Help with Indicators

[Chorlton]

Hi All,

Firstly, as we are fast approaching the 25th Dec, I'd like to wish T2W & everyone on here a Merry Xmas :cheesy:

Ok, now my question:

I trade UK stocks and currently I am quite successful in choosing those stocks which continue to make short-term gains in an Uptrend using certain combinations of MA's to first identify these stocks.

However, the one area where I am having MAJOR problems with is predicting when the current uptrend rise will collapse.

So far, I have held on to certain stocks only for them to suddenly drop in SP which results in my stop loss being hit , or worse still closing trades only to watch them suddenly shoot for the stars a few days later !!!!!!!!

There may be some scope to modify my stop loss (ie. lower it) to eliminate it being activated but this obviously will have a knock on effect to my risk:reward ratio.

My goal is to identify those stocks beginning a new uptrend and to ride the tend as much as I can before it falls against my position. In the instances where the SP then levels off and stays within a short trading range, I am happy to wait 3-5 days to see if the uptrend continues and if not, to close my position.

Consequently, can anyone recommend any good indicators (and how them intepret them) to give some indication as to when a rise may run out of steam or when it is good to keep a certain trade open??

Any help much appreciated as I've run out of ideas and don't know what to try.....

Many Thanks in advance,

Chorlton

 

[heycanilosemoney]

Have you tried using a moving average as your stop. For example if you use the 20 and 60 cross as an entry the use the 40 MA as a stop.

 

[Chorlton]

Have you tried using a moving average as your stop. For example if you use the 20 and 60 cross as an entry the use the 40 MA as a stop.

Hiya,

Using a MA for a Stop Loss!! mmm... Never considered that before. Good Idea and one I will definately look into..... Thanks

BTW Ignoring Stops for one minute, can you recommend any indicators which could help me?


Chorlton

 

[bluetipex]

Chorlton

You may wish to have a look at ADX or "Directional Movement" indicator. It's described in the "Traderpedia" on this site.

It is specifically designed to help identify trends, where more traditional indicators like MACD and Stochastics are practically useless. These latter indicators are best in sideways markets.

Good luck

 

[Chorlton]

Chorlton

You may wish to have a look at ADX or "Directional Movement" indicator. It's described in the "Traderpedia" on this site.

It is specifically designed to help identify trends, where more traditional indicators like MACD and Stochastics are practically useless. These latter indicators are best in sideways markets.

Good luck

Thanks Bluetipex....

I did have a look at ADX briefly before, but will definately revisit this indicator to see if I can tailor it to my trading plan.....

 

[efficiency]

ADX will peak and fade before price will. So will relative strength (underlying price divided by an index such as S&P 500 which neutralizing market influence out)

Stops should NOT be easy to hit, meaning they will keep you in but get you out when the move/swing/trend has definitely changed. Moving averages and round numbers are clear targets for specialists/ market makers/locals to gun stops once they accumulate. "Here I am, come get me"

You'd probably be better served with a volatilty-based stop. For example maintaining an average true range on whatever's owned, and the stop 2 ATR's or 2.5 ATR's away. Trail it, meaning it can move up, but never down. And of course, NOT honoring your stops defeats the purpose of having them.

 

[mr_cassandra]

Hiya,

Using a MA for a Stop Loss!! mmm... Never considered that before. Good Idea and one I will definately look into..... Thanks

BTW Ignoring Stops for one minute, can you recommend any indicators which could help me?


Chorlton

One thing to be aare of when using any ta indicators is what I call 'timeframe myopia'. They are all preset to the rough best fit of time range but if your stock happens to rise for longer than the indicators preset range, the indicator begins to signal 'divergence'. But what its really signalling is that its time frame and your stocks are different.

 

[shadowninja]

What about a trendline or using past movements to work out what range of movement counts as noise?