What's your favourite combo of indicators?

[Aceyducey]

Guys, which indicators do you use regularly in your trading & why?

Personally I keep Stochastic & MACD onscreen at all times & often refer to Momentum as well.

I also keep a close eye on the company's ratios & executive/board trading. If the executive are buying or selling, there's definitely something to investigate

Cheers,

Aceyducey

 

[still_in_school]

Hi Aceyducey,

favourite indicators... MACD & RSI, and every now again may use EMA..

ideally i like the use of OHLC & Candlesticks,the market depth and the amount of volume traded each day over a 3 month period broken down into weekly then daily periods...

for fundamental, growth and blue chips, like stocks in the top 150 and for midcaps in the top 300

Cheers,
sis

 

[wayneL]

Take your pick guys, they all measure the same thing...price and/or volume over a time period!

But FWIW the institutions use the following simple moving averages as buy/sell areas, but are by no means a sure cop:

20 SMA
50 SMA
200 SMA

Also keep an eye on Fibonacci levels as they are also widely used and therefore self fulfilling.

I think it is useful to disect the mathematics of the indicator to understand what it is they are measuring.

For instance:

MACD simply measures the distance between the 12 day exponential moving average and the 26 day exponential moving average, plus another moving average of this relationship.

Stochastic measures the relationship of the closing price to the highest high and the lowest low of the last x number of days, smoothed(averaged) by a factor of 3 usually.

Momentum measures the distance from todays x day EMA to the x day EMA at some point in the past.

RSI is a bit more complicated but essentially measures the exact sme thing in a slightly different way.

If you understand the mathematics of the indicator, suddenly it becomes insignificant because you can visually see these relationships immediatley in the price without refering to the indicator.

As you guys develop in your trading you will sense that these indicators give you no edge whatsever and that they are essentially a crutch to justify a buy or sell decision.

After having said all that, indicators are useful in that they can be useful to smooth out and interpret the noise inherent in the raw price data.

Also they are usefull as scanning tools to track down stocks that are on the move.

If you must use indicators, (remembering that they all measure price/volume) use one only. understand exactly how that indicator measures price/volume. Get to know all the nuances of the indicator and how it can be used in ways other than how the textbook says it should be used.

The best way use an indicator is not when it crosses such and such a line. Look for the patterns in the indicator and how that relates to price. In other words think outside the square.

I use the Commodity Channel Index ;D

 

[wayneL]

I should point out something here.

The standard CCI signals are buy when CCI crosses above -100 and sell whenn CCI crosses down below +100.

This is not how I use this indicator at all. I will explain later if anyone interested.

Cheers

 

[Joe Blow]

I find Bollinger bands are a good indicator to see whether a stock has been oversold or overbought.

Good for short term trading... anyone else use them?

 

[JetDollars]

I currently using Candlestick patterns indicators, EMA, RSI to look for opportunity, only papertrading though.

But I will learn as you go...

Thanks guys for those information, honestly I only know 50% or less of what you wrote above.

 

[Bobby]

Take your pick guys, they all measure the same thing...price and/or volume over a time period!

But FWIW the institutions use the following simple moving averages as buy/sell areas, but are by no means a sure cop:

20 SMA
50 SMA
200 SMA

Also keep an eye on Fibonacci levels as they are also widely used and therefore self fulfilling.

I think it is useful to disect the mathematics of the indicator to understand what it is they are measuring.

For instance:

MACD simply measures the distance between the 12 day exponential moving average and the 26 day exponential moving average, plus another moving average of this relationship.

Stochastic measures the relationship of the closing price to the highest high and the lowest low of the last x number of days, smoothed(averaged) by a factor of 3 usually.

Momentum measures the distance from todays x day EMA to the x day EMA at some point in the past.

RSI is a bit more complicated but essentially measures the exact sme thing in a slightly different way.

If you understand the mathematics of the indicator, suddenly it becomes insignificant because you can visually see these relationships immediatley in the price without refering to the indicator.

As you guys develop in your trading you will sense that these indicators give you no edge whatsever and that they are essentially a crutch to justify a buy or sell decision.

After having said all that, indicators are useful in that they can be useful to smooth out and interpret the noise inherent in the raw price data.

Also they are usefull as scanning tools to track down stocks that are on the move.

If you must use indicators, (remembering that they all measure price/volume) use one only. understand exactly how that indicator measures price/volume. Get to know all the nuances of the indicator and how it can be used in ways other than how the textbook says it should be used.

The best way use an indicator is not when it crosses such and such a line. Look for the patterns in the indicator and how that relates to price. In other words think outside the square.

I use the Commodity Channel Index ;D

Hullo Wayne,
I thought your old post so good that here it is again !.
As much time has passed have you found anything new ?

Regards Bob.

 

[bullmarket]

Hi Bobby

For what it's worth I tend to keep to the KISS principle for charting.

I use the following indicators:

1) 3 and 10 day moving averages

2) Volume

3) Stochastic Indicator (momentum type indicator)
Settings: %K = 10 days, %D = 5 days, Smoothing = 1

4) MACD, MACD-H Indicator (trend following indicator)
Settings: 5 and 15 days for the two MA's and 10 days for the trigger line

5) support/resistance/trend lines

6) Sometimes use Bollinger Bands to 'guesstimate' potential price targets (upper/lower bollinger bands) and Fibonacci Retracements for potential price targets as well.

cheers

bullmarket

 

[tech/a]

Indicators regardless of which you choose simply supply a beginning and an end.

Just as a product and a purchase price does in a business.

What you do in the middle will determine success and how often you do it right will determine continued success.

Just as overheads and COGS will determine profitability in any business.

The day a trader undrestands that its not the analysis,Technical or Fundamental or both that determines consistant profit is the day the trader becomes one of the "3-10%" who will be consistantly profitable.

 

[Prospector]

Hi Bobby

For what it's worth I tend to keep to the KISS principle for charting.

I use the following indicators:

1) 3 and 10 day moving averages

2) Volume

3) Stochastic Indicator (momentum type indicator)
Settings: %K = 10 days, %D = 5 days, Smoothing = 1

4) MACD, MACD-H Indicator (trend following indicator)
Settings: 5 and 15 days for the two MA's and 10 days for the trigger line

5) support/resistance/trend lines

6) Sometimes use Bollinger Bands to 'guesstimate' potential price targets (upper/lower bollinger bands) and Fibonacci Retracements for potential price targets as well.

cheers

bullmarket

Hey, I use the KISS model too! With focus on the MA and Volume. I read in the glossy Australian Wish magazine (the one from last Friday) that one Investment Manager said his best investment ever was buying a particular share at $4 four years ago and was now worth $12 Crikey, I think even I could teach him something! I would be so disappointed if that was the best I had done, and I am only a junior punter!

 

[bullmarket]

Hi prospector

Hey, I use the KISS model too! With focus on the MA and Volume. I read in the glossy Australian Wish magazine (the one from last Friday) that one Investment Manager said his best investment ever was buying a particular share at $4 four years ago and was now worth $12 Crikey, I think even I could teach him something! I would be so disappointed if that was the best I had done, and I am only a junior punter!

geeeeeez.....you're hard to please $4 to $12 in 4 years = 31.6% pa compound return.........I'll take that any day

But I get the jist of what you're saying

btw.....in addition to my previous post, I always go on what the price action is saying first and then look to the indicators for confirmation hopefully. If the indicators confirm the price action then I am more confident my interpretation of the chart is likely to be correct. All indicators regardless of the settings one uses will give false signals occassionally.

cheers

bullmarket

ps....CSI NY is about to start....have a relaxing evening whoever is reading this

 

[wayneL]

Hullo Wayne,
I thought your old post so good that here it is again !.
As much time has passed have you found anything new ?

Regards Bob.

Nope, still use CCI as a crutch. Sometimes I'll chuck on a MACD if I think there's a marginal divergence setup. But most times the obvious ones I can see in the price action, so no need.

But with the CCI, I know exactly how it is calculated and know when it should be ignored and when it's showing me something useful.

 

[wavepicker]

Guys, which indicators do you use regularly in your trading & why?

Personally I keep Stochastic & MACD onscreen at all times & often refer to Momentum as well.

I also keep a close eye on the company's ratios & executive/board trading. If the executive are buying or selling, there's definitely something to investigate

Cheers,

Aceyducey

Personally, I try to steer clear of using indicators as they are like chasing shadows across the computer screen.
For me the best indicators are a simple bar chart and volume coupled with pattern, price and time. However I sometimes use the MACD to further reinforce any assumptions made from the above.

 

[tech/a]

btw.....in addition to my previous post, I always go on what the price action is saying first and then look to the indicators for confirmation hopefully. If the indicators confirm the price action then I am more confident my interpretation of the chart is likely to be correct. All indicators regardless of the settings one uses will give false signals occassionally.

Frankly when you look at any chart with positive price action you'll get indicators confirming that price action as all indicators are lagging.They are made up of PAST price action.If you use an indicator with a periodicy of 10 or 14 days and expect it to confirm price action of the last 2 days then your going to be disappointed.Incorrect use and application of indicators is by far the greatest error made by would be technicians.Understanding how they are compiled brings a new dimension to brainless plotting.False signals are proportionate to correct use in my veiw.

Infact stochastic along with RSI is one of the most commonly mis used indicators.
Anyone like to hazzard a suggested Sell signal from a stochastic or RSI?

ALL indicators are made up of either a combination of
Open
Close
High
Low
Volume or open interest.

Many like Stochastic and MACD are telling exactly the same thing as their components are just the same.Like taking a bus or a car to the same destination its a matter of opinion as to which is most efficient.

I'm with Wave picker/Wayne in that I use Price action well above any indicator for entry signal and longerterm analysis.Fib and Elliot are excellent for short term levels.As a filter for mass segregation there is an application,as for setup in the long run if used properly only a 50/50 proposition --if used incorrectly far less---and traders wonder why.

See people think that a magical indicator or 5 or a positive Fundamental evaluation of a company guarentees success,when they dont get it CONSISTANTLY they blame their analysis.
Fact is they believe that their analysis if correct over 50% of the time guarentees success.

Yet I can prove that a 7/10 hit rate doesnt equate in some cases to success.
The method I use has a 35% success rate and is tremendously profitable.
Well over 30% compounded return.

 

[Julia]

Hey, I use the KISS model too! With focus on the MA and Volume. I read in the glossy Australian Wish magazine (the one from last Friday) that one Investment Manager said his best investment ever was buying a particular share at $4 four years ago and was now worth $12 Crikey, I think even I could teach him something! I would be so disappointed if that was the best I had done, and I am only a junior punter!

Hi Prospector:

I'm with you. This is an INVESTMENT MANAGER and that's the best he can do?

Well, I'm glad I don't have my money in his Fund whatever it might be!

Julia

 

[Bobby]

Hi Prospector:

I'm with you. This is an INVESTMENT MANAGER and that's the best he can do?

Well, I'm glad I don't have my money in his Fund whatever it might be!

Julia

Well said Julia !
That did make me smile thanks.

Bob.

 

[GreatPig]

That would be pretty good as a portfolio average (about 32% pa), but if that's the best single share, I wonder what his overall average is.

My "best ever" investment share is currently sitting on about 71% after 5-7 months (I bought it in two parcels in August & October 2005).

And I've only been doing this for about a year.

GP

 

[Bobby]

Frankly when you look at any chart with positive price action you'll get indicators confirming that price action as all indicators are lagging.They are made up of PAST price action.If you use an indicator with a periodicy of 10 or 14 days and expect it to confirm price action of the last 2 days then your going to be disappointed.Incorrect use and application of indicators is by far the greatest error made by would be technicians.Understanding how they are compiled brings a new dimension to brainless plotting.False signals are proportionate to correct use in my veiw.

Infact stochastic along with RSI is one of the most commonly mis used indicators.
Anyone like to hazzard a suggested Sell signal from a stochastic or RSI?

ALL indicators are made up of either a combination of
Open
Close
High
Low
Volume or open interest.

Many like Stochastic and MACD are telling exactly the same thing as their components are just the same.Like taking a bus or a car to the same destination its a matter of opinion as to which is most efficient.

I'm with Wave picker/Wayne in that I use Price action well above any indicator for entry signal and longerterm analysis.Fib and Elliot are excellent for short term levels.As a filter for mass segregation there is an application,as for setup in the long run if used properly only a 50/50 proposition --if used incorrectly far less---and traders wonder why.

See people think that a magical indicator or 5 or a positive Fundamental evaluation of a company guarentees success,when they dont get it CONSISTANTLY they blame their analysis.
Fact is they believe that their analysis if correct over 50% of the time guarentees success.

Yet I can prove that a 7/10 hit rate doesnt equate in some cases to success.
The method I use has a 35% success rate and is tremendously profitable.
Well over 30% compounded return.

Go Tech,
Yes mate them indicators can Suck you out, thats why many feed the eaters like you & me

Bob.

 

[Bobby]

Nope, still use CCI as a crutch. Sometimes I'll chuck on a MACD if I think there's a marginal divergence setup. But most times the obvious ones I can see in the price action, so no need.

But with the CCI, I know exactly how it is calculated and know when it should be ignored and when it's showing me something useful.

Hullo Wayne,
Just had to ask you about your use of CCI, I don't use this , I think its a tool for trading cyclical trends & trying to predict some sort of cycle of moving averages.
Its another osillator !
What is it in your trading application ?please.

Regards Bob.

 

[It's Snake Pliskin]

Frankly when you look at any chart with positive price action you'll get indicators confirming that price action as all indicators are lagging.They are made up of PAST price action.If you use an indicator with a periodicy of 10 or 14 days and expect it to confirm price action of the last 2 days then your going to be disappointed.Incorrect use and application of indicators is by far the greatest error made by would be technicians.Understanding how they are compiled brings a new dimension to brainless plotting.False signals are proportionate to correct use in my veiw.

Infact stochastic along with RSI is one of the most commonly mis used indicators.
Anyone like to hazzard a suggested Sell signal from a stochastic or RSI?

ALL indicators are made up of either a combination of
Open
Close
High
Low
Volume or open interest.

Many like Stochastic and MACD are telling exactly the same thing as their components are just the same.Like taking a bus or a car to the same destination its a matter of opinion as to which is most efficient.

I'm with Wave picker/Wayne in that I use Price action well above any indicator for entry signal and longerterm analysis.Fib and Elliot are excellent for short term levels.As a filter for mass segregation there is an application,as for setup in the long run if used properly only a 50/50 proposition --if used incorrectly far less---and traders wonder why.

See people think that a magical indicator or 5 or a positive Fundamental evaluation of a company guarentees success,when they dont get it CONSISTANTLY they blame their analysis.
Fact is they believe that their analysis if correct over 50% of the time guarentees success.

Yet I can prove that a 7/10 hit rate doesnt equate in some cases to success.
The method I use has a 35% success rate and is tremendously profitable.
Well over 30% compounded return.

I agree.

Price itself and where that price is relative to its historical position is important. Fibonacci would be the only indicator that can be used to forecast.
Money flow out of the averages I like.