Honest question: do you know what are the formulas that generate your indicators, and why they are supposed to work? or do you just follow then because it works?
Sierrachart, package nr 5 because I also want to use Market Profile charts. I will get in to that later on.. Datafeed is from the broker. Transact has history data with bid and ask ticks, that is important for cummalitive data indicator, will explain later on how to use that.
All indicators like the moving averages and cci are price calculations. The only exception is the cummalitive delta that is based on the bid and the ask volume. This is for me a great indicator, especially when price and cummalitive delta diverge from eachother. I do not act on indicators alone, it helps me to paint a picture what price is doing. I know it works trough backtesting and forward testing, but I use this testing more to see where I have to put my stop, targets, and so on. The market volatility always changes. So do my stops and targets.
Today I was waiting on what I think is very valuable to share, but hard to explain or let other people see it. It is very clear when you see it happen in front of your screen. I call it a diverge between price en cummalative delta. Basic knowledge is that price is driven by bid and ask volume, but you can see with cummalative delta and price, that price reacts sometimes more on a down move of cummalative delta, then it moves with an up move of cummalative delta en vice versa. This is a great tell, what price will do in the next few moments. As you can see in the chart, cummulative delta is moving down, and so is price. Suddenly cummalative delta is going up, but price not so much, see arrow 1 and 2. When cummalative delta return to a down move, price goes much faster down. I hope it is clear, more examples follow.
Its a bit over engineered, are you not just trading a continuation of a trend after a short pullback?
Yes, I do. I thought to start with something you are allready doing, trend trading. Do you buy (or sell) the breakout's of a trend or do you buy the pullbacks? I preffer the pullbacks, because it let me have a shorter stop or smaller risk in absolute dollars. It makes it easy to have a 2 to 1 risk ratio, like your first example. About the over engineered part: Let it sink in and hang in for the moment. Everything has a purpose. If you have a specific question why something is used, I will be glad to explain to make it clearer. Are you willing to take and do the first exercise in the previous post? Worry about the rest later, it will become clear if you start doing it.