Instead of using RSI for extremes, I found what works for me even better, keep 4 week average of completed swings before trend change, and each hour has different size of swings. So say in ES first hour ave swing before reversing is 8.00 points, so I know what the ave is when I place trades, if getting nearer to 8 points, I could look to take less than 8 ticks I target. If at beginning of possible new trend and have failed attempt of making new lows, I might add more lots on this Head & Shoulders or Triple bottom, now a SMA/EMA not fast enough to show said reversal and RSI might or might not show extreme in reading if move down was gentle sloping. Each instrument has different Swing lengths, like Crude oil right now is 88 ticks.
I think a well-chosen MA or EMA can be helpful. Not that it should signal entries or exits, but rather that it be used as a reference point of one kind or another, including, but not necessarily limited to, as a dividing line in the middle of the road. Sometimes you can make great headway on the wrong side of the road, just so long as you realize that's where you're driving.
The interesting thing is that a lot of the Market Wizards used indicators in their trading. Yet so many 'experts' on ET say indicators are useless and that you should rather learn PURE price action. Lol.
"Experts" on ET seem to think anything's useless that doesn't provide guaranteed profits on every trade. These "experts" also seem to believe that any methodology described in a book or on an instructional trading web site is worthless. The really bizarre thing about these experts is that they've never provided a description of a profitable trading method. Their methods are either cloaked in secrecy or prone to stop working at any time, hence the secrecy.
I have used indicators since late 70'x by hand and 86 using PC, you watch anything long enough and comparing it to Price, you have good idea after awhile what the indicator is doing if not on chart. I think most would agree when you young you thinking it should help get you into trades and out till losses mount, then you just keep adding more indicators to offset the flaws of another one, then you go back to price patterns and integrate both. At some point you realize what you first learned during your first year is all you ever really needed which is get on coat tails of big boys, don't need to re-invent the wheel. Indicators are quick way to identify trend and few times when market is behaving uniquely that Price is not always shows like hidden divergences. http://www.chart-formations.com/indicators/divergence.aspx But one of the Best imho is Bulkowski's Pattern Index: http://thepatternsite.com/chartpatterns.html And have few of his books. This site seems to be good for Price patterns. http://www.chart-formations.com/chart-patterns/default.aspx Often see some have way too many indicators, one confirming another, whereas I think Price can confirm indicator or other way around depending on back testing. You don't need to have more than one/two indicators, concentrate on after entered trade and be very consistent in your approach. At some age, less is more. Hardest thing of trading is following your own Trading Plan. LOL
Thank you, Handle. For me though, I never really bothered much with indicators since I was stupid enough to trust consensus here and through other sources of knowledge that they in fact were useless. And some of the arguments against indicators made sense to me at the time being. Now I have a different approach and I trust no one. So, I'm planning on doing extensive research on the subject and I'm expecting to come up with something that will be worth my while in the end. I'm of course not building a complete methodology based on indicators, but I'm thinking it can be a fine refinement in reading the market. As mentioned earlier, one of the things I like about indicators is that they can remove discretion. That is valuable for day trading.