indicators that work

[mechtraderpro]

Exactly. Treating in terms of probability of success:

Using two indicators with probability of 70% accuracy each will result in probability of 49% accuracy when used together and so on.... ( 0.7 x 0.7 x .......)

VG

Sorry ...don’t agree with your mathematics on this one… If someone finds that A lot of indicators work then that’s ok.. It is the interpretation and knowledge of WHAT they tell you that counts… as the attachment…. there are FIVE indicators that are being used here plus 2MAs …. some people don’t use any ! ..some use one ! and that’s all fine as long as you are correct in your interpretation !!!!! regardless of what math you apply !!!...

 

[montmorencyt2w]

What is the lower indicator on that last chart? (sorry if it was there somewhere, and I missed it). I notice it seems to lead, if only by slightly.


BTW: Alligators were new to me, and seem to be a fun concept. However, if I interpret them correctly, they are basically saying only trade when the market is trending, and don't when it isn't.

 

[johnnyonspot]

Anyone use the Weekly Williams %R? I use it as a divergence indicator combined with price action and volume and it seems to work well if you wait for the class A setups and time your entry correctly. I was turned on to it by a filter I poached in a forum. Since it had not been mentioned I thought I'd ask.

 

[philhackett]

I just recently lost a lot of money on the symbol “ICE and BIDU” playing options.
I know a lot of indicators are lagers, but being new to getting in and out of the market I pay attention to Candlesticks and volume. Are there any good indicator settings for MACD or others indicators that could help.
And what are the best indicators and settings to use in swing and day trading.
I also pay attention to 15 and 30 and 240 minute charts. Is there any good silver bullets.

Thank you
Mr. Steve

I have used these two systems for years on 5 minute charts. Chose the best chart for you.

eSignal Learning: Trading Educator's Corner -- Joe DiNapoli


file:///C:/Trading%20advice/TraderTalk,%20A%20Simple%20Moving%20Average%20Trading%20System.htm

Phil H; MSTA CFTe

 

[yacarob1]

Having thought about the subject of indicators extensively, I have come to the firm conclusion that the best indicators of all are your bowels.

 

[0007]

Having thought about the subject of indicators extensively, I have come to the firm conclusion that the best indicators of all are your bowels.

Hmm...... yes, I normally find these are a lagging indicator!

 

[trendie]

BBC NEWS | England | Manchester | Ronaldo to be quizzed over crash

I am looking for car that works.
I have seen lots of cars, and some seem better than others.
I have even been in showrooms with other drivers.
But, some seem to drive them alright, and others crash them.
Are the ones travelling the most distances given special extras?

Please help. I dont know what a gear-stick or clutch is. I want a car that I can use within 5 minutes of buying it.

 

[Chorlton]

I just recently lost a lot of money on the symbol “ICE and BIDU” playing options.
I know a lot of indicators are lagers, but being new to getting in and out of the market I pay attention to Candlesticks and volume. Are there any good indicator settings for MACD or others indicators that could help.
And what are the best indicators and settings to use in swing and day trading.
I also pay attention to 15 and 30 and 240 minute charts. Is there any good silver bullets.

Thank you
Mr. Steve

I would suggest that ALL indicators work..... The problem comes with how people interpret them........

 

[Dacamic]

BBC NEWS | England | Manchester | Ronaldo to be quizzed over crash

I am looking for car that works.
I have seen lots of cars, and some seem better than others.
I have even been in showrooms with other drivers.
But, some seem to drive them alright, and others crash them.
Are the ones travelling the most distances given special extras?

Please help. I dont know what a gear-stick or clutch is. I want a car that I can use within 5 minutes of buying it.

People who understand this post are walking down the right path.

 

[FulcrumTrader]

I am not a big fan of traditional off the shelf price derived indicators, but I do have a set-up I use tracking one of the Jurik Research indicators on my Cumulative Delta charts.....good for tracking order flow transition criteria for scalp trading various futures instruments.

 

[Black Swan]

Having thought about the subject of indicators extensively, I have come to the firm conclusion that the best indicators of all are your bowels.

pfftt...apart from the stench of false signals....

 

[FulcrumTrader]

Sure, go ahead and use typical off the shelf indicators on a FED news day like yesterday (August 12th, 2009) and by the end of the day you will look like Angelina Jolie from "Girl, Interrupted"

I am not saying indicators are bad so get that out of your head, but I am saying they can enable confusion of trade entry determinations while caught in rapid price/volume action. The few price based indicators I actually like are some of the Jurik Research tools (VEL is my favorite) but the Cumulative Delta volume study is my primary trading mechanism.

 

[Jason101]

Good advice hwsteele. Best to keep a trading system simple so that you don't tie yourself up in 'what-ifs?' when the real money goes in.

But in addition, one reason why many folks pile up a bank of indicators is that they think ther accuracy will compound. That is, if you have an indicator that is 70% accurate in signalling trades, then 30 out of 100 trades will be losers: some think that if you add a second indicator that is also 70% reliable, you would knock out 70% of the losers, so you end up with an overall success rate of 91%. Adding further indicators, by this logic, increases the win rate to a fantastic degree. This is all notionally true, so its a very seductive process, but in practice it is nonsense.

Is not 70% enough to be profitable?

 

[Dacamic]

Is not 70% enough to be profitable?

Possibly, but not necessarily. Even a high winning percentage can be swamped if winners are small and losers are big.

 

[Jason101]

Possibly, but not necessarily. Even a high winning percentage can be swamped if winners are small and losers are big.

I guess everyone trades in a different way and some people do trade with a greater risk than reward ratio. Personally not my cup of tea. I would start to feel uncomfortable any ware near 1:1.
Horses for courses I guess.

Jason

 

[dcraig1]

Hi mechtraderpro -

I think the reason a lot of people don't get this is becasue it is wrong in such a simple way.

Fact - if indicator A gives 70% success rate, for every 100 trades, I will have 70 winners and 30 losers.
Theory - if I use indicator B and this also has a 70% success rate, it will reduce the 30 losers by 70% to 21. 21 + 70 = 91, so my overall success rate is now 91%. Fantastic!

In fact, this is wrong. Using indicator A gives 70 winners out of every 100 but indicator B has to be used simultaneously on all trades, not just the losers, so the overall success rate using A and B will be better than just using A or B alone, but not that good. And the benefit of adding multiple indicators becomes negligible. The more serious downside is that traders become confused with multiple indicators, some of which are going to contradict each other at times, and some of them are event re-iterations of the same evidence in different expressions.

Yes ... but it depends what you call an indicator. If you are just reprocessing price in a slightly different way (eg multiple oscillators) then what you say is clearly true.

However, there are other things also known as 'indicators' that may bring something to the party - eg market internals, market breadth, sector relative strength. Intraday things like TICK, Level 2 and so on. Even things like intermarket analysis eg during some periods there has been a very strong relationship between oil and equity prices.

Being aware of what other market participants are looking at is important and that can vary from time to time.

 

[jon1971]

Also notice I said that I don't use indicators any more. I believe that price will give all the information you need.
Some people are looking for something that tells them what to do and they believe that indicators will do that.

I agree, I was always told to use price action and volume to make decisions and to use indicators (leading, lagging or whatever) as confirmation only.

 

[tomorton]

Is not 70% enough to be profitable?

Sorry I hadn't replied, missed this post when went away on holiday. Yes, 70% would be more than good enough as long as losers kept under control.

 

[tomorton]

Yes ... but it depends what you call an indicator. If you are just reprocessing price in a slightly different way (eg multiple oscillators) then what you say is clearly true.

However, there are other things also known as 'indicators' that may bring something to the party - eg market internals, market breadth, sector relative strength. Intraday things like TICK, Level 2 and so on. Even things like intermarket analysis eg during some periods there has been a very strong relationship between oil and equity prices.

Being aware of what other market participants are looking at is important and that can vary from time to time.

Yes, agree with that. If indicators must be used (i.e. anything other than price) they should certainly be based on non-correlating data to avoid the risk of duplication appearing to give confirmation. Also, as said above, any indicator is good for confirmation only of entry, possibly more valuable in identifying exits that cap risks. For most of us the exit is the harder part anyway.