After many months experimenting with every indicator and combination thereof, I threw them all out. I went back to the basics, and very soon thereafter passed over the hump to profitability. For the last few years I have used nothing but... candlestick charts with volume 20EMA 40EMA 200SMA Simplicity and consistency are the two things that will really help speed up your learning curve as you look for your edge. Good Luck and Good Trading! -Bo Yoder
Have to agree 100% with most of the assessments of indicators on this thread. Despite my handle, I like to keep it simple. I like averages to get a perspective on the flow of the trend and I find multiple averages helpful for discerning whether a change of direction may be in the air. However, I do find my self obsessively trying to identify patterns on the candle stick charts. Other than that I think most technical studies are only good for trying to impress non-market participants with analysis of historical events. Granted my perspective is extremely short term so I am sure the point for T/A could be argued based on your trading time frame...although I doubt it.
NiteRider..it seems the overlying trend here is that everyone started trying various TA indicators and then went back to price and volume. This is because you should remember that most TA indicators are a derivative of price - and thus, they do not really tell you anything that the price chart couldn't tell you. However, if you lack experience in reading a price chart then continue to look at your TA indicators. You will find that an indicator by itself will always lose money. If you build a multiple TA indicator trading system and back-test it you will find that a super profitable system will often turn into a super losing system by just changing the moving average input by one period. But don't get infatuated with the indicators - you should always relate them back to price....and when you really understand the price chart you will be able to draw an RSI or an MACD freehand. After price, the most important is volume...however that can be difficult to monitor if you are trading futures or FX. This is what often makes stocks easier to trade as volume is often a superb leading indicator. After price and volume take a look at relative strength. A great indicator which can help you narrow down your stock universe, and help you choose between two similar stocks.Nb remember also to always look at the chart with a larger time frame than what you trade....its all too easy to see a clear run for a stock on an intraday chart, and overlook the fact that there is strong resistance ahead on the daily or weekly chart
pick a single stock that you want to keep track off, bring up the chart everyday, write down your anticipation of where you think it will go, if you get to > 50% of correct 'anticipation' then you might want to trade with your real money http://www.askresearch.com/cgi-bin/...rsi=8&macd=8-17-9&roc=16-8&mfi=14&refresh=180
The last two posts are sound advice. Especially using two time frames, one for direction and overview, the other for entry and exit. Toby
the school of thought on indicators boils down to this imho.on one side is the endless search for that magic indicator that will be the holy grail and will give you an advantage over the market. on the other side is the school of thought that indicators work because if enough people know about a certain indicator and are watching it it is self fulfilling. if the second one is true all the designing and backtesting of indicators is a waste of time an the best thing to do is stick with ones that are most popular ie 200ma 50ma and support and resistance ect. it is true that all indicators are a derivitive of price so will always lag the price.
here is how to trade with just price & vol chart http://www.thestreet.com/comment/helainemeisler_up/10008709.html
Voltrader, These are excerpts from your recent post. Since Nite has indicated he is a newer trader-and this topic has confused both new and experienced traders alike-you may want to clarify whether you were referring to RSI (Relative Strength Index), or simply relative strength as a third indicator to watch. In the first sentence you specifically refer to RSI- which measures a stocks price against itself over a period of time for strength/weakness. However immediately thereafter you refer to relative strength as a way to compare two similar stocks, which is consistent with the concept of relative strength of a stock's price in comparison to an index or peer stock to gauge its strength/weakness. Would you mind clarifying which one it is you prefer as the third indicator you would recommend?
sorry DAT if it wasn't clear. For the third indicator I meant relative strength, i.e. a plot of stockA/StockB. I find that this helps zero in on the stronger stocks/sectors which may not be clear from just eyeballing the two separate price charts (unless your using log charts...but thats a different topic altogether). Trend analysis can also be done on the relative strength line. For the RSI, relative strength index, - its just a derivative of one item - the price. Any RSI signals, such as a weakening of momentum or divergence can usually be "seen" first in the price chart by an experienced chart reader.