Which are THE best indicators & why ?

[Pat494]

I have used all the regular indicators like RSI, Macd etc. but only with a b/e ratio.
Have you found a magic indicator ?

:clap:

 

[timsk]

No such thing as a best indicator Pat, other than one's eyes and whatever one's gifted with between one's ears. However, if there was a poll to discover the most used indicator to which traders attributed some sort of value, I'd guess it would be a basic moving average. Beyond that, it's all subjective - horses for courses etc.

The other key point here is it all depends on what you want an indicator to indicate. If you want to know the average range of prices over the previous x periods, I imagine most traders will agree that ATR does a pretty decent job. And all of them will agree its a whole heap better than MACD! However, implied in the thread title are the technical indicators that give a trader an edge - or contribute towards it at least - by way of gauging market direction and timing of their entry and exit. A number of them can do this, but the 'best' one is bound to be personal and governed by the way a trader integrates it into their trading strategy.

For swing and position traders who primarily use daily charts or longer, then there's a suite of market indicators (as opposed to technical indicators) that may well be helpful. Of these, the Bullish Percent Index would probably be my favourite. When I day traded the Dow, I became obsessed with $Tick, as that often appeared to be a leading market indicator that was much better at highlighting an overbought or oversold condition than say, a technical indicator like RSI. Ultimately though, you won't be surprised to learn that it wasn't the magic bullet I hoped it would be.
Tim.

 

[sminicooper]

Price.

 

[forker]

For me it's central banks

 

[barjon]

Of all the hundreds of indicator based systems that Kaufman tested there was only one that proved profitable. And that one was based on a simple MA cross.

 

[forker]

Of all the hundreds of indicator based systems that Kaufman tested there was only one that proved profitable. And that one was based on a simple MA cross.

Do you trade an MA cross?

 

[barjon]

Do you trade an MA cross?

No

 

[malaguti]

I have used all the regular indicators like RSI, Macd etc. but only with a b/e ratio.
Have you found a magic indicator ?

:clap:

you can take a macd with a b/e ratio and easily make a profitable system out of it

 

[Pat494]

Indicators do tend to lag, so any change of direction may be indicated too late.

Of course there are indicators of indicators but this tends to build in an even more laggardly structure.

You would think this might be a BIG challenge to mathematicians as the possible rewards are huge. Maybe they are keeping their efforts a closely guarded secret ?

 

[dbphoenix]

Indicators do tend to lag, so any change of direction may be indicated too late.

Of course there are indicators of indicators but this tends to build in an even more laggardly structure.

You would think this might be a BIG challenge to mathematicians as the possible rewards are huge. Maybe they are keeping their efforts a closely guarded secret ?

Depends on what one means by "too late". MAXOs -- and the MACD is simply an elaborate MAXO -- "indicate" one of two things: (1) a change from trending to ranging -- or vice versa -- or (2) a reversal, both of which can be determined faster and more easily with a straight line. This proposition generally results in a lot of snorts, but those who are practiced in the use of MAs understand that an MA is essentially a straight line that is late. Once the trend or range settles, the MA and the straight line are for all practical purposes the same. But when conditions change, the line will be a bird instantly taking flight. The MA will be a pilot climbing into his plane, revving up the engines, taxing down the runway, lifting off, eventually finding some sort of momentum and direction.

Being late, of course, does not mean failure, but it does make the trader more vulnerable unless he increases the size of his stop, and if he happens to be wrong about direction, he stands to lose a substantial amount of money, over both the short and long terms.

 

[Pat494]

Someone was on about Bayes theory ( named after an English vicar ). Anyone know anything about this theorem ? I.e. if it works ?

 

[dbphoenix]

Someone was on about Bayes theory ( named after an English vicar ). Anyone know anything about this theorem ? I.e. if it works ?

Depends on what you mean by "works". It is what it is, like auction market theory. Whether or not one finds the theory useful will depend on what he does with it.

 

[Pat494]

Depends on what you mean by "works". It is what it is, like auction market theory. Whether or not one finds the theory useful will depend on what he does with it.

In your opinion can it be used to make consistant profits ?

 

[dbphoenix]

In your opinion can it be used to make consistant profits ?

Yes. It can also be completely useless. What makes consistent profits is study, followed by experimentation, data collection and analysis, further experimentation, then application.

 

[Oscar Reed]

Buyers and sellers

Time and sales

Market depth

 

[Fugazsy]

Price.

Indicators can also be helpful but without understanding price they are useless.

Once you start to understand the dance of price, indicators can be helpful to draft a more objective system if your personality gets a bit lost in the many nuances of price.

 

[dbphoenix]

Or what drives price in the first place: demand and supply. "Price" is somewhat ephemeral. One can more easily grab hold of demand and supply.