Baruch, I used the search engine Google to find basic info about those indicators you asked about... Momentum http://www.incrediblecharts.com/technical/momentum.htm MACD http://stockcharts.com/education/IndicatorAnalysis/indic_MACD1.html RSI http://stockcharts.com/education/IndicatorAnalysis/indic_RSI.html ROC http://stockcharts.com/education/glossary/rateofChange.html http://www.incrediblecharts.com/technical/rate_of_change_(price).htm Hopefully there's something in the above links to help you to figure out how to calibrate them. Yes...I agree...its easy to recognize a trend after the fact... Some traders are comfortable with using indicators and others are comfortable in using price action only methods and others are comfortable in using both. There's no right way or wrong way...there's a way that fits you as a trader. I notice you said recognizing a trend is easy. If that's the case...I would suggest you exploit what you already know as easy and profit from it via whatever tells you its a trend. Also, it really doesn't matter if a trader knows when a trend is about to end... what matters is your exit strategy (stop/loss management, trailing stop management and profit target management). There's also some in-depth discussions already posted about MACD, RSI and others... For example...I used EliteTrader.com search menu in the upper right corner about the MACD... http://www.elitetrader.com/vb/searc...d=250975&sortby=lastpost&sortorder=descending There's a few threads about MACD and Divergence that may help you in your use of this indicator. Also, check out Awash Trade Journal. He uses both MACD and Stochastic in divergence for his trade setups and he posts lots of charts... http://www.elitetrader.com/vb/showthread.php?threadid=21214 NihabaAshi
Definitely 'other' . Bollinger Bands + RSI is a powerful combo for picking candidates for reversal/correction. Use a simple bar chart; if the tops of the bars are hugging the upper line and RSI>75 SHORT IT! If the bottoms of the bars are hugging the bottom line and RSI<25 BUY IT! If you want to time it more precisely, wait for a day when Volume is significantly lower and a new Hi/Lo is set. This increases your odds, but, of course, trading is ALWAYS a gamble. Just don't mortgage the house to trade and follow your stock closely. If you can't follow it closely, protect yourself with stops set slightly beyond the level your stock should trade at without violating your expectations. This is the method I use and it has made me a small fortune. Before I used this method I had a large fortune. Good luck.
Price, volume, time, lookback period, volatility...indicators measure these issues and maybe a couple of others singularly and in combination. Only you can decide how to trade with them, what to trade, and what time frames suits you. You will never see two traders doing quite the same thing the same way. You must read, read, read your way to finding out what fits you. At the site stockcharts.com, there is a public page where subscribers publish their charts and rantings for all to see. It is a good overview of the different ways traders view the world of trading and investing. And they all use different indicators. Link... http://stockcharts.com/def/servlet/Favorites.CServlet?obj=public&cmd=show&disp=RED&n=/ While stockcharts.com is a great place to "look over the shoulder" of different types of traders and see "standard" indicators, there are also other indicators of a more um...custom, refined (not sure of the word) nature offered by aftermarket vendors like Jan Arps and Jurik Research. Lots of good reading at both sites. Links... http://www.janarps.com/index.htm and... http://www.jurikres.com/catalog/ms_rsx.htm#top
Thank you very much. I have a lot to read - and study. Or maybe I should just continue with the charts as I have done until now? But I like to see charts with MACD. It seems so right and easy - after the move.
You will never get it even after years as long as you don't understand that the framework (the whole) is more important than the parts alone (indicators): it is the glue, the architecture of the building that counts the most and not the bricks used to build it. Remember not to look only at the 10% of the visible of the iceberg like 100% of people can see but also and above all under. Nevertheless most people can't build a robust framework because of the methodology involved so you'd better use some that exists from people you trust : it doesn't mean that the people you trust are reliable since you don't have the judgement technically to know if they are reliable or not but it is one of the left criteria you can use if you don't know much about the field and all the snake oils that exist - for example those who sell a 5000 years Fibonacci secret . Fibonacci is useful but turning into a 5000 years secret is a bit exaggerated : you can guess how serious they are. Generally the snake oils use their marketing power of network and as idea what appeal to people: the KISS principle but when you look at details it's so fuzzy that it is not so KISS and totally unusable.
Use of indicators (including MACD) from a well known professional - LBR can be found below: http://www.lbrgroup.com/index.asp?page=DailyCharts&date=2003-11-10 http://www.lbrgroup.com/index.asp?page=DailyCharts&date=2003-11-07 http://www.lbrgroup.com/index.asp?page=DailyCharts