I've attached a current QQQQ chart for the benefit of any who doubt that popular indicators can consistently give profitable trading signals. It uses a PPO(6,13,9) as recommended in my first post on 1/14. There I implied that if I had to do with just one indicator, I would use a PPO. The PPO is just an MACD expressed in percent. I prefer percent because the velocity in percent above the average is more meaningful for comparison than price increments: it works like bands for resistance and support levels, is more readable on large percentage changes, and channels well. The parameters are set to half what was originally recommended for MACD(12,26,9) because todays markets tend to trade faster than they did 30 years ago. Notice the following dates: Oct 19 -- PPO buy signal on a long white engulfing. Buy at the average or mid-body the next day on margin. Margin is needed because indices, being an average, tend to move less than individual stocks. Place initial stop under the low of the buy day. Oct 27 -- A long black, but we hold because PPO is still positive. Oct 28 -- A touch to the signal line at zero. A second buying opportunity, as bar closes white. After this first test, we can go to a trailing stop $0.20 under the three day low until we exit. Nov 28 -- Sell signal as lines cross. Sell at close or open for a 16% profit. Jan 3/4 -- Buy morning star any time Jan 4 as PPO goes on a buy again. Purchase is the same as the last sell price. Jan 13 -- PPO is still holding with a 7% profit. A lower low on Jan 17 could hit your trailing stop. The PPO is above 1%, so velocity is still high, hence I don't expect the stop to hit, but 23% is not bad for 3 months of slow index trading. That the Dec decline was slow and the Jan rally was fast is bullish, as are the gaps on Nov 3 and Jan 6. You can get such charts for free on StockCharts.com.
Its easy to say what to do after the fact. MACD, Stochs, B-bands all work SOME of the time. They tell you what's already happening.
Woodie Nice to have you as a contributor to ET WELCOME !!! To the original poster that started the thread... It's always been price and volume for me that being said I use several for different purposes. ADX, CCI, MA's, Keltners etc... Every indicator will have its proper place and purpose if you can learn to use them all you will have this business mastered because you will be able to adapt to ALL market conditions. That being said I have seen others do very well with specialization too, it's really just a personal thing at the end of the day.
Or, 1). Pick a higher priced stock that has at least a 1 point daily range. 2). Buy it at 1/2 point below yesterdays close 3). Wait 1/2 hour - if stock is 1/4 or more below your buy point - sell. If not ... 4). Set stop at 1/2 below stock close. Move your stop up in 1/4 point increments per day. Obviously, only do this after you have done all of the other TA that indicates the stock is in uptrend. IBD strong stocks seem to yield lots of candidates. In sideways or up markets this will give you average losses of 1/2 and average gains of 1 1/2 points. The reason average losses are more than 1/4 is because you wait 1/2 hour to either exit or hold and, sometimes stocks open below your stop. Average holding periods on losing trades - 1 day. Average holding periods on winners - 3.5 days (some as long as 10-12 days).
Today was the BEST indicator. Classic technical analysis. It will not get any easier than it was today. Now mind you i trade the ES. review the ES chart on a 5 minute and see what you have. Some say there are no trends in the daytrading, Really? What was today? they were dead wrong today for sure. Not only was today a piece of cake well frosted (YUMMY), but the setup was a piece of cake (sorry could not resist). In the SP pit the fun starts at 0930ET so to trade the ES that is the start of the days mission. BOOM, we went below the opening bar, the opening range, the -6 line from the opening tick and that was the only signal for the ENTIRE day. YOU had an easy 10 handles before any, any, any real retracement, that my friends is a classic one-way day. Even later the retraces were very shallow, 3 handles approx. WOW, how easy can it get? This post was in response to those that have said in the past that TA is bogus. NOT SO my friend not so. ......have a swell weekend and may the Aussie tennis games to good and the food delicious.....
Yes, today was easy... but this kind of day doesn't happen all the time. I trade ES as well. TA does work... some of the time.
Would you care to explain how TA helped you today? Excepting long term trendlines / channels I'm not aware of any TA that forecasted today's action, and in no way its magnitude. Even more, there were a lot of fake divergences especially during the second half of today. This is why I trust more trendlines and channels.