I heard from this guru that it is really not possible to trade of indicators alone. Like, it is very hard to base a strategy based on if fast moving average crosses over slow moverage average and RSI is something... the buy next bar. What he said, is that you base all your entries and exits on price action. Indicators because they are used to measure the markets, are best used to filter the trades? Thoughts?
Well, the more you have in you arsenal the better. Contrary, to the believe of most people on this board, this unfortunatly includes me fundamentals do help out as well. Although they move to TA. Hope that made sense. Overall, I would say that RSI won't just do it. Many reasons to this. 1) It is not always right. 2) It is a lagging indicator. Yes, many, many people use MA crossovers succesfully. But the price action is the most important contributor as well as the trend. Trend is very very important might want to pay attention to it. What I would recommend (what do I know, right?) is try to learn price action (e.g. candlestick) behavior. Although be careful they are drasticly different in markets. (from small caps co. to big cap co. and from forex to futures). Good luck
There are lots of ways to get signals for trading. V leads P so that helps. Also if you know any math you can use indicators as leading signals of price. This is not possible, even conceptually, for some people. It is their choice. All patterns follow the P, V relationship so that gives you the sequencing of the patterns on charts and when the price will be moving. None of the above is related to predicting; it is just a nice idea to have seen signals in sequences as time passes and it let you know in NOW how to anticipate the next upcoming signal. I feel it is best to just trade in NOW and have a terrific display on your screen so that you catch what the market offers in the most timely way. I use a lot of timing clocks for reference as well. This is important when you get dwon to optimizing how to squeeze out the last multiples of the daily range.
Jack, 3 Questions? 1) Do you have automated strategies, or do you do it my hand? 2) Do you believe it is easier to trade 30 min / 60 min bars vs 1 min - 5 min bars? 3) When you say V leads P. I have spent a lot of time trying to come up with something. Is there a specific indicator that you use when you find this relationship or do you just use Volume? I ended up creating an exp moving average of Volume ( XAverage(volume, 4) ) and plotted a dot on the chart where the volume was higher for 2 conseq. bars, but I just couldn't come up with anything solid enough Thanks
I guess he means Volume leads Price. For me volume is a best indicator, price action doesn't exist without volume, and volume increasing/decreasing shows a market sentiment. just my 0.02
i believed this myself in the past but it is not true at all. it all depends how many trades you make a day. emas and other indicators give a few clear signals every session. i think it is just preconceptions and the bad name indicators got from those who can't use them.
Just to state up front: I'm not trading full time, but I *am* on the cusp of achieving profitability. My main struggle now is consistency and repeatability. When I first started looking at trading, I found the holy grail repeatedly with this indicator, and that oscillator, etc. I gradually moved toward the "clean screen" approach with volume and 2 moving averages. But don't get me wrong. I don't trade a "moving average crossing" system either. I just use the MAs to help my eyes see if things are trending or not. If they are, then I buy dips and sell rallies. That's really all there is to it. Jack H is right. Volume does lead price.
3) When you say V leads P. I am not saying V leads P. You are reading a fact. The fact is: V leads P. You have no choice in this matter. You are looking at what you MUST have in front of your face 24/7 and also when you are trading. Use this fact to tear pages out of books. When you want to buy a book make sure the index in the back of the book has an equal amount of references to volume as it has for any other topic you wish to choose and particularly price as a topic. I have spent a lot of time trying to come up with something. Check your stack of calenders where you have marked the days you have looked at volume. I could be running around 15,000. I'll give you five years or over a 1,000 business days it actualy could be less for you. Here is a word for you. Purposefully. A carpenter with 20 years experince may have just repeated the first year 19 times. He would be said to have 1 years experience. When you read Gary Smith or exchange emails with him you learn he spent some time doing this or that. You find out his best day was almost a million bucks. Why did he put off getting to the first million dollar day so long? He tells you. He spent a lot od time wandering around looking at things and inventing stuff. You do not have to come up with anything. No one has to do inventing. Think of the person who is spending year after year telling me what I do is unbelievable and astonishing. He is inventing that I can't do what I do. He has a choice as a consequence of memorizing everthing I have posted. He could use it and see what unbelievable and astonishing feels like and spends like. He is not very purposeful. He happens to think he is a contrarian trader; he isn't; he is just a contrarian talker. Is there a specific indicator that you use when you find this relationship or do you just use Volume? I use the P, V relationship and measure it as vectors. It is what answers the three Q's above. there are jounals that have been running to show this working to make money. It happens to all be in my mind as well. I am not conscious of it because it is all automatic for me. To be clear I am not saying I unconsciously am using my unconscious part of my mind. I am extremely conscious and I am very very fast and cognizant of everything I need to see, know and use at all times. I deal in a state of always having the "sufficiency" requiremnts met to extract every nickel available all of the time. I spent a lot of purposeful time and I came up with being "fully automated" and I can explain in detail what is going on. Some people read my posts and say they ramble. What I actually did was convey some ideas in a different venue, seemingly, to make so very graphic points that the person cannot get because of consequences of choices he made in the past. That is a good deal for him because he can stop reading my rambling. He did not get my points anyway and he may or may not know that ever. I ended up creating an exp moving average of Volume ( XAverage(volume, 4) ) and plotted a dot on the chart where the volume was higher for 2 conseq. bars, but I just couldn't come up with anything solid enough I am glad to hear that you didn't. I hope you thoroughly examine the P, V relationship and see that it works for every price volume pattern that ever occurs. When this becomes part of you, you will notice that to trade and make money , you let the market tell you when to trade price after volume has said the trade is coming up shortly. I do a crayola thing with people who are able to consider how much money can be made. They draw the zig zags of the day on a chart. they add up the zigs and zags to get the daily potential of the market. It is there and is what a trader can make on that chart. If you do 50 of them and apply the P, V relation to each and every zig and zag, then you will see how to view volume and its buddy price following the P, V relationship. Only do it on high quality stocks and the commodities. One proviso for making alot of money in a very short time. It to trade only high quality stocks. Who would trade any other kind of stocks?? No one we all know that. Thanks [/B][/QUOTE]
Here is a simple chart for you. It shows how to trade manually without looking at charts. You just use a list and trade off the list. The simple rules are in the middle and in color.