Which indicators do you choose?

pavilion103 · 1 September 2011

I've often heard that keeping things simple in the market is the most effective way to consistently make profit. At the same time I understand that using a couple of indicators can be quite beneficial.

Before I ask any questions, I understand that everyone is different and there is no one correct answer, so I ask out of curiosity to hear what most traders find effective in their personal trading.

1. Which indicators do you like the most?
2. How many indicators do you use?

These are ones that I have recently read about and am considering using. I will test these and then would like to use maybe 1-2 of them in my trading.

- MACD
- Relative Strength Index (stock price compared to All Ords or Index)
- Force Index (Alexander Elder uses this)
- New High-Low Index

Billyb · 3 September 2011

pavilion103 said:
I've often heard that keeping things simple in the market is the most effective way to consistently make profit. At the same time I understand that using a couple of indicators can be quite beneficial.

Before I ask any questions, I understand that everyone is different and there is no one correct answer, so I ask out of curiosity to hear what most traders find effective in their personal trading.

1. Which indicators do you like the most?
2. How many indicators do you use?

These are ones that I have recently read about and am considering using. I will test these and then would like to use maybe 1-2 of them in my trading.

- MACD
- Relative Strength Index (stock price compared to All Ords or Index)
- Force Index (Alexander Elder uses this)
- New High-Low Index

Do you mean RSC instead of RSI? I do like to use the RSC. RSC appeals to me because it's different to all the other indicators - it gives new information not inherent in the symbol's chart - whereas all the other indicators I know off seem to just be presenting the price (or volume) action in a slightly different form.

The new high-low index you mention looks interesting, I shall look into that

tech/a · 3 September 2011

The problem with RSC is that by the time you see an opportunity it's all over.
It's not a leading indicator.
Anything calculated from past data will always be far too slow for practical application.

Gringotts Bank · 3 September 2011

There are some nice adaptive indicators around, usually paid versions. They adapt to market conditions, bar by bar.

joea · 4 September 2011

pavilion103 said:
I've often heard that keeping things simple in the market is the most effective way to consistently make profit. At the same time I understand that using a couple of indicators can be quite beneficial.

Before I ask any questions, I understand that everyone is different and there is no one correct answer, so I ask out of curiosity to hear what most traders find effective in their personal trading.

1. Which indicators do you like the most?
2. How many indicators do you use?

These are ones that I have recently read about and am considering using. I will test these and then would like to use maybe 1-2 of them in my trading.

- MACD
- Relative Strength Index (stock price compared to All Ords or Index)
- Force Index (Alexander Elder uses this)
- New High-Low Index

I do not think its about the indicators that you choose, its about what you choose them for. So you choose the one you think does the best job.

You have trend, momentum, volatility and market strength.

Trend............ Trendlines( support %resistance)
Momentum......MACD Histogram(perhaps)
Volatility.........Average True Range (ATR)
Market Strength......Volume

Bullish and Bearish divergence will give you and edge, but while one indicator may pick it up, another may not.

In Carolyn Boroden book Fibonacci Trading she explains the "Ideal Set Up" with utilises
pattern(HH's &HL's or LH's &LL's) , symmetry projection, (where the projection is in relation to 34EMA) and CCI indicator. Trading naked site shows the divergence patterns.

I bought the book, she explains the setup and I implement it . Simple.
joea

Billyb · 4 September 2011

tech/a said:
The problem with RSC is that by the time you see an opportunity it's all over

A worthy point made for short term traders. Horses for courses I think. I like to use it the way Weinstein mentions in his book, to identify whether a stock is outperforming the parent index, for this I find it useful.

tech/a said:
The problem with RSC is that by the time you see an opportunity it's all over.
It's not a leading indicator.
Anything calculated from past data will always be far too slow for practical application.

I suppose every indicator is calculated from past data. Even the so called leading indicators.

joea · 4 September 2011

Billyb said:
A worthy point made for short term traders. Horses for courses I think. I like to use it the way Weinstein mentions in his book, to identify whether a stock is outperforming the parent index, for this I find it useful.

I suppose every indicator is calculated from past data. Even the so called leading indicators.

In Achelis book of Techical analysis from A to Z it quotes on the Williams%R indicator, "An interesting phenomenon of the %R indicator is its uncanny ability to anticipate a reversal in the underlying security price. The indicator ALMOST always forms a peak and turns down a few days before the security's price peaks and turns down. Likewise %R usually creates a trough and turns up a few days before the security's price turns up."
Its in my stable as a momentum indicator.
That is why I purchased the book to find the weaknesses and strength of indicators that may be applicable to do a job.

The VSA application on a chart would be another method of analysis that cannot be overlooked.

Comment on RSC. I think a comment on this particular indicator should include a time frame, as I would agree with the above that in short term trading and day trading it may not be applicable.

I think Weinsteein make two good points, one is RSC and the other is the 4 stages of a stock cycle.

I use RSC to look at sector and commodity analysis agains the XJO. Overlay of say the gold price against the XJO may be ok in relation to trading gold stocks. But I am looking at emerging companies in this area. So I am watching the gold price direction plus XJO sector direction comparison.
once a week analysis.!!!
joea

Wysiwyg · 4 September 2011

joea said:
The indicator ALMOST always forms a peak and turns down a few days before the security's price peaks and turns down. Likewise %R usually creates a trough and turns up a few days before the security's price turns up."

Hi, I can't find any instance where the W%R indicator turns up or down before price movement. Nowhere.

joea · 4 September 2011

Wysiwyg said:
Hi, I can't find any instance where the W%R indicator turns up or down before price movement. Nowhere.

I can!
Go to BND, the 11th/3rd is the lower trough, then on the 15th/03 it show a higher trough while price bar was wide range and price went down further..
At the moment W%R shows a flat line to Friday but CCI 13 &34 has a bullish dvergance on the current price.
joea

Wysiwyg · 4 September 2011

joea said:
I can!
joea

Where?

joea · 4 September 2011

On BND again 21/07/2010 shows lower trough, then 2 X HH's and HL's on a flat price and no volume.
.56 to .86 at close over 4 to 5 days, that's 53.5%.
joea

joea · 4 September 2011

Wysiwyg said:
Where?

BND look at shaded area.
joea

Wysiwyg · 4 September 2011

On BND again 21/07/2010 shows lower trough, then 2 X HH's and HL's on a flat price and no volume.
.56 to .86 at close over 4 to 5 days, that's 53.5%.
joea

Likewise %R usually creates a trough and turns up a few days before the security's price turns up.

No it doesn't. The indicator reacts to each and every price change.

IFocus · 4 September 2011

When I started in the markets the older traders used to talk about volume and price action being the best and only indicators.

The rest being pretty much BS

I struggled with this for a number of years.

Now all I use is volume and price action.................and two MA's to remind me of the trend direction.

Wysiwyg · 4 September 2011

Wysiwyg said:
No it doesn't. The indicator reacts to each and every price change.

I smoothed out that jagged, gnarly line.

PHP:

function PercentR( periods )
{
 return -100 * ( HHV( H, periods ) - C )/( HHV( H, periods ) - LLV( L, periods ) ); 
}

SmoothPR = EMA(PercentR(8), 4);

A = HHV(SmoothPR, 10);
B = HHV(SmoothPR, 60);
D = HHV(SmoothPR, 110);
E = HHV(SmoothPR, 160);
F = HHV(SmoothPR, 210);
G = HHV(SmoothPR, 260);
I = HHV(SmoothPR, 310);
J = HHV(SmoothPR, 360);
K = HHV(SmoothPR, 410);
M = HHV(SmoothPR, 460); 

A1 = LLV(SmoothPR, 10);
B1 = LLV(SmoothPR, 60);
D1 = LLV(SmoothPR, 110);
E1 = LLV(SmoothPR, 160);
F1 = LLV(SmoothPR, 210);
G1 = LLV(SmoothPR, 260);
I1 = LLV(SmoothPR, 310);
J1 = LLV(SmoothPR, 360);
K1 = LLV(SmoothPR, 410);
M1 = LLV(SmoothPR, 460);

Average = SelectedValue(A+B+D+E+F+G+I+J+K+M)/10;
Average1 = SelectedValue(A1+B1+D1+E1+F1+G1+I1+J1+K1+M1)/10;

Plot(SmoothPR, "", colorBlack, styleLine);
Plot(Average, "", colorDarkRed, styleLine);
Plot(Average1, "", colorSeaGreen, styleLine);

tech/a · 4 September 2011

Why don't you throw up a few charts and just elxplain how you'd apply that to a few profitable trades?

pavilion103 · 4 September 2011

IFocus said:
When I started in the markets the older traders used to talk about volume and price action being the best and only indicators.

The rest being pretty much BS

I struggled with this for a number of years.

Now all I use is volume and price action.................and two MA's to remind me of the trend direction.

This is what I seem to be reading and what resonates with me the most.

I want to experiment with using a few indicators myself so I can see their usefulness through my own testing. But I'm thinking price and volume are probably sufficient (once I am able to read them well).

Logique · 5 September 2011

Good old volume and OBV, combine with MACD, on the KISS principle.

To me, it's more important to check by the different time periods than to browse a vast array of different indicators.

I don't understand Elliot Waves.

MrMomentum · 6 September 2011

I prefer chart patterns to indicators.

My favourite chart pattern is the peak to trough trend. I refer to this as a “wave trend.”

I also like straight edge trends, support/resistance and triangles patterns.

Indicators confuse me and result in indecision on my end.

If I had to use an indicator is would be one moving average.

investorpaul · 6 September 2011

I dont really use charts or indicators anymore (i found they don't suit my investment style).

However when I do I just stick to the basics price, volume, support/resistance, trend lines.

Which indicators do you choose?

pavilion103

Billyb

tech/a

No Ordinary Duck

Gringotts Bank

joea

Billyb

joea

Wysiwyg

Everyone wants money

joea

Wysiwyg

Everyone wants money

joea

joea

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Wysiwyg

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IFocus

You are arguing with a Galah

Wysiwyg

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tech/a

No Ordinary Duck

pavilion103

Logique

Investor

MrMomentum

investorpaul

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