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What's your favourite combination of indicators (tech analysis)?

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shyguy

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As the title states...

So far, and i am only new, i am using EMA, RSI, Volume, MACD and general candlestick patterns...

i had a look into A/D trends but after looking at it more closely i don't see that it really helps with "forecasting" it pretty much just shows me the trend as it is happening...
 
I like the one day moving average.
 

I use moving averages quite a bit. For testing out short term patterns using something as simple as a 200 day simple moving average filter can help to highlight how certain patterns have behaved in bull vs bear markets.

The 2 period RSI still has some use for the US markets, and I have a couple of triggers based on that that I follow.

IMO the key isn't really which combination to use, but to have a thorough understanding of what you are measuring and where it has and hasn't been effective in the past
 

I'd suggest research how each indicator is made up so you know what it's telling you. Decide what you want to look for in a trade setup and that may tell you what indicator will benefit you.

No indicator (in my opinion) is good for predicting the future. Indicators just take the price history you see on your chart and displays it to you in a different form.

I notice you included volume in your list of indicators, just to be clear - True, it's indicating the volume. But it's giving you additional information that's not shown in the price action itself. The other indicators don't give you new information, they just display the same price history information in a different way. So indicators are useful to see at a glance what the price action has been doing. The question then becomes, what do you want to look for?

Also note that some indicators "repaint". Meaning that something may appear, then a moment later it will disappear because the condition that made it appear is no longer true.

wayneL said:
I like the one day moving average.
Click to expand...

Would that be the SMA or the EMA?
 
Firstly, I agree with what the Prof and Lone Wolf have said:
You must understand what the individual indicators measure and what you can and can't conclude from them in the confines of the respective time parameters you apply.

One or two additional points I would add:
MACD and RSI are both "momentum" indicators; as they essentially tell the same story, many students take their agreement as twice the confirmation of whatever it is they're suggesting. For that reason, I have eliminated RSI from my charts altogether and use only MACD.
wrt "momentum": When T/A traders talk about a momentum indicator, what they really measure is more the equivalent of the "speed" at which the price changes. MACD convention also shows the second derivatve as histogram, which would compare to acceleration or deceleration. The thing that's missing to complete the "momentum" analogy is the equivalent of "mass", and for that I'm using the volume.

In practice, this analogy has its limits especially where volume changes very erratically, and I have abandoned attempts to calculate a MACD from the product of price change times volume; however, if increasing volume underpins a change of price "speed" and direction, it gives the analysis greater credibility than a case where wishy-washy volume accompanies a change of price direction - no matter how vehement that might be.
 
Lone Wolf said:
I notice you included volume in your list of indicators, just to be clear - True, it's indicating the volume. But it's giving you additional information that's not shown in the price action itself.
Click to expand...

Could you please elaborate on this?
 
Lone Wolf said:
I notice you included volume in your list of indicators, just to be clear - True, it's indicating the volume. But it's giving you additional information that's not shown in the price action itself.
Click to expand...

shyguy said:
Could you please elaborate on this?
Click to expand...

There are three things that can be recorded in a trade - The amount that was traded (volume), the price it traded at and the time the trade took place.

All indicators use a combination of these three bits of information to create a visual display. Most indicators only use time and price. Indicators like MACD and RSI don't give you additional information, they just filter and rearrange the information you already have to make certain conditions easier to see.

For example, if you know how the MACD is created, you can look at a chart and picture in your mind what the MACD might look like. But it's not possible to look at a price chart and figure out how much volume was traded. So where other indicators are a rehash of what you can already see on the chart, volume is additional information about the size of the trade.

So maybe I was being pedantic in pointing it out. But because volume is one of the three key components of a trade I felt uncomfortable seeing it grouped with MACD and RSI.

It might sound like I'm bashing indicators here, I'm certainly not. They have their uses. They can give you a view of the bigger picture at a glance or alert you to when a particular market condition is met. But you need to know what conditions you're looking for and which indicators will alert you to those conditions.
 
They are all variations on a theme.

Price
Volume
Time

Are essentials obviously.

I do like the RSI for momentum.

KISS.

gg
 
wayneL said:
You can't tell just by looking at it?
Click to expand...

Agree-- a poor indicator.
XAO for last 12 mths Bull or Bear?



For me the best "indicators" are EXTREMES.
Extremes in Volume
Extremes in Price (Higher highs)/ or Exhaustion highs or lows.
I need to know where this occurs in a charts history (The extreme).
When they happen you need to know that the reaction will be short and swift and knowing where it is in the life of a chart will enable you to make a decision as to whether it is likely to continue into the future.

Extremes occur more often than you think. Even in flat periods in an index. like that above---there have been extremes all over the place in stocks in that index.

But when they show confluence (Index to stock----Index to Index--Stock to Stock) ---get out the cheque book!

You have to be different to the other 95% of the market------
I feed off what they do.(The 95%)
 
Some more examples of EXTREME

Have a look at some of your charts and mark extremes and not how the Market reacts to them---Both in the positive AND the negative.

You may well be surprised

.
 
Another example



Dont know about you guys but this stuff is easy to find is happening now

Leaving the pretty toys like MACD'S/ Multiple Moving Averages and 200 day M/A's
way way behind in the dust of those of us way way up in front!!
 
tech/a said:
RMS
RES
Click to expand...

im still only trying to learn about waves... but i would have said that RMS is already at the top of its wave 5? figure this is just to demonstrate how the market reacts though tech/a...
 
The charts are examples of past Extremes. (Red Diamonds)
Where the charts are NOW is a completely different discusion.
 
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