To what extent do you use indicators?
- Thread starter IronFist
- Start date
for 20 days the spreadsheet says that from 7:30 to 3:00 the system is hitting 85%...rule is take every signal...only..start at 9:00 and go to 2:30 and it runs over 90 %.....but still the losses have to be accepted without a big ouch. The teenie ouch is easier because the loss is minimal because the initial stops are always with a tight range...or no trade....this is eminis only intraday with a few indicator lines customized...no curve fitting and very little thinking allowed...all entry signals taken, no cherry picking trades...if you don't take all of them u won't be happy over time.....u will grab the duds and pass on big runs......and won't have the ability to re-enter on each bar as one should, otherwise you won't be passing on entries that are good if you are using a good system...in other words, if you don't have confidence in your system, you certainly won't step in after big move occurs and you just are beating yourself up for missing the opportunity of perfect system signal....i use 4 indicator lines that really i could use none, but i am lazy....after 6 years of pleasure and massive hours of testing combinations of everything out there, I have my simple little robust indicator system but again don't need lines really...just eyes and a 5 year old's brain and it is not that secretive.....follow the price...which time frame? i would rather watch 2 or 4 candles per hour than 12...or 30...they say the same thing if you watch big picture.....entering near zero point of run is helpful...actually beautiful...just near is good enough...trying to capture exact zero starting point of run is not going to make you happy....all the gambling analogies is okay, just gamblers don't do 90%....my system does so risk is miniscule.....greed and gambling go well together...i prefer neither..
One thing you can use when you are trading stocks or options is fundalmentals.
And I am not talking about PE which I believe is misleading.
1) Example #1, legal judgement or FDA ruling on a stock.
If you know the possible time frame, you could use a neutral trade like a straddle. Like all trades, they might lose you or make you money.
If the stock does not move up enough up or down, you will lose money on this trade.
So the opposite is to sell both the call and put if the option price is very expensive since you could actually make money on both sides of the trade.
2) Example # 2, hedge trade. A hedge fund is about to buy a company, so you want to buy the stock or options before they annouce.
You heard about this as a rumor or were sleeping with the CEO's wife.
The opposite, and an actual trade I am in right now, after hearing about the rumor that AMR was being bought out, I did some DD including checking the message board, and saw that one of the shorts discovered it was not real, so I went short on Friday. After the bell, that information came out that the buyout is false, so my goal is to ride the stock down.
And I am not talking about PE which I believe is misleading.
1) Example #1, legal judgement or FDA ruling on a stock.
If you know the possible time frame, you could use a neutral trade like a straddle. Like all trades, they might lose you or make you money.
If the stock does not move up enough up or down, you will lose money on this trade.
So the opposite is to sell both the call and put if the option price is very expensive since you could actually make money on both sides of the trade.
2) Example # 2, hedge trade. A hedge fund is about to buy a company, so you want to buy the stock or options before they annouce.
You heard about this as a rumor or were sleeping with the CEO's wife.
The opposite, and an actual trade I am in right now, after hearing about the rumor that AMR was being bought out, I did some DD including checking the message board, and saw that one of the shorts discovered it was not real, so I went short on Friday. After the bell, that information came out that the buyout is false, so my goal is to ride the stock down.
The holy grail is 1.using the indicators with price action 2. Prudent Money Management 3. Let winners run and never ever scale out.
Indicators are a fabulous tool. However, any system you use needs to include number 2 and 3. (especially3). Even a 10 percent winning system can be profitable using 2 and 3.