What are your favorite, most reliable indicators?
- Thread starter dylan57
- Start date
Hello, I don't usually participate in this forum but decided to give my 2c$ on this topic since I also suffered for a long time from the "over technical indicator" sickness...
Over and over people continue trying to find the "perfect" indicator and don't get the wrong, they all seem to make a lot of sense "after the fact" ... get just about ANY indicator, look back in the charts and you will notice they all "worked" and gave you fantastic signals... the only issue is that they don't work on the "right edge" of the chart
I personally limit myself to Price and Volume, supply and demand. It's not hard if you spend enough time training your eyes to "see it" in the charts... it's all there.
I'm also often puzzled to see how we traders make brokers rich by overtrading, when, really, all you need is a couple of good trades per week/month/year... not thousands... not to mention we also make the charting software/data feed companies richer too by buying the 1,670 indicators-"Get me rich" packages....
Here's a chart that tries to depict what I mean about my indicator -- it's called "oops, I failed to drop and found buyers, go long and stay until buyers are no longer interested" or "oops, I failed to go up and didn't find buyers at support, go short and stay short until it finds more buyers than sellers again..."
This "indicator" has been working for me and I trade stocks but have used to trade fx, futures and they're all the same...
I've read some of the threads at ET on price action and volume and there are some very bright minds on that subject.
If you are interested, I have a blog at TradeForGain.com and from time to time I write about the pv interactions, search for the "Trades" category, they are live trades too... Not trying to sell you anything BTW.. don't even have Google ads.
Good luck to you.
<img src="http://www.elitetrader.com/vb/attachment.php?s=&postid=1737989"></img>
Over and over people continue trying to find the "perfect" indicator and don't get the wrong, they all seem to make a lot of sense "after the fact" ... get just about ANY indicator, look back in the charts and you will notice they all "worked" and gave you fantastic signals... the only issue is that they don't work on the "right edge" of the chart
I personally limit myself to Price and Volume, supply and demand. It's not hard if you spend enough time training your eyes to "see it" in the charts... it's all there.
I'm also often puzzled to see how we traders make brokers rich by overtrading, when, really, all you need is a couple of good trades per week/month/year... not thousands... not to mention we also make the charting software/data feed companies richer too by buying the 1,670 indicators-"Get me rich" packages....
Here's a chart that tries to depict what I mean about my indicator -- it's called "oops, I failed to drop and found buyers, go long and stay until buyers are no longer interested" or "oops, I failed to go up and didn't find buyers at support, go short and stay short until it finds more buyers than sellers again..."
This "indicator"
has been working for me and I trade stocks but have used to trade fx, futures and they're all the same...I've read some of the threads at ET on price action and volume and there are some very bright minds on that subject.
If you are interested, I have a blog at TradeForGain.com and from time to time I write about the pv interactions, search for the "Trades" category, they are live trades too... Not trying to sell you anything BTW.. don't even have Google ads.
Good luck to you.
<img src="http://www.elitetrader.com/vb/attachment.php?s=&postid=1737989"></img>
Quote from Sharp2be:
Hello, I don't usually participate in this forum but decided to give my 2c$ on this topic since I also suffered for a long time from the "over technical indicator" sickness...
Over and over people continue trying to find the "perfect" indicator and don't get the wrong, they all seem to make a lot of sense "after the fact" ... get just about ANY indicator, look back in the charts and you will notice they all "worked" and gave you fantastic signals... the only issue is that they don't work on the "right edge" of the chart
I personally limit myself to Price and Volume, supply and demand. It's not hard if you spend enough time training your eyes to "see it" in the charts... it's all there.
I'm also often puzzled to see how we traders make brokers rich by overtrading, when, really, all you need is a couple of good trades per week/month/year... not thousands... not to mention we also make the charting software/data feed companies richer too by buying the 1,670 indicators-"Get me rich" packages....
Here's a chart that tries to depict what I mean about my indicator -- it's called "oops, I failed to drop and found buyers, go long and stay until buyers are no longer interested" or "oops, I failed to go up and didn't find buyers at support, go short and stay short until it finds more buyers than sellers again..."
This "indicator"
I've read some of the threads at ET on price action and volume and there are some very bright minds on that subject.
If you are interested, I have a blog at TradeForGain.com and from time to time I write about the pv interactions, search for the "Trades" category, they are live trades too... Not trying to sell you anything BTW.. don't even have Google ads.
Good luck to you.
<img src="http://www.elitetrader.com/vb/attachment.php?s=&postid=1737989"></img>
Sharp, nice to see that you joined ET, I enjoy your blog and have posted a couple your urls here. I feel my trading has been improving since I started to look solely at the pv relationship.
I prefer to use the pure price action and volume data presented in charts to analyze the supply-demand relationships and group psychology within the markets. Otherwise, youâre just using a third layer of highly subjective information to analyze the chart itself - if that makes sense.
Indicators are basically worthless, especially once you understand their underlying formulas; indicators present answers to questions that need not be asked. Plus, the information conveyed by indicators is redundant and inferior to the information conveyed by price action itself anyway - not to mention late.
Overbought and oversold indicator are based on arbitrary mathematical formulas which serve as no comparison to a proper understanding of support and resistance, which unfortunately is rare even among âprice actionâ traders and even leading authors. Likewise, a positive reading in a momentum indicator is not necessary to identify an uptrend and gauge its strength, its pretty obvious at that point.
All too often, traders attempt to find that perfect set of indicators with the perfect settings; but thats never going to happen. However, indicators can be used in regard to scanning, and their period settings can be used to correlate scans to certain events in the overall market - but youâre still going to have to apply price action and volume analysis to the potentials youâve narrowed down.
There are a few exceptions; I use moving averages to an extent, the proper understanding of moving averages in relation to price can replace almost all other indicators, but I only treat moving averages as visual aids to speed up my analysis; I donât use moving averages in terms of support and resistance, cross-over type signals, or anything like that.
Although I donât use it anymore, the OBV is a good indicator to simply speed up volume analysis. Itâs a cumulative total of volume, with each positive dayâs volume added to the total, and each negative dayâs volume subtracted from the total - this is one of few indicators that manages to present an answer to a question that I might actually find myself asking.
The McClellan Oscillator is another exception, this is a stand alone oscillator based on market breadth internals, so it will appear exactly the same no matter which symbol you attach it to. Market breadth and sentiment internals are extremely important and highly reliable if analyzed properly.
Speaking of which, the indicators I use most often are a set of custom internals based on market breadth and sentiment. Depending on the time frame, they use data such as; the tick, the trin, advancing issues, advancing volume, declining issues, declining volume, various types of put/call ratios, new highs, new lows, and % above xMA, etc. - and I also keep an eye on the relationships between bonds, currencies, commodities, and equities.
If you donât have a good grasp of internals, then I suggest you close any open positions and stop trading until youâve got them figured out - and once you do: go back over some of your old losses, I guarantee youâll absolutely want to slap yourself.
Aside from that, indicators are worthless, there might be a few other slightly useful exceptions, but I moved away from using indicators in general before I found any more. For further information on indicators, check out: Better Teach Me To Use Investâo MACD+Stochastic Wize Tools⢠â Advanced GET Screwed edition, with the Eliot Wave your money goodbye plug in! Its only about $30,000 if you call right now. First 100 callers get Fibonacci cult numerology ceremonial robes.
Indicators are basically worthless, especially once you understand their underlying formulas; indicators present answers to questions that need not be asked. Plus, the information conveyed by indicators is redundant and inferior to the information conveyed by price action itself anyway - not to mention late.
Overbought and oversold indicator are based on arbitrary mathematical formulas which serve as no comparison to a proper understanding of support and resistance, which unfortunately is rare even among âprice actionâ traders and even leading authors. Likewise, a positive reading in a momentum indicator is not necessary to identify an uptrend and gauge its strength, its pretty obvious at that point.
All too often, traders attempt to find that perfect set of indicators with the perfect settings; but thats never going to happen. However, indicators can be used in regard to scanning, and their period settings can be used to correlate scans to certain events in the overall market - but youâre still going to have to apply price action and volume analysis to the potentials youâve narrowed down.
There are a few exceptions; I use moving averages to an extent, the proper understanding of moving averages in relation to price can replace almost all other indicators, but I only treat moving averages as visual aids to speed up my analysis; I donât use moving averages in terms of support and resistance, cross-over type signals, or anything like that.
Although I donât use it anymore, the OBV is a good indicator to simply speed up volume analysis. Itâs a cumulative total of volume, with each positive dayâs volume added to the total, and each negative dayâs volume subtracted from the total - this is one of few indicators that manages to present an answer to a question that I might actually find myself asking.
The McClellan Oscillator is another exception, this is a stand alone oscillator based on market breadth internals, so it will appear exactly the same no matter which symbol you attach it to. Market breadth and sentiment internals are extremely important and highly reliable if analyzed properly.
Speaking of which, the indicators I use most often are a set of custom internals based on market breadth and sentiment. Depending on the time frame, they use data such as; the tick, the trin, advancing issues, advancing volume, declining issues, declining volume, various types of put/call ratios, new highs, new lows, and % above xMA, etc. - and I also keep an eye on the relationships between bonds, currencies, commodities, and equities.
If you donât have a good grasp of internals, then I suggest you close any open positions and stop trading until youâve got them figured out - and once you do: go back over some of your old losses, I guarantee youâll absolutely want to slap yourself.
Aside from that, indicators are worthless, there might be a few other slightly useful exceptions, but I moved away from using indicators in general before I found any more. For further information on indicators, check out: Better Teach Me To Use Investâo MACD+Stochastic Wize Tools⢠â Advanced GET Screwed edition, with the Eliot Wave your money goodbye plug in! Its only about $30,000 if you call right now. First 100 callers get Fibonacci cult numerology ceremonial robes.
Price & Larger Macro Trend
Poetry, man. Just poetry.