What Indicators Do You Find Most Useful?

[rglim 10]

My first post here. What indicators do you find most useful? And why?

[CandleWhisperer 10]

My first post here. What indicators do you find most useful? And why?

 

PRICE

 

Price action is king.

 

"What works in markets? Price. Price is all that matters. Price is reality. Everything every trader knows about the market is reflected in the price. Everything the market knows about itself is reflected in its price. Price reflects the effects of volume, of open interest, of everything.

 

Price is the only thing we want to look at because price is what the market is doing. All fundamentals are contained in the price. Supply and demand are contained in the price. Price is what IS." Welles Wilder jr.,The Adam Theory of Markts., pp. 22.

[Hlm 10]

First of all, I mostly agree with CandleWhisperer. Before using anything else (including volume imo) one needs to study pure price and the ebb and flow of the markets. After you have a good grasp at how price moves, then one may look at using indicators to extract information that is wanted. Trying to use indicators without first knowing the information required is putting the cart before the horse and I HIGHLY advise against it. However, I do not agree that the price only camp is the only way. Although price IS king, there are tools out there that can be very helpful in simplifying the market (for example, not many people use single tick charts).

 

Now on to your question...

 

Even though I currently don't use any "out of the box" indicators...the two that I have found the most helpful in the past are the slow stochastic and a few SMAs on a time bar chart. The stochastic setting of 5/3/3 doesn't change. If you are wondering, the setting is based off the golden ratio. I don't never use the oversold/overbought section of a stochastic. You can always become more oversold or overbought. In my opinion, a stochastic is best used as a filter. Which way is it going? How is it moving with price? For example, price barely moving up while the stochastic continues to stretch up, could be a good sign to watch for a reversal. As for SMAs, I would suggest throwing up several with fib number (because they do a good job at seperating themselves) settings starting at 9 and noting which ones tend to hold price, or when broken create a "failure" type momentum. There are two methods with SMAs. First, you can actually take trades off of them. For example, if price holds one and is sloped...and then retraces back to it (with stochastics agreeing) you can take a continuation trade off of it. The second way is to use them for estimating potential price action. Are they conflicting with each other? Are they coming together? Are the seperating? Is price sandwiched between them? After spending some time observing them, you will start to find patterns.

 

I would also highly suggest that one looks into both TPO and Volume Market Profile.

[Minis Trader 10]

First and foremost I agree with CandleWhisperer & HLM about price. I have spent countless hours looking at how markets move as well as the positions that I trade. As I decide that I want to look at adding a market to my list I will spend hours looking over price and patterns as well as time analysis looking for things to pop out at me.

 

After price is fibonacci, as HLM mentioned the golden ratio, fibonacci has a pure relationship to the golden ratio. Everything around us has some relationship to fibonacci such as: a tweed pattern, a conch shell, the multiplication of rabbits, the pyramids, etc. It also works very well in trading.