Grabbit, save yourself some time and stop trying with the indicators you learned from a book The only way to make money with THOSE indicators is to write another book about them. If any of them actually works, the institutions with an army of computer geeks would have program-traded the indicator and killed it. Look at some charts and some charts and some more charts, and figure out something not taught in a book. I doubt anything would work in this market though, wait till volatility comes back to the equity market, or look at some trendy stuff, like commodities or currencies. Under extremely trendy conditions, those 'canned' indicators may actually make you a buck, but the performance will lag far behind anything you work out on your own. Good luck.
Well thanks dozu888, but the indicator I'm using right now seems to work. But will it work tomorrow? I'll see. It's always a very personal thing, you have to find the right trading style that suits you, and the right stocks that suit that style... and so on. Trial and error and a bit of advice here and there will get me there in the end I'm sure. Thanks! BTW it wasn't a book but a website, http://stockcharts.com/education/index.html ,that I can recommend to anyone who wants to know the basics - nothing less, nothing more - of T/A. (I'm too lazy to study any more books anyway that's probably why I'm trading...)
I agree. I think that cutting losses is only part of the puzzle. I also feel that assigning 90% of success in trading to psychology is a bit overstated. Knowing how and when to let profits run is a major obstacle for new traders. Well, it was for me. As EnterLong mentioned, I have found that stops based on some measure of volatility combined with an area of support or resistance that will likely change the short term bias if violated have proven best for the futures. I donât think Iâd work off a fixed dollar amount. I use a very short-term tool to partially scale out of a winning trade if it begins to appear weak while allowing the remainder of the position to adhere to a trailing stop defined by volatility or S/R. The same applies to trades running against me. I have seen âcannedâ indicators work for some traders if they had learned how the market operated in relation to them. They had become familiar with their strengths and weakness.
I've found indicators alone to be inconsistent. They often quit working and by the time I figure it out I've whipsawed away my profits, especially in a non-volitile market like we've had lately. I've come up with many, many holy grail indicator formulas on certain stocks, only to see them quit working after a few days. In my experience they're only good for timing entrys and exits. Rgds Rigel
cutting losses is a piece of the puzzle but its an important one. One of the major secrets is to be able to come back to play the next day. If you don't have good stops and disciplined to execute them you won't come back to play the next day. as for indicators: I don't care what kind of indicator you are using, it lags. I only watch price and key off it and volume. Simplicity is bliss. getting back to the main topic of this thread, I also get really weird stares when I tell people that I trade for a living. Its really funny, they look at me as if I'm an anachronism. "Didnt that whole thing die out last year?" I'm seriously considering telling people that I'm an actor or something. Probably much better when trolling for babes.
Babak, I don't care what kind of indicator you are using, it lags. I only watch price and key off it and volume. Depends what you mean by price and volume. If you mean a chart with price and volume bars, then it also lags as the "minute" is forming. If you mean the T&S tape then it's as immediate as you can get, for practical purposes. For trading equities one indicator that doesn't lag is the futures, in fact they often lead (depending on the synergy of the particular stock and it's relation to them). In the strict sense they're not an indicator like MACD, Stochastics, Bollinger Bands, Moving Averages, etc. but they can be a very useful tool along with price and volume.
The capitalization (aka account size) argument is less relevant than an earlier poster made it out to be. The only things that matter are trading costs (commissions/slippage) as a percent of trade size (in $), and trading instrument size as a percent of account size. Slippage increases along with trade size (it's much harder to get a good fill for large size), so if you ignore the very low end where someone trading a ~1 share on E*Trade is going to wind up just working for their broker, that makes trading costs linearly or semi-exponentially related to trade size. The granularity of the available sizes of the trading instrument matters because without it you may not be able to adequately match the risk to the account size. Stocks don't have this problem (unless you are trading BRK.A for some strange reason ;-) but in futures a very small (<$10k) trader may have to devote most of their buying power to a position of a single contract. I've probably missed something else that matters.
That probably means that they work on some days very well, and on other days not at all. During yesterday's glide probably any indicator would have worked (I didn't check, but it seems probable).
OK I know very little about the futures. Where do I find their quotes, how do I follow them, do they have symbols like stocks? Is there a future for every stock or is it something for the whole market? All I know is that they are a bit like options, where do I find more about them? As for trading them, are they as risky as options? Stuff like that. Tnx.