Most Useful Technical Indicators

Discussion in 'Strategy Development' started by Investorsources, Oct 12, 2005.

  1. What, in the opinion of the people on these boards, are the most useful technical indicators that when they are all saying the same thing will most likely result in profitable trading.

    Example:

    Take a stock with good fundamentals, a value stock or even an ETF.

    And say you were following this stock for some time. At point, based on technical indicators, would it become a buy. What are the best signals to look for together to give the best indication of when to get in.
     
  2. none bro, if indicators worked then all u would need is money - it's all about price...
     
  3. tomhaden

    tomhaden

    tradefreak is right about price action. Price is the only true reading of a market. Thats why tape reading is still a useful skill.

    However, indicators do have their use. You just have to understand that indicators show the statistical side of the underlying price move.

    I recommend New Trading Systems and Methods by Perry J. Kaufman. Excellent source on the subject of price/indicators along with the statistics of trading.
     
  4. Bollinger Bands Brother..
     
  5. By price what exactly do you mean? We know the price of the stock and we can see what the technical indicators are saying.

    Okay, lets simplify the situation. Let's say an ETF in a fairly good area of the market, say the QQQQ or SMH in the tech sector. I for one am in the SMH right now, but I am doing a different strategy that I would rather not discuss on this board.

    Nevertheless, the situation is thus:

    Say that it is hitting the lower bollinger band, and that other indicators such as MACD, RSI and Slow Stochastics are below 20 threshold and indicating heavily oversold conditions.

    So to recap:

    You like the stock fundamentally, (the sector) and you the technicals are in your favor, what does the price action/tape reading have anything to do with it (we know the price).

    Nothing is a guarantee and I dont want to sound like a novice, because I am not, but to the daytrading game, maybe I am.

    Please Explain.
     
  6. tomhaden

    tomhaden

    When you remove everything, price is all that matters.

    For example, you can have an indicator that says oversold, yet the market continues to drop. If you don't confirm the indicator and just buy an oversold market, you can be in real trouble fast.

    You can have numerous readings from indicators and yet they can still be wrong. Most markets, sectors, and stocks were way oversold at the beginning of the week, yet today we still finish down.

    The indicators/oscillators can signal a trigger, but price is always right. It is important to remember that indicators are only statistical measurements of price. Indicators only give a probability of something happening; price is the deciding factor.

    After price, the use of market indicators such as TICK/TRIN are helpful for intraday trading in confirming price moves. After that, other indicators such as RSI, MACD, Moving Averages can be used to evalutate conditions.
     
  7. i like andrew's pitchforks, macd, stochastic, and the nyse tick for trading the es.

    i have started to use "market profile" support and resistance levels also as i am just learning them --- these have really been a great addition to what i was using before.
     
  8. ER9

    ER9

    From my experiences those indicators that are telling you everything is oversold and everything might be ready to turn around are only going to be right 50% of the time.

    On the other hand if you can read price action you can verify what the indicators might be telling you and might add enough winning trades to that 50% accuracy to actually make a profit.

    I do like CCI though myself with nyse tick. I find them to be a very good combination.
     
  9. and i might add that basic "oscillator" indicators are least effective in hard trends and most effective in sideways or balanced markets -- so keep that in mind.
     
  10. Arnie

    Arnie

    Your question is a good of example of why TA doesn't work for most people..... you have no idea what you are trying to do. Those that use TA successfully already know ahead of time what they are trying to do with it.

     
    #10     Oct 12, 2005