Did you know?

[kbleivik]

There is only two trading regimes:
1. Sideways.
2. Trending up/down.

It is vital to your success that you try to identify wich regime you are in. And you use different indicators in trending and sideway regimes. Parabolic SAR is useless in flat regimse, but good in trending. Stochastics, MACD etc. are better in flat than in trending regimes. These indicators may lie in the overbought / oversold region all the time in a trending regime.

Moving averages is good in trending regimes. An exponential moving average is faster than a simple. Use crossovers as buy and sell signals.

ADX (DMI+ and DMI-) was made to identify trends.

Bollinger Bands is good to use. Buy Bollingers Book and learn to identify the different movements within Bollinger Bands.
- Tagging the bands in trending regimes.
- Break Outs.
- Explosion.
If you combine Bollinger Bands with accelleration bands (Bigtrends.com), you may be able to identify take offs.

Look at the stock at different frequencies. If you have the same signal at daily data as at weekly, that is a strong singal.

Be ware of Multicolinerity. MACD, Stochastics and RSI gives the "same" message. There is another indicator that is not so well knowm, the Precision Profit Float indicator by Steve Woods. He claims that this is the third dimension of a stock quote in addition to volume and price.

Conclusion:
1. Learn to identify the regime of a stock.
2. Use the right indicators in that regime.

[Milk Man]

Thanks mate,

I never knew that about MACD/SAR. I thought they were extremely similar in their signals. Something to throw at the ol' backtester! I havent looked at B.B's yet; are they better in flat or trending?

:bier: (Aussie beer can be quite tasty: why they export fosters I dont know)

[brisvegas]

Multiple time frames another way to get a better feel for trend bias etc. I use these rules which were penned by Kaufman


LAWS OF MULTIPLE TIME FRAMES

1. Every time frame has its own structure.

2. The higher time frames overrule the lower time frames.

3. Prices in the lower time frame structure tend to respect the energy points of the higher time frame structure.

4. The energy points of support/resistance created by the higher time frame's vibration (prices) can be validated by the action of lower time periods.

5. The trend created by the next time period enables us to define the tradable trend.

6. What appears to be chaos in one time period can be order in another time period

[Milk Man]

Multiple time frames another way to get a better feel for trend bias etc. I use these rules which were penned by Kaufman


LAWS OF MULTIPLE TIME FRAMES

1. Every time frame has its own structure.

2. The higher time frames overrule the lower time frames.

3. Prices in the lower time frame structure tend to respect the energy points of the higher time frame structure.

4. The energy points of support/resistance created by the higher time frame's vibration (prices) can be validated by the action of lower time periods.

5. The trend created by the next time period enables us to define the tradable trend.

6. What appears to be chaos in one time period can be order in another time period

So by higher/lower timeframes do you mean like daily/weekly charts repectively? Very helpful; just needs putting in perspective for my stoopid head.