does not work well in a ranging market but I only look for trends that have started or are continuing.
If you look at the up turn in XLE in late Aug or the last 3 trend changes in XLY I traded ATM options profitably off the MACD signal....why such hate on the signal if used in the proper context, trend change. What am I missing ?
 
I suppose it matters what you use the indicators for.

MACD: look for divergence in the indicator versus price.
Bollinger bands: I have never heard of anyone who uses BB and makes money
The others listed: not so much

Personally, I use MACD and RSI but look for divergences in price vs the indicator. It helps me find tops and bottoms. I have a couple of moving averages and I use pivot points. Then I look for supply and demand levels. When all of these guys line up, I have a trade.
 
Most small traders believe in the self-fulfilling nature of others, not them, using indicators. How many hundreds of friggen indicators are there in use today lol. Yet most small traders lose.

Another belief most small traders have is the big traders are picking them off watching said indicators.

Hysterical.
 
sss12 said:
If you look at the up turn in XLE in late Aug or the last 3 trend changes in XLY I traded ATM options profitably off the MACD signal....why such hate on the signal if used in the proper context, trend change. What am I missing ?
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What you say makes sense, of course.

I strongly suspect that what you're "missing", if anything, is ...

(a) the fact that the typical aspiring trader's experience with MACD is unsuccessful and that partly explains its "bad rep" (granted, the same is true of many other indicators, too, but that's not the point); and ...

(b) the fact that MACD is really terribly easy for the neophyte to misuse atrociously, use without understanding clearly (let's be honest: understanding it isn't trivially easy to do, as indicators go), and/or try to use it with wildly inappropriate settings for what they're actually trying to use it for (which they can very easily end up doing, especially if they make the mistake of following widespread forum and/or Youtube "advice"!).


ExactlyMyPoint said:
MACD: look for divergence in the indicator versus price.
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Indeed. But many/most people don't use it that way, often because they don't really know how to, partly because they've been exposed to misinformation about it, as mentioned above.


ExactlyMyPoint said:
Bollinger bands: I have never heard of anyone who uses BB and makes money
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I have. But only one person I know, myself (she's an ex-institutional trader who strongly prefers BB to Keltner Channels and uses them daily and successfully as part of her trading methods, and with settings which would surprise most people) - I never got anywhere with them, myself, even after a lot of study and experimentation.
 
Xela said:
But many/most people don't use it that way, often because they don't really know how to, partly because they've been exposed to misinformation about it,
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That fact. without a doubt, would certainly apply to all worthwhile forms of TA, wouldn't it?
Lack of sufficient study resulting in misuse, or even diligent study based on inadequate teachings, and the like result in the same 'bad rep' for TA as a whole that you mentioned for MACD.
 
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Grantx said:
As you know by now I dont use indicators but I have tried a few. Im interested to know what your favourite indicators are and which ones you think are a total waste of time. This doesnt need to turn into an argument on whether indicators work or not, Im just interested in your opinion and reasons for using a particular tool. If you have an opinion then Id love to hear it because I am always ready learn something new from more experienced traders. The only rule is that for every negative opinion, you must have something positive to say about something else.

Here is my list starting with the worst ones.


Top 3 worst indicators:
3:
MACD: Convergence divergence something or other.
Usage: Apparently good for trends but sucks balls in a range.
Comment: Totally useless when the market ranges which is a lot of the time.


2:
Swing indicators: Draws a straight line joining swing high and low points.
Usage: Helps you identify ranges and trends by highlighting swing points
Comment: Im am going to be the ultimate lazy retard and get something to draw a line peak to trough because I can’t be bothered to simply look for myself.


1:
Bollinger bands: A moving average with standard deviation bands.
Usage: Scalping channel breakouts and contracting/expanding channels indicating price volatility.
Comments: This pulsating intestinal tube goes against every common sense rule I can think of. By the time price breaks out of a channel it is already too late to enter the trade. Just as useless as a moving average.



Top 3 best indicators:
3:
Unirenko bars: More of a bar type but it has built in indicator.
Usage: Cuts out a lot of ‘noise’ and makes the charts easier and more meaningful.
Comment: The reversal bars are great indicators for scalping continuation trades.


2:
Straight line.
Usage: Identifies swing points and big round numbers.
Comment: Draw a line at a point that interests you and set an alert. This awesome tool enables you to occupy your mind with something else instead of suffering a mental seizure from watching every tick of the chart.


1:
Ichimoku Kinko Hyo: All in one package.
Usage: At a glance trading. No more having to look to the left, this package does everything for you.
Comment: Tells you trend, momentum and areas of support and resistance in one go. If my brain could cope with all the colours and imagery I would definitely be using this on my charts. Combined with renko bars this package can be very powerful.
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I find the MACD histogram to be a reliable instrument to help you fly/trade better.

Best uses-trend capitulations, double tops and bottoms in range days, pullbacks in trend days.
 
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