Some advice

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Old May 27, 2011, 8:50pm   #1
Joined Apr 2011
Some advice

Hi all

Like most people in this section of the forum i am completely new to trading.

I have started to spread bet on a demo account (scalping) with varying success, i am making decisions based on MACD, Paroblic SAR, Bollinger bands and RSI.

Am i using too many indicators ???

Feed back much appreciated

Matt
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Old May 28, 2011, 5:16am   #2
 
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Re: Some advice

Quote:
Originally Posted by mattboffey View Post
Hi all

Like most people in this section of the forum i am completely new to trading.

I have started to spread bet on a demo account (scalping) with varying success, i am making decisions based on MACD, Paroblic SAR, Bollinger bands and RSI.

Am i using too many indicators ???

Feed back much appreciated

Matt
some use many more than that, me a lot less
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Old May 28, 2011, 9:39am   #3
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Re: Some advice

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Originally Posted by mattboffey View Post
Am i using too many indicators ???
Hi Matt,
Welcome to T2W.

If you have developed a methodology with a positive expectancy that is consistently profitable over time, then I would answer no, you're not using too many. You're using the right combination and you're using them well. If, on the other hand, you haven't developed such a methodology, then the answer might be anything from yes, to maybe, to no!

Indicators are about the most contentious thing there is in trading, and their fans and detractors frequently come to blows. So, each trader has to decide for themselves if indicators have a use - or not - and which of the 100s that are available are the best for them. Only you can decide that. My opinion - and that of all other members - is just that, opinion. In spite of that and the many disagreements about indicators, there are some general points of consensus. Most members would agree that whatever indicator(s) you propose to use, be sure that you:

1. Understand fully how the indicator works and what it does.
2. Understand fully what its limitations are. For example, an momentum oscillator like RSI will indicate the market is severely overbought in a strong uptrend. Many traders (including me!) have lost money trying to fade the trend in a strong bull market on the strength of an overbought indicator reading.
3. Following on from the above, understand the difference between 'lagging' and 'leading' indicators - and the pitfalls of each. The former is great for trending markets but will lose you shed loads of money in a rangebound one. With he latter, you run the risk jumping the gun and getting in too early before the current move has finished.
4. If you use more than one indicator, be sure that they complement one another and aren't just a different way of saying the same thing. E.g. there would be no point adding CCI to your current selection given that you already use RSI.
5. Understand that indicators make a poor substitute for your eyes and your brain. These are the best tools to filter whatever it is you think the indicator is telling you. Use 'em!
Tim.
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Old May 30, 2011, 8:56pm   #4
 
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Re: Some advice

You are not going to get as splendid response from me as you have recieved from Timsk, above.

However, you seem to have an unequal balance (3X1) of trending and oscillating 'lagging' indicators. According to my interpretations and how I may use of them. I personally choose not to use them at all.

Are you using too many? It depends!

why are you using them?
when are you using them? and
how, are you using them?

They are only tools, do you need all of them to get the job done?
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Last edited by jiggly; May 30, 2011 at 9:01pm.
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Old May 30, 2011, 11:12pm   #5
Joined Apr 2011
Re: Some advice

mattboffey started this thread Thank you for the responses.

Another quick question, am i right in assuming that the momentum percentage shows the volume of trades that has caused a certain outcome ie to brake a resistance?

Matt
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Old Jun 1, 2011, 7:07pm   #6
 
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Re: Some advice

I am not a fan of indicators. Why? I feel they lag and distract me. I feel if you know how to evaluate price, that is all you really need. I guess there are many that do well with indicators, but the majority of traders I know that are successful do not use them. My two cents for what it is worth. What is the saying? Price is king?

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