What indicators do you deem essential?

[TWI]

I cannot believe that nobody has mentioned the wonderful Ichimoku Kinko Hyo
You just cannot go wrong with that I hear.
One of the best ones I ever heard about on here was the suggestion of putting every type of Moving Average from 1-200 bars, so you have a mess on your screen. when the price appears either side of it just go with the breakout.
Personally I just like to flip a coin.

 

[chump]

"Personally I just like to flip a coin" ....long as you are disciplined about it ...inconsistent randomness would not be good

 

[damianoakley]

I'm all for flipping a coin !

I've said it before and I say it again - a coin flip entry can work as long you manage the position once you're in the market................but let's not go down that line of discussion - that's for another thread!

I couldn't agree more with the KISS approach.

Many traders look to indicators because I think it goes against human nature to just simply look at the price of a stock. Humans like to over-complicate the markets with indicators because it gives them the feeling that they have control over the market in some way.

Price is always your best indicator in my opinion.


Thanks


Damian

 

[andycan]

Apologies Eagle soar
it looked like a break out system but the pull back is a better approach IMO

 

[andycan]

Price is always your best indicator in my opinion.

is the only thing i use!!!
reading charts alone is by no means simple but after a while you start to understand
expanded bars, short bars, congestion overbalancing and so forth

 

[dcraig1]

These discussions always seem to separate into the 'indicators just pollute the chart' mob and the 'use a 33 SMA on the 5 min chart of the ES because it has magical properties' crew.

Yes, I know it's a bit of a caricature, but there is some truth in it.

What about things that CANNOT be readily had from a candlestick plus volume chart.

eg

1. Market breadth indicators. eg trin, tick intraday (and i'm sure there are other ones that could be constructed and may well be usefull). Daily there are any number such as McClellen summation index, bullish percentage index, stocks above 200 MA, advance/decline line etc etc. Sector relative strength. .......

2. Order flow - the market delta. Volume at bid/volume at ask difference.

3. Order book. On stock index futures the ratio of total contracts at bid to total contracts at ask across all levels in the book is significant.

4. Market and volume profile.

Aren't any of these worth a mention ? KISS is all well and good, but a more appropriate motto probably is "As simple as possible, but no simpler".

 

[damianoakley]

Hi dcraig1,

Speaking for myself, I am not rubbishing indicators.

Many of the indicators around are very useful tools.

All I would say is that indicators can be dangerous for the new trader because it becomes easy for a beginner to start thnking that indicators can be relied upon in place of the actual price chart itself.

This leads to novice traders packing too many indicators onto a chart and ending up with information overload.

The infamous forex trader Rob Booker always says in his seminars that if he locked a trader in a room for 6 months and made that trader devise a system using only one indicator (eg - MACD), the trader could probably devise a profitable system. I agree with this.

It has been stated before that indicators are just part of a trader's toolkit - they need to be used in conjunction with price action, volume, etc..


Thanks

Damian

 

[TWI]

Best thing for me about indicators is that they allow you to observe more clearly the seperaration of momentum from price action.
One thing to remember is that they look better in retrospect than real time and they are trailing not leading.

 

[andycan]

i personally dont find indicators useful
i know traders that do but not for me i occasionally use rsc
relative strength comparative
the only reason i use this is when i trade grains i make a comparable to see who is the leader or which one is out of synch with the others and so forth
it is personal choice which indicator one uses its a bit like, beauty is in the eye of the beholder

 

[Xandar]

I think you have to adapt indicators to financial instruments you use, trading time frames, and volume.

 

[dcraig1]

Hi dcraig1,

Speaking for myself, I am not rubbishing indicators.

Many of the indicators around are very useful tools.

All I would say is that indicators can be dangerous for the new trader because it becomes easy for a beginner to start thnking that indicators can be relied upon in place of the actual price chart itself.

This leads to novice traders packing too many indicators onto a chart and ending up with information overload.

The infamous forex trader Rob Booker always says in his seminars that if he locked a trader in a room for 6 months and made that trader devise a system using only one indicator (eg - MACD), the trader could probably devise a profitable system. I agree with this.

It has been stated before that indicators are just part of a trader's toolkit - they need to be used in conjunction with price action, volume, etc..


Thanks

Damian

You miss my point, which is that there is information available for the market and instrument that is not contained within any OHLCV time series - no matter how the latter is massaged and charted - indicators or no indicators.

 

[damianoakley]

Having re-read your post, I see what you mean - sorry.

You're absolutely right - there are definitely things that charts and indicators do NOT show.

I know a few traders who day-trade with a level 2 screen, and that's all they use - they never look at a single chart because they say that their level 2 screen tells them all they need know.

It fascinates me how many different strategies and personalities there are in the trading business.

Like the famous Jack Schwager says: "There is no single path to trading success"



Thanks

Damian

 

[andycan]

Like the famous Jack Schwager says: "There is no single path to trading success

could not agree more