Oscillators - Who uses them?

[It's Snake Pliskin]

As the thread title asks; I'm interested why and why not.
I use stochastics and find them to be of benefit with other indicators.

Snake

 

[happytrader]

Hi Snake

I use stochastics, bollingers, rsi and ema's as supporting evidence, secondary to pricebars and volume. Rsi will show the internal strength and weakness of a stock long before the fundamentals become common knowledge. Bollingers contracting and opening alert me to possible breakouts and reversals. Stochastics for oversold and overbought areas.

The more you keep looking at these things the more you percieve, right down to the slope, the shape, the height etc. It all starts to talk to you after a while believe it or not. Probably the brains reticular activation system at work.

As always these are my thoughts and opinions and should not be taken as financial advice or recommendations.

Cheers
Happytrader

 

[It's Snake Pliskin]

Happytrader,

I think it is best to learn how to use them properly and know their strengths and weaknesses and how to use them with other signals. One can read into them too much if they want to, but keeping a balanced view and a clear head sure helps.

Cheers
Snake

 

[happytrader]

Hi Snake

Yes knowing how to use them properly is the key. As I've said they are secondary indicators. I could get along okay just using trend, pricebar, volume, range and stop losses. As far as I'm concerned thats all oscilators are telling you anyway in a quick compact form.

As Ive been using and observing them for so long (4 years) I've trained my 'eye' to be alert to what they are telling me.

The reality is if they keep showing you the same thing over and over again and you can benefit from that insight who cares how you use them?

Cheers
Happytrader.

 

[tech/a]

Stopped using most years ago.

Most traders use a multitude of indicators/oscillators and as mentioned have no idea how to apply them.
RSI,Bollinger M/A's stochastic all are derived from Price.
Open,close high,low,volume and open interest are re arranged in 1000s of forms to read price action.
ALL ARE LAGGING.
Like all analysis they INDICATE.
Application of ANY trade methodology isnt what will make the profit.

ITS NOT WHAT YOU USE BUT HOW YOU USE IT

And that certaintly doesnt mean the literal sense of how to interpret a stochastic for example----!!

Until you understand this youll be forever combining/cross checking/referencing all sorts of analysis in the futile attempt to find.

SOMETHING THAT WORKS

Ask yourself this question.

Why with 1000s of indicators available to EVERYONE ---Fundamental AND technical--do very few trade at a consistent profit?
If it were analysis---any and or all analysis then ALL would be profitable.

 

[It's Snake Pliskin]

Stopped using most years ago.

Most traders use a multitude of indicators/oscillators and as mentioned have no idea how to apply them.
RSI,Bollinger M/A's stochastic all are derived from Price.
Open,close high,low,volume and open interest are re arranged in 1000s of forms to read price action.
ALL ARE LAGGING.
Like all analysis they INDICATE.
Application of ANY trade methodology isnt what will make the profit.

ITS NOT WHAT YOU USE BUT HOW YOU USE IT

And that certaintly doesnt mean the literal sense of how to interpret a stochastic for example----!!

Until you understand this youll be forever combining/cross checking/referencing all sorts of analysis in the futile attempt to find.

SOMETHING THAT WORKS

Ask yourself this question.

Why with 1000s of indicators available to EVERYONE ---Fundamental AND technical--do very few trade at a consistent profit?
If it were analysis---any and or all analysis then ALL would be profitable.

Tech,

You seem to think most people employ too much analysis.
I see analysis as being very important in determining a high probability trade. However, it is a small part of the trading process and must be accompanied by other aspects. One with enough determination and the right frame of mind can determine what you have posted above.
I'm interested in your thoughts on oscillators from experience be it good or bad.

Snake

 

[wayneL]

I use them for scanning.

Why? because you can program them.

I don't use them to trade.

Why? Because I can see price action better by looking at the price than at an oscillator.

Cheers

 

[money tree]

I backtested every indicator on every stock using metastock. Not one gave better than 50/50. Ie random.

indicators dont work.

however, trendlines, support / resistance, fibonacci and REAL TIME price action methods DO work.

forex traders using indicators get their accounts wiped out faster than you can say "holy stochastics batman, what happened?"

 

[tech/a]

Tech,

You seem to think most people employ too much analysis.

Snake

Yes thats correct.

I see analysis as being very important in determining a high probability trade.

I'm with Wayne and Money tree on this one.

I'd be interested in you doing an exercise using your analysis over say 20 selections,which you believe give you a "high probability trading opportunity" then looking back and seeing if in actual fact that analysis gave you what you hoped or expected it would.
Placing them here for all to watch would be interesting---I dont mean this to be an exercise in embarressment but one of practicallity.

See I'm of the belief that 90% or the time the market is efficient.
10% of the time its inefficient.(Could be 3%/97% point is its not balanced perfectly---all things are mostly equal.)
In that 10% you'll get outliers (Spikes,un common occurences V the other 90% of trading happening around you).
These are what will make you the money---infact if you (or anyone) are profitable and you look at your results I'll bet a very small % of trades made your profit.
Now I dont care what sort of analysis is used there is no way that you'll know a trade will be profitable----let alone massively profitable--the day you place the trade.

So you have to take many trades and every now and again a trade will home run 100% even 500%.
Now the analysis used to get on that trade will have been the same to get on every other trade yet this trade will make the majority of profit for you.

Does that mean your analysis discovered the trade and is very successful?
Or does it mean that its useless as it also found 80 trades that either lost or underperformed this trade.?

 

[kaveman]

If using any indicators they need to be applied to suitable stocks. Suitable meaning charts that do not behave erratically or have large jumps in price. They are best on charts that have steady price movements. If these exist then lucky you.
Another point is that no 2 charts act alike, therefor you would probably need to assign different values to the indicator variables, or even different indicators to different charts.
Then we come to the charts changing behaviour as they turn from speccie, to small cap to midcap to large cap and even maybe blue chip.
I cannot see anything creating a tradeable system over these ranges with same set of squiggly lines.

 

[Milk Man]

What if the system operates over longer timeframes? Techtrader uses rolling highs but the rest is indicators isnt it? Mine is a bit shorter timeframe, just waiting to see if ive 'data mined' it. Just doing real time testing ATM(not backtesting).

 

[It's Snake Pliskin]

I backtested every indicator on every stock using metastock. Not one gave better than 50/50. Ie random.

indicators dont work.

however, trendlines, support / resistance, fibonacci and REAL TIME price action methods DO work.

forex traders using indicators get their accounts wiped out faster than you can say "holy stochastics batman, what happened?"

moneytree,

Thanks for your informative response - ill keep it in mind.

 

[It's Snake Pliskin]

I use them for scanning.

Why? because you can program them.

I don't use them to trade.

Why? Because I can see price action better by looking at the price than at an oscillator.

Cheers

Wayne,

What do you mean you can program them?

Most peole think they are used to pick tops and bottoms, but that is wrong. They help to determine the momentum of a trend, and give one good signal in my opinion - divergences. Those who try to pick tops and bottoms might be the statistics.

Cheers

 

[It's Snake Pliskin]

Yes thats correct.



I'm with Wayne and Money tree on this one.

I'd be interested in you doing an exercise using your analysis over say 20 selections,which you believe give you a "high probability trading opportunity" then looking back and seeing if in actual fact that analysis gave you what you hoped or expected it would.
Placing them here for all to watch would be interesting---I dont mean this to be an exercise in embarressment but one of practicallity.

See I'm of the belief that 90% or the time the market is efficient.
10% of the time its inefficient.(Could be 3%/97% point is its not balanced perfectly---all things are mostly equal.)
In that 10% you'll get outliers (Spikes,un common occurences V the other 90% of trading happening around you).
These are what will make you the money---infact if you (or anyone) are profitable and you look at your results I'll bet a very small % of trades made your profit.
Now I dont care what sort of analysis is used there is no way that you'll know a trade will be profitable----let alone massively profitable--the day you place the trade.

So you have to take many trades and every now and again a trade will home run 100% even 500%.
Now the analysis used to get on that trade will have been the same to get on every other trade yet this trade will make the majority of profit for you.

Does that mean your analysis discovered the trade and is very successful?
Or does it mean that its useless as it also found 80 trades that either lost or underperformed this trade.?

Tech,

This thread relates to oscillators only. Please share your thoughts on these indicators - I don't need system reporting information.
Don't worry Tech, I understand that technical analysis is not the answer, but finding what rights for me is the answer and that you cannot deny.

Cheers

 

[tech/a]

What if the system operates over longer timeframes? Techtrader uses rolling highs but the rest is indicators isnt it? Mine is a bit shorter timeframe, just waiting to see if ive 'data mined' it. Just doing real time testing ATM(not backtesting).

Yes I agree.But suggest that you use oscillators only for EXIT and price action for entry. Easiest to set stops as well.(entry).

I'll explain something about ATR indicators and their use when I'm at home.
Ill post a chart.

 

[tech/a]

Tech,

I don't need system reporting information.
Don't worry Tech, I understand that technical analysis is not the answer, but finding what rights for me is the answer and that you cannot deny.

Cheers

Hmm if you think its system reporting information then I'm wasting my breath.(fingers).
I'll stick to the topic for you.

 

[Milk Man]

Yes I agree.But suggest that you use oscillators only for EXIT and price action for entry. Easiest to set stops as well.(entry).

I'll explain something about ATR indicators and their use when I'm at home.
Ill post a chart.

Thanks tech, always good to learn something new.

 

[It's Snake Pliskin]

Hmm if you think its system reporting information then I'm wasting my breath.(fingers).
I'll stick to the topic for you.

Well, I have asked three times. English is English isn't it?

 

[tech/a]

---

 

[Milk Man]

Whats the theory behind the ATR stop method tech?