Using the right T/A Indicator combination

What is considered the best indicator combination that most traders use in determining the current trend and any possible direction changes?
With so many indicators measuring the same tab data in a different way and producing the same results it is possible for beginners to use the wrong indicator combinations to determine entry or exit signals?

Would the combination change depending on the time frame being traded or would you just adjust the indicator variables to suit the time frame ?

I tend to stick with either SMA or BBand on the main screen, and MACD, RSI, and Slow Stoch on the lower charts. What is your thoughts on this combination of indicators and is the default indicator values still relevent in todays market or should they be refined to suit each market?

GlobalIndexTrader said:

What is considered the best indicator combination that most traders use in determining the current trend and any possible direction changes?
With so many indicators measuring the same tab data in a different way and producing the same results it is possible for beginners to use the wrong indicator combinations to determine entry or exit signals?

Not necesserily wrong but perhaps in appropriate.

Would the combination change depending on the time frame being traded or would you just adjust the indicator variables to suit the time frame ?

Yes.

I tend to stick with either SMA or BBand on the main screen, and MACD, RSI, and Slow Stoch on the lower charts. What is your thoughts on this combination of indicators and is the default indicator values still relevent in todays market or should they be refined to suit each market?

See below

Click to expand...

Firstly What are you trading.
If Futures(Or Indexes as you trade---I think.)optimising variables maybe appropriate as it could also be for singular stocks.If trading a portfolio of stocks then possibly not however optimising an indicator for entry and exit to the index your trading could be very wise.(A topic on its own).So most default variable values would be best.

I think most use far to many indicators which basically tell you exactly the same.
Ive seem some charts with so many indicators on them I cant see the price action.

All indicators use either.
Open,close,high,low,volume or open interest as their components.Its only the way they are put together that makes them slightly different.
Using MACD,RSI and Stochastic together is similar to taking a cab,car or motor bike to the same destination.----youll get there but in a slightly different way.

Timeframe will have a bearing on what you use.(Choice of indicator).
Method of trading will also have a bearing.
IE
Volitility trading.
Momentum Trading.
Swing Trading.
Divergence trading.
Support/Resistance trading.
Retracement Trading.

Your simple choice of an SMA and B/B is great for a starter.

A question/s for you (And others)
Do you think you should use different indicators for entry to exit?
Why use them at all?

I like to use T/A to determine the underlying index. In my case the Dax and the STOXX Euro 50. I trade options on these market by selling either Calls, Puts or both depending on what the market just did. The time frame that I trade is mainly between 30 and 74 days to expiry (DTE) and once the order is filled I place a Good to cancelled (GTC) order to buy back as soon as I can working on daily annualised percentages against percentages at expiry (see my Options Trading Worksheet for example).

My system really doesn't require me to have a market direction in mind when placing orders as I work with consecutive up or down days to determine whether I sell Calls or Puts or both but I like to know what the underlying Dax market is doing in relation to my strikes in case I need to role.

As far as charting goes I like have around 6 months daily or 2 years weekly but I still use the default values with all indicators. What I need to do now is work out which is the best combination of indicators (that measures different information) and whether the default variables can be optimized to suit todays market.

As far as using different indicators for entry and exit, If you can come up with a combination that gets you in as early as possible and minimise the false signals at the same time and another combination that keeps you in long enough to reach set profit margins then you should use different indicators. I guess its best to settle with a combination that you are happy with knowing that you have 3 indicators all reading different data all showing simular signals.

Maybe lagging indicators to get you in and oscillators to get you out as you dont want to wait for a lagging indicator to tell you to get out when markets rise via steps and falls via elevators...

tech/a said:

Firstly What are you trading.
If Futures(Or Indexes as you trade---I think.)optimising variables maybe appropriate as it could also be for singular stocks.If trading a portfolio of stocks then possibly not however optimising an indicator for entry and exit to the index your trading could be very wise.(A topic on its own).So most default variable values would be best.

I think most use far to many indicators which basically tell you exactly the same.
Ive seem some charts with so many indicators on them I cant see the price action.

All indicators use either.
Open,close,high,low,volume or open interest as their components.Its only the way they are put together that makes them slightly different.
Using MACD,RSI and Stochastic together is similar to taking a cab,car or motor bike to the same destination.----youll get there but in a slightly different way.

Timeframe will have a bearing on what you use.(Choice of indicator).
Method of trading will also have a bearing.
IE
Volitility trading.
Momentum Trading.
Swing Trading.
Divergence trading.
Support/Resistance trading.
Retracement Trading.

Your simple choice of an SMA and B/B is great for a starter.

A question/s for you (And others)
Do you think you should use different indicators for entry to exit?
Why use them at all?

Click to expand...

How about Indicators for technical analysis on stocks?

Can someone categories the main indicators into their respective groups so that I can workout the best combination of indicators to use please.

I am currently using SMA on the main chart, MACD Hist, RSI, and Slow STOCH on the lower three charts. Is this the best combination or are they all really displaying the same sort of thing? If so what would you consider a better combination

thanks Steve

OK.

All of the indicators you are using are guaging momentum.
They should ALL be used IN THE DIRECTION OF THE TREND.
So using an M/A is fine ---or a group of them at different timeframes.
Using any ONE of the oscillators is also fine Id only include them for Over sold in an up trend and possible divergence.
I like either MACD or RSI as Stochastic is a bit fast but if your trading short timeframes maybe the go---Ifound it a bit twichy.

To help us look at what your trying to achieve can you tell me what your looking at trading.

That way we can look at the chart/s and determine what the price action is doing.

Have you thought of trading price action and not using any oscillators?

What timeframe are you trading.

2 min ticks
10 min
1 hr
EOD
Weekly
etc?

This will have a bearing on what your trying to achieve.

In my case the Dax and the STOXX Euro 50.

Sorry just saw this.

EG do you use a standard deviation of 2--2.5--3 this is what Ive seen done by many.
You cover at what point?

Here is a chart of the DAX

From what youve said Id say an M/A would be all you need.
You can optimise its value to give you its best M/A to work with.
I may have the data and if I do Ill post the results.
As I said above an ocsillator may help for divergence.

Selling index options is a stratagy Ive heard of before someone selling the FTSE was the last I had contact with.Ive also heard its pretty safe and consistant.

What sort of premium do you get?
Good win rate?
How do you cover and when?
I percieve selling puts as being pretty risky (As indexes fall faster than they rise).Am I on the right track?
Do you adjust times from expiry for this?
Just that I think selling puts risky at this time.

Just interested.

I mainly trade a 30-74 day window trying to enter around the 55-58 day mark. I sell calls roughly 300-400 points away from the market after a few up days and the same for puts after 3 or more down days. As far as cover goes I always sell naked calls unless I am putting a spread together or move closer to the market. I always buy Puts 200 points below the sold put as insurance (cover) if I can get around 12-20 points credit in the spread. This equates to 10 contracts x 20 points x AUD8 = 1600 net premium for a margin cash balance of 16,000. I will then buy back as soon as possible after setting a GTC order based on a greater annualised percentage profit over 7 days against what it would of been at expiry. I then re-do the GTC order each week until the value is not worth the brokerage to buy back in which case I let expire. I normally will roll when the market gets within 100 points of the strike.

Because the options this far out have no value at the moment due to record low volatility I have to either more further out or closer to the market, what I need now is to watch the overall market direction looking for possible change in directions or forming channels so I can work out if I can last longer timeframes or get closer to the market without knowing that the market is looking like its about to turn.

The end of the day I am not supposed to have an opinion on market direction but I cant help but keep an eye on whats going on and use this info to assist in selling calls or puts.