Momentum indicator â Is there such a thing as a high odds momentum indicator? We all want our entries to go a couple of ticks in our favor so that we are not faced with an immediate loss. I am not interested in moving average crossovers or stochastics or other indicators that follow price. The best we may have is where is the current price in relation to support/resistance, what is the current setup, i.e. a 1,2,3 a triple break, etc and what has price been doing thinking continuation first and reversal second. Is it naïve to think that there is an indicator that will, in most cases, shows the strength of the initial momentum?
Instead of looking for that elusive indicator that always seems to work so wonderfully in hindsight but always lag in reality, you should look for price patterns like, for example, Trader Vic's "2b setup". http://www.surinotes.com/Tradestation/articles/suri2B_TJDec2007.pdf
As it turns out, we all can let history be our guide. While I started trading in the mid to late fifties, all the work you mention had been done long before I began. It is probably a good idea for everyone to read up on how markets work and how they were examined right from the beginning. Right off, there was an understanding of the additional understanding of doing formulations that had two lines in indicators. The leading characteristics of these indicators is often lost on those who are hung up on the data that inputs the formulations. All of science and the associated mathematics would be deem irrelavant by this absurd thinking (the lagging indicator beliefs). lets say you are able to reason and you know calculus is used in science and statisitcal mechaninics is used in physics. This doesn't mean you have to let your mind get differentiated as BLowinski's did. It is possible to use geometry to get first derivatives and to use envelopes to manage the equivalent of regression analysis. Obviously you cannot use any maths associated with continuous functions though. There are two "effects" in trading analysis that affect time. Logically you can surmise that one is compression and the other compression's opposite. This thread turns out to be dealing inferentially with compression. So the best approach is to look at leading indicators that emphasize time compression. Do you want a litany of references or do you just want additional tools to put in your tool box? My guess is that this would be a real just ahead and it would create a set of gaps in your skills and knowledge. In the meantime, it may be best for you to play it safe, in these times, and not keep situated in the very risky place you occupy. Only be in the market when you know with certainty what is going on. For an example of how bad it can get, read BLowinsky during the period he did not know he did not have a data feed. Also read trader666 for gaining an understanding of how bad it can get if you do not know how to backtest.
Read Jack Hershey to gain an understanding of the Jack Hershey Method of Gurudom, which has proven effective for over a decade: 1. Seek out locations like ET that are teeming with newbies and wannabees who have a desperate need to believe 2. Troll for followers with grandiose claims, both trading and personal 3. Recruit flunkies and "seconds in command" to support your unsubstantiated claims of trading success... if this is not possible, simply create sock puppets 4. Peddle an incomprehensible "method" with its own jargon that can only can be learned from you or one of your stooges 5. Speak in riddles and gibberish to keep followers hanging on your every word and believing their lack of success is because they didn't grasp the full meaning of your "wisdom." This also makes the "method" nearly impossible to backtest... but if you do mistakenly state something in clear enough terms for others to test, attack backtesting and whoever ran the tests 6. When exposed as a fraud, disappear until it blows over... reappear later in a thread filled with potential fresh victims 7. Constantly berate "detractors" and the "conventional wisdom" 8. Make up success stories about followers who were willing to "do the work" -- even if in reality they went down in flames 9. Never, ever do live trading or show any proof of success (because there is none) 10. Foster a cult-like atmosphere 11. Keep things fresh by promising new things on the horizon that will never materialize, like books and automated trading platforms 12. Find someone to support you so you can play pied piper full time and not be distracted by trivial matters like having to earn a living