i guess i'll add more to that. I think in the next couple months there going to be a lot of days like friday. People are going to panic and get outta positions. I am looking for a way measure the "panic" in the market and do not know too much about sentiment indicators but figure they should be a concrete start. With that said, please share any relevant ideas. r
I've heard that they all "lag"...MACD, CCI, RSI, STOCH's...if they lag...forget it...this board board for the most part seems to be TA motivated...they say "indicators lag"
rdm239, Try to think about trading as a rather calm experience. Price movement at anytime is a demonstration of all kinds of people doing all kinds of things. at of this point you seem to be seeing people in panic and are you clear on the fact that a bunch of these people are making money hand over fist? You may, at some point, get out a pad and write down what is going on. I hope you have your screens up and have three or four feeds which is what is required to see what is going on. Someone reponded to you with this: "I've heard that they all "lag"...MACD, CCI, RSI, STOCH's...if they lag...forget it...this board board for the most part seems to be TA motivated...they say "indicators lag"" You asked about sentiment indicators and a person listed what you see above. He is on a very different page than people who use sentiment as an indicator. Market sentiment doesn't lag now does it. How could it? What is the sentiment of the people who came into the market to take the place of the people you see that you think are exiting. Is there any chance that you can use a yellow pad to figure out what you mind is doing? You may want to print out a chart (use 5 minute one for a liquid index). Put yourself in the place of an ace trader. Draw on the chart in hindsight what this rich guy did to take a lot of money away from those who do not know what is going on. What are his sentiment indicators? Start out by just figuring out three or four as a first pass. Ask yourself how MACD expresses sentiment. What is CCI doing to tell you the sentiment of the market? Why did Welder use the signals he did on RSI to get the answers? How do you adjust the defaults on the STOCH to get a sentiment signal and how far ahead of the price move is this signal? There are many indicators and they each can be used for an assortment of things. At some point get a crayon out and draw zig zags on it for all the money that was made by some people. Think of how many people it takes to feed them all the money that you see being made throughout the 5 minute chart. The way it works is that 2 people make the money and about 18 people are feeding them the money. What is the sentiment of these two guys? What is the sentiment of the 18 people who are feeding these 2 guys their money? Lets say the sentiment is accummulation or distribution. A could be accumulation and D could be distribution. Use a green crayon for accumulation and a red crayon for distribution on your chart. Shade the times for accumulation and distribution. It is fun to hide price and just show indicators on a chart. You can mark vertical lines to show when to act. You can shade between the lines what you position is until the next vertical line appears. Then you can show the price part of the chart and add up what you made for the day. What do you think would happen to a person's mind if he did that 100 times in a few hours? One thing would happen; he would find out that it is important to have all indicators set to the correct defaults. He would learn that it is also important to learn to use the right signals from the indicators. About 18 out of 20 people can't do indicators. About two people out of twenty can. Some of the best sentiment indicators sequence in their signals. That is they signal one after another in a specific order. It is conventional for sharp traders to use a set of 4 of these and they always use the same signals for each indicator. None of them are those that I quoted above as a reference.
MACD does lag alot. Its more of a confirmation signal in my opinion. Im still a rookie but I can tell you I have already been burned by the MACD . You will make money if the stock has enought momentum to continue the trend but alot of times by the time you buy on the MACD Crossover it might be too late and the trend will lose steam. Christian
"It is fun to hide price and just show indicators on a chart." Eureka! Halleluhaya, I'm saved! I'm not crazy! I'm not crazy! You are the very first person I have ever read who has said this, besides myself to myself.