What indicators do you look for most?

timsk

Legendary member
6,911 1,794
Average daily range, really, remember indicators do not predict the future they only show what has happened so useless really.
Hi David,
As you've stated in other posts that you're new to trading - please allow me to offer a small tip that will stand you in good stead along your journey. . .

Don't make assumptions based on logic or accept blindly what you read - regardless of the source. You have to test everything for yourself and arrive at your own conclusions. Your statement above is absolutely fine if you've tested all indicators and found that for you personally none of them offer any predictive qualities. By the same token, if you're only interested in indicators that predict and nothing else then, based on said research, you can conclude they're all useless. Unless and until you've done that, I recommend you keep an open mind, especially as some indicators are classed as predictive. And, as I say, just because you might conclude all indicators are useless, it doesn't mean that all other traders will reach the same conclusion. Indeed, I can assure you they won't - and don't!
;)
Tim.
 
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jonisonvespa

Junior member
12 0
Hi David,
As you've stated in other posts that you're new to trading - please allow me to offer a small tip that will stand you in good stead along your journey. . .

Don't make assumptions based on logic or accept blindly what you read - regardless of the source. You have to test everything for yourself and arrive at your own conclusions. Your statement above is absolutely fine if you've tested all indicators and found that for you personally none of them offer any predictive qualities. By the same token, if you're only interested in indicators that predict and nothing else then, based on said research, you can conclude they're all useless. Unless and until you've done that, I recommend you keep an open mind, especially as some indicators are classed as predictive. And, as I say, just because you might conclude all indicators are useless, it doesn't mean that all other traders will reach the same conclusion. Indeed, I can assure you they won't - and don't!
;)
Tim.
Hi Tim
what indiarers predict the future then? I am being polite I do mean it
Thank you
 
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Pat Riley

Established member
794 178
The best indicator is when you have client X indicating willingness to sell at 100 and client Y indicating a willingness to buy at 101, and both in unlimited size if ya want icing on it.
 

timsk

Legendary member
6,911 1,794
Hi Tim
what indiarers predict the future then?
Hi jonisonvespa,
In general terms, indicators fall into two main groups: leading and lagging. The former work best in range bound markets and the latter work best in trending markets. Examples of lagging indicators are things like moving averages and MACD. By contrast, many oscillators are classed as leading indicators because they indicate when a market is overbought or oversold, enabling traders to 'predict' what it is likely to do next. Well know examples are stochastics and RSI. Potentially, they offer greater rewards, but that comes at the expense of increased risk. For example, in a market that's trending strongly (upwards), leading indicators will generate overbought signals, tempting traders to exit long positions prematurely and/or to enter short positions in an attempt to catch the market near its high.

One indicator that sort of bridges the gap between leading and lagging is Bollinger bands. Lots of traders regard price breaching the upper band as an indication that it's overbought and look to close their longs and/or to go short, while John Bollinger himself recommended 'riding the bands' and considered the breach of the upper band as an indication of a strong trend.

All the above is just standard text book stuff which I'm pretty much quoting from Steven B. Achelis' highly regarded book Technical Analysis from A to Z. IMO, it isn't of much help or interest to individual traders. As per my post to David, what matters is that each trader does their own research to find what indicators - if any - 'work' (whatever work means for them) and whether or not they offer any predictive qualities. Needless to say, what works for one trader may not work for the next.
Tim.
 

Pat Riley

Established member
794 178
timsk, all indicators are lagging in that they can only ever work on data that is already in the market domain. The 'predictive' bit is purely and only ever in traders' heads. Your example about OB/OS is a case in point. One trader will likely sell or go short as soon as it hits OB while another will wait for it to fall below a lower level 'for confirmation' before selling. They both will be working with the exact same data. And they can both just as easily be wrong. Stuff can stay OB for a long, long time and switch back up to OB just after hitting a lower level on any of the oscillator indicators. There is a fascination with indicators out of all proportion to their actual worth. They can, sometimes, provide a useful general guide, but to be timing entries and exits on them alone is folly in my view.
 

timsk

Legendary member
6,911 1,794
Hi Pat,
Just to be clear, all the points I've made about 'leading' and 'lagging' indicators do not reflect my personal views or those of T2W; I'm merely explaining the basic premise on which most indicators are based - as discussed in major texts on the topic - of which I referenced one.

. . .The 'predictive' bit is purely and only ever in traders' heads.
That key point is one I stressed in both my last two posts - but thanks for making it again Pat as it can't be emphasised enough, IMO.
Tim.
 

tokyojoe

Established member
866 287
Hi Tim
what indiarers predict the future then? I am being polite I do mean it
Thank you
The best indicators will develop in your own mind over time.

I strongly advise you learn how to read into inducements & traps, these will become part of your strategy. You will not learn about them in books, nor on this forum, or online, you may read about them but you will only learn about them with live chart time/live trades.

Most indicators are stabilizers while learning to justify why the price went here, why the price went there. They are slowly stripped away to reveal what is really going on, which is mostly avoiding inducement/traps, seeing traps & taking a position to be carried on the momentum of the move.

Scalping skills are required for this to avoid using large stops & potential drawdown.

If you are looking to trade very infrequently & maybe that is what the OP mean't in the opening post about "intelligent investing", all investing is gambling to some degree, it will be very prudent to realise & admit this to yourself, Especially with a question like "which indicator predicts the future" from Jonisonvespa, which is a very fair question if you are starting out.

As a day trader(speculator/gambler;)) I am only interested in the future of the now, indicators are of no use to me anymore, but I am very glad to have learned to use them.

Good luck
 
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NH538DB8

Junior member
13 0
The best indicators will develop in your own mind over time.

I strongly advise you learn how to read into inducements & traps, these will become part of your strategy. You will not learn about them in books, nor on this forum, or online, you may read about them but you will only learn about them with live chart time/live trades.

Most indicators are stabilizers while learning to justify why the price went here, why the price went there. They are slowly stripped away to reveal what is really going on, which is mostly avoiding inducement/traps, seeing traps & taking a position to be carried on the momentum of the move.

Scalping skills are required for this to avoid using large stops & potential drawdown.

If you are looking to trade very infrequently & maybe that is what the OP mean't in the opening post about "intelligent investing", all investing is gambling to some degree, it will be very prudent to realise & admit this to yourself, Especially with a question like "which indicator predicts the future" from Jonisonvespa, which is a very fair question if you are starting out.

As a day trader(speculator/gambler;)) I am only interested in the future of the now, indicators are of no use to me anymore, but I am very glad to have learned to use them.

Good luck
Thank you all for your input on what really is a very vauge and poorly phrased question.

I will say that I believe there is nothing (indicator, price pattern, etc) that can predict the direction that a price will go at any given time. There are lots of things that will give you information that you can use to extrapolate an "educated" opinion of where the market will go given past performance and trends.

As the OP I can clarify Tokyojoe's question about trading frequency for ME. I have no problem trading on a day to day basis. Day trading is not an option as I have a day job (for now). So I think I would be considered willing to be an active trader as opposed to a day trader.

I've spent a lot of time since I started this thread researching price action patterns and the like. Seems like I've scratched the surface of a whole new world of stock trading strategies.

I will say the MOST important thing I've learned from this thread and all the information that its lead to is the necessity for back testing, forward testing, and thoroughly evaluating a strategy that is going to be used. In the past couple weeks I've spent countless hours developing criteria for what in my mind (reinforced by the interwebs) will be a winning strategy and then seeing it fall apart under testing. If you can't test a theory before putting it into action in the market then its a gamble. If you can't test it objectively and have it be profitable in testing then there is no way it will be profitable in real life other than plain dumb luck (gambling).
 

ifmcinstitute

Junior member
15 0
Indicators are just manipulations of price data or volume data, therefore many day traders don't use indicators at all. There is no single indicator that is the best for day trading. Technical indicators are just tools, they can't produce profits.
 

NVP

Legendary member
36,356 1,801
interesting resurrected thread .........

How do you tell what is a swing from a full blown reversal ?.

What indicators do you rely on for your entry strategy and why? There are a million theories out there but so far they all seem to be a bit wishy washy in the why area?

for me the first question is all about price relativity ..........and at what price you use as a reference / start point ...the answer flows from there ............and it will never be 100% correct whatever you do ......

second question is a small cocktail of my trusted indicators based on years of usage and practice .......my only advice on this area is if yuo are going to use indicators (plural) then ensure they are doing seperate independent jobs ......many indicators pretty much so the same thing so you will already have one too many indicators on your chart for some combinations !

i would ensure you have a decent directional bias indicator alongside an indicator looking at relative volatility/momentum ....seek increasing momentum/volativity into a clear direction ......

just my thoughts ...........so lets hear what others have to say again on this interesting subject

N
 

NVP

Legendary member
36,356 1,801
Thank you all for your input on what really is a very vauge and poorly phrased question.

I will say the MOST important thing I've learned from this thread and all the information that its lead to is the necessity for back testing, forward testing, and thoroughly evaluating a strategy that is going to be used. In the past couple weeks I've spent countless hours developing criteria for what in my mind (reinforced by the interwebs) will be a winning strategy and then seeing it fall apart under testing. If you can't test a theory before putting it into action in the market then its a gamble. If you can't test it objectively and have it be profitable in testing then there is no way it will be profitable in real life other than plain dumb luck (gambling).
forward testing is the key..........i have strategies showing 100% win rates when backtesting ......but useless unless they work in the real world
 

Xevield

Junior member
22 1
I find that most commonly used indicators are MA RSI followed with BB. Those are also my favourites. But I would note that many traders are relying not only on one, but combination of few indicators, waiting for clear confirmation of trend.But you should find what fits to your trading technique best
 

monro00

Newbie
8 1
I like to apply a momentary standard deviation utilizing the h/l through the span of half a month and apply it as a percentile(lining up the sections in order to impact the ones prone to change) to the normal cost either up or down and if the h/l is outside of this section by a sum more noteworthy then I foresee then I think about that a break out from the example either up or down. By then I consider there will be an inversion towards the opposite end of the sexually transmitted disease D - news not withstanding-or a break to another range.

I likewise gather pattern information by means of the h/l over a similar time allotment and submit to reinforcing and debilitating patterns as a further investigation.
 

tomorton

Legendary member
7,191 945
Actually, I've started looking just today at RSI during a trade's lifetime to identify dynamic TP levels. I don't set TP's in advance as my long-term trades are all trend-following but it would be nice to get out before a massive pull-back.