hitman, that was a great post! i knew exactly what you meant throughout the whole thing. i've been trading for about 2 years, and like you, i've tried all the different indicators. i eventually removed them all too.
The first indicator I used successfully was a strategy I came accross that involved Average True Range. I paper traded it for a month using a trailing stop for my exits. I did about 40 trades in one month with a 4k$ position on each trade and maximum of 12k$ in the market at any one time and no overnight positions. The results were consistent, without any one or just a few trades making up the bulk of my earnings. Out of the 40 trades I had about 25 wins and 15 losses. My return was something like 9k$ in one month. I calculated that if I could keep it up and increase my positions to the 15k$ each that my trading account could handle, and reinvest my earnings in increased position sizes, that I would have 3.1 million dollars at the end of one year. I meticulously kept track of the trades in an excel spreadsheet which calculated entry prices, trailing stops, documented every trade and took into account trading fees. About the time I started trading with real money the market changed, the range narrowed, and I started getting stopped out about 4 out of 5 times. I was loosing money, the system had quit working. Fortunately it worked several times in the first week I used it with real money so by the time I realized it had quit working I was even, I hadn't lost any money. The next setup I tried used two timeframes of MACD and RSI. This worked quite well for about 3 weeks. It worked with all 4 stocks I was following. I was papertrading it and was just about convinced to start using real money, and IT quit working. I've also come up with 8 or 10 systems that I thought might work but when I put them to the test with papetrading, they all failed. What it all amounts to is that so far, over the last 5 months, I've spent a $h$tload of time on this and haven't made any money. I haven't lost any either so I guess that is SOMETHING. Thanks to some good advice from some people here I have learned the value of papertrading and the value of GETTING OUT when a trade is going against me. I always know ahead of time at what price I will sell and close my postion. I always stick to it, ALWAYS. Thats why I'm even in my trading accout after $700K in live trades. I do think indicators work. They've worked for me. The problem is in determining when to use them. I think they only work under certain market conditions. Right now I am trying to define those conditions so that I can recognize when it would be appropriate to use either of my two winning systems. Over the last 2 weeks I have developed two more systems, very similar to each other, that use longer time-frames and my own indicators. The idea is that if they use longer time-frames, bars, that they will have longer useful lives and won't be as influenced by hidden large institutional orders executing over several hours or a few days. I have just begun to test them. Some people (besides the brokers) are making money in this market. If it weren't so there would not BE a market. The trick is to figure out how.
Dear friends, I cant thank you enough for the effort U put in this board. Especially Hitman, Praetorian and tymjr... not to ditch the rest of you! Hitman- guess U being Chineese (if I remember correctly) helps with an "open mind" approach Bundlemaker and Wareagle-Yeah, the toughest part IS finding a style that would suit my personality but I thought it would be easier if I had like a few of the "MAIN" styles and work from there, cos... as someone said you really DO have like a million things to choose from and vary so it kinda frustrates sometimes. I guess the best thing is to learn the basics (definitions formulae etc) and then ditch it all and start over with the price/vol/pattern. WarEagle- I read somewhere (I belive Tony Oz) that "Any system will work if it is constant, i.e. if U stick to it religiously" so the moon phases could work actually...he he Thank you once more! Alex
BTW, theese are the stocks Im following (any advice if I shoul narrow or expand my selection?!) AMD AOL C GDT EMC GE GPS HAL HD HDI ICN JNJ JPM MO MRK MU NE PFE SGP SWY T TXN TYC WFC
I too, as many others on this thread, have spent alot of time using various indicators only to find that nothing really works in every situation. The search for the holy grail can be fustrating, not to mention expensive. In the end it's really a combination of gut feeling and mechanical analysis that gets the job done. Those that can go simply on gut have simply internalized some basic analysis and no longer conscienously think about it. Let's face it, going on gut means that one has identified a possible oversold condition, or a top forming, or cleanly trending prices on high volume BUT without having to use a chart loaded with indicators to make the identification. This only comes from experience (provided one is consistently profitable and not gambling). This comes from watching market behavior day in and day out. For some this works, but for others the action of the market, the gyrations, the false breakouts, the noise, all cloud the picture enough that they can't see what's really going on or simply don't feel comfortable relying on just a gut feeling. For those, technical analysis helps filter out that noise so they can see a clearer picture. Ultimately we are all seeing the same picture........right? The time and sales are the same for all of us. But it's how we interpret that information that makes all the difference. As I've mentioned, some with experience, have internalized the analysis of the information while others prefer the structured nature of technical analysis to provide guidelines within which to work. However, pure technical analysis in the form of a holy grail is not possible or we'd all be using it. In fact it's not possible for us all to use it. If we all saw a short, who would buy it? In addition, if it were that mechanical, trading wouldn't be one of the most difficult professions in the world, would it? So there is a place for both in each of us, and each will have them in a different ratio. I'd say I'm 80/20 (hard analysis/gut). I've developed a simple combination of technical analysis inputs that seem to be reliable under most circumstances. Basically, I've customized ordinary indicators into a system that serves as a framework for my trading but is always subject to my gut feeling at the time. The hard analysis gets you in the ballpark, but reading the tape and the "feel" of the market before entering and exiting a trade is the final step before pulling the trigger. I think simple is the key here. Too many indicators only complicate the matter, and trading is best left simple or you'll end up with analysis paralysis. Managing the trade then becomes critical. With my system, the same methods apply: technical analysis provides the framework, but go with my gut as the final yea/nae. Please excuse the rambling! Good Trading!