Indicators

[Noche]

I have a big doubt about indicators... :?: somtimes i think i am getting to know them, but sometimes i realize that is not what i thought... or some one used to explain me, and then another one cames and told me something very different... this make me feel very

Is tehre any place, page, or here that can give me the truth about indicators :?:

I normaly use MACD, ADX, Scholastic, RSI and Bollinger Bands... I am starting to use fractals, and fibonacci... plz, need help to understand this much better.

 

[cucuchris]

I am sorry but i am one of those people who does not belive in indicators and such things

Nothing and nobody can tell us what happens in the future

 

[mr_cassandra]

Depends on your perspective I guess

I am sorry but i am one of those people who does not belive in indicators and such things

Nothing and nobody can tell us what happens in the future

I think that we all depend on indicators much more than we think. From the morning weather, to the fuel gauge on your car, in some sense and some way, we spend our entire day depending on some form of indicator.

Regarding investing, my preference is the contrarian indicators. Starting with Zweigs book, winning on wall st and then continuing on to ‘due diligence’ watching the correlation, there is a profitable interrelation between put call ratio, vix, net new lows etc and market swings.

The amount of work it takes to diligence these concepts dissuades the more casual investors, but has profited me well.

 

[Faris]

Hello Noche.

From your post it seems to be that your taking in to much information when it comes to trading and the indicators that your using.
The best advice that anyone can give you is to keep it SIMPLE.
If you need to use indicators choose one or two and chuck the rest away. Completely concentrate on using these and see how they react with price on charts.
Just remember that TA will not work all the time.

Happy Trading
Faris..

 

[GruntnoWay]

the buzz words are keep it simple. I do not agree. It is not simple. I think it is complex and needs lots of confirming indicators. I am trying to learn more so i can add them. The more i use the better I am at picking a move.

 

[TheBramble]

GW - you say the more indicators you use, the better your trading?

Are you using all the indicators now that you've ever used - or have you let a few go?

And if you've let some go, why did you do that - because they stopped being useful or giving you any definitive market indication?

I'd personally go with Faris on this one and start real simple - just an MA or so. Then have a look at MACD and RSI.

Then the exotics from Chande and Wilder.

Work your way up and through all of them - a few at a time. Make sure you understand why they are built the way they are built and why the people who use them will use them the way they will. Make sure you thoroughly understand what they are, what they're looking at and why people use them.

And then - just drop them all.

You need to go through the process of using, inventing and understanding indicators to realise why it is you don't need them. Or even if you don't - that's fine too. You'll have acquired a considerable expertise of trading indicators.

 

[GruntnoWay]

I used to stop using one when I found another. Now I keep the ones I have and add others. I use about 11 now. It may appear stupid but I am getting better confirmations. I have to have three charts open to accomodate them all. Its working for me at the moment. I am looking for more now. What I need is a composite indicator.

 

[culion]

I used to stop using one when I found another. Now I keep the ones I have and add others. I use about 11 now. It may appear stupid but I am getting better confirmations. I have to have three charts open to accomodate them all. Its working for me at the moment. I am looking for more now. What I need is a composite indicator.

Are you sure that the indicators are really independent? Or are some really measuring the same thing (e.g., momentum), perhaps with different sensitivities due to the parameters chosen?

 

[GruntnoWay]

I dont know if they are independent. I dont mind if they are. I am mvery careful with the parameters to keep them all in the same time frame.

 

[Noche]

Hello Noche.

From your post it seems to be that your taking in to much information when it comes to trading and the indicators that your using.
The best advice that anyone can give you is to keep it SIMPLE.
If you need to use indicators choose one or two and chuck the rest away. Completely concentrate on using these and see how they react with price on charts.
Just remember that TA will not work all the time.

Happy Trading
Faris..

Ok, take only 2, but 2 with the candelstick, and two like rsi or MACD or ADX?

Then is better for me in the mean time i can get to understand all of them, to use as few as i can, and dont listen to all those who lnows much more than me?

 

[Faris]

Hi Noche

It doesn't matter what someone else or what i say about indicators. All that should matter is how you feel comfortable to trade. If you need to use 20 indicators or 0 indicators its up to your as its your money your trading with.
All i will say to you is if you need use indicators your really trading of price from charts. If that is the case why dont you try and understand price and how each stock, commodities, currency behaves to certain circumstance's.

Happy Trading

Faris..

 

[jimbo57]

Indicators/Schmindicators.

I think of indicators as stabilisers on a bicycle. Good for the novice, especially when the bike goes around a corner, but ultimately to be cast off.

But, and this is a big but, every once in a while, even the most experienced cyclist will hit a curve or a patch of road, as the market often does, where they wish they had those stabilisers back on for a few seconds.

And this comes down to knowing the road, and knowing which indicators the big boys are looking at, or wearing at that time. Only experience can give you this, and the trick is to avoid th tricky roads and the pot holes in the meantime.

 

[trendie]

Hi Noche,

I can re-affirm what jimbo57 says about indicators - stabilisers on a bike.

I think I have been where you are - I went through a process of learning and using indicators to trade.
I eventually, one by one, ditched them, until I am predominantly price / action trader.
I still use SMAs though !

GruntNoway
One point to consider using 11 indicators:

You must have heard the 80/20 rule ?
Generally speaking, 80% of your work or value can be derived from 20% of your abilities or effort.
You will find that the first 2 or 3 indicators give you about 80% reliability.
The remaining indicators can only add increasingly little value.

Each additional indicator adds less and less value - at some point the additional parameter will be more effort than any derived benefit.

Possibly, at some point, the additional indicators may even begin to contradict other indicators.

Just a thought regarding adding more indicators.

 

[GruntnoWay]

I used to take that approach but as I says I am getting better results and many more profitable trades with more filters