Indicator Advice

[dazman 10]

what are the best indicators for the ES. I know enough to be dangerous but am trying to make the best sense of a combination of them macd, rsi, srsi, mov. avgs. and what parameters do you use. Also, does anyone know anything about the indicators that traders international uses to overlay the actual chart. I believe that they use a rsi and stochastics. It is a ninja trader feed through e-signal. I've just finally funded my mirus account and am struggling. I do great on paper, but the fills are just simply different. Any help suggestions.

[diablo272 10]

This is completely dependent on what you want to use the indicators for. Each indicator needs to serve a purpose--what do you want the indicator to tell you? How will each indicator improve your strategy?

 

Edit: I should add that indicators are not a REQUIREMENT. It is perfectly possible to have a profitable strategy that doesn't use any indicators at all, so keep that in mind, and only use an indicator if you really think it would help you in a way that pure price action can't do directly. Sometimes I think of indicators as "visual aids". They can make something apparent in a single glance which might take longer to see clearly if you were just looking at bars on a chart.

Edited February 21, 2009 by diablo272

[dazman 10]

Thanks diablo,

 

That in fact is what i am trying to do is put together a game plan. I'm still learnig about how navigating around ninja it can be a bit frustraing some times. I wonder if n7 will help?

[DbPhoenix 42]

Considering all that has eventually to be unlearned by so many traders who go the indicator route, I urge you to at least skim the following thread:

 

http://www.traderslaboratory.com/forums/f30/price-action-only-5074.html

 

Even if you incorporate indicators later, understanding price action will enable you to understand them and make the most of them.

[Robert Joyce 10]

I am new to this 'chatting' thing, but I have been studying and watching the es and ym mini's for several years and trading both practice and real accounts. The thing about any indicator or value of any kind is they are only relative to another value. Any value by itself is useless, it has to be compared. For example the Macd is a comparison of ema's usually the 9, 12, and 26. The signals are generated with cross over's. The same with Stochastics. But these also have to be compared with the same signals generated in different time frames. For intraday I use the standard Macd and slow Stochastic on a number of time frames say the 1 min and the 5 min charts. Now for example the oscillation of the stochastics from overbought to oversold on a one minute chart will happen 2 or 3 times while the five min. moves only once from overbought to oversold. I use the longer term chart for index direction and the short term for entry points. This is a simple system and to be sure I look at many more indicators at the same time, like trin, tick, and most importantly 'technical pivots'. I know this is getting long winded but the real point I want to make is that you have to learn to read these indicators yourself and this can only be done through observation over a long time..... usually years.... or you could just sign onto one of the guru's and trade his interpretation of data; but at the end of the day you will be no further ahead. You have to learn to 'read' the data yourself... period... or you will never have the confidence to trade profitably for yourself. Remember though you don't have to know everything to be able to 'read' the markets and it is 'trade management' that will make you money not reading the markets. The fact that you can stop yourself out of bad trades and let your winners run combined with a 'coin toss' for entry.... you should be able to make money. But if you have a simple signal generating system like the one I described above combined with good trade management skills you will do just fine. Hope this helps. Robert

[Spydertrader 10]

what are the best indicators for the ES?

 

Price and Volume.

 

- Spydertrader

[Robert Joyce 10]

Ok.... so I had a good look at 3 relative time and sales windows; 1<, 50<, and 200< . I saw these three used by some guru so thought I would try to see what they are all about. I tried to google for an explanation of how to interpret them but the best I got was 'screen time', other than the obvious meaning larger players 200< usually are the volume surges that will push the price in their direction. That part is simple but these also have to be juxtaposed with S/R and I assume technical pivots would be good to keep an eye on. So I guess I'm asking for someone who uses 'price action' as represented by time and sales could give me a detailed description of how they traded the ES today for example. How they read it or what....

 

What really got me interested is when one of you mentioned all the stages one goes thru, from the Guru, thru indicators, and finally to 'pure' price and volume. Who knew I was only in a 'stage'.... lol lol. Well, again I would be very interested to get some more insight into this 'tape reading'..... thanks again.

[brownsfan019 17]

Contrary to the 'indicators are bad' phenomena that has swept through TL, I would say find what works for you and then work it.

 

Each indicator has a strength/weakness. You need to know what those are and how to maximize the strength and minimize the weakness.

 

Examples

:

MOVING AVERAGES

= great in a trend, can get beat up in non-trends

OSCILLATORS

(such as MACD) = can work well in non-trend, can try to catch a falling knife in a trend

TREND FOLLOWERS

(such as Trix) = very nice in trend, not so great in non-trend

FIXED LINES

(such as pivots, fibs) = can provide timely support/resistance, can also provide levels that in hindsight were meaningless

There is a common them here though... whether or not you are in a trending market. Sounds easy enough to say, but identifying that in real-time takes a lot of practice and screen time.

 

So while having a screen of 40 indicators is repeatedly redundant, you can use them and you can make money using them. In it's purest sense of form, it'd be great to pull up a 1 or 5 minute chart and just know instinctively when to buy and when to sell, but that's difficult, esp for a new person. When you are new, having something that can give that added confidence is needed.

 

Here's the catch w/ indicators though .... if you play w/ them and test out all different settings and such, you may never stop testing and playing. There are so many indicators out there that it's rather amazing. My suggestion would be to find a trending one and non-trending one and see if you can get them to work w/ each other.

 

There's also been mention of confluence and that can be pretty powerful IMO. Confluence meaning when multiple things are saying the same thing - whether that's a mix of indicators, fixed lines, time frames, etc. etc.

[jimbo61 10]

I have always had good luck using the DMI.

The D+ and D- lines will show you the trend direction, while the ADX line show you the trend strength.

 

I will NOT enter a trade until the ADX line is (1) below 25%, (2) flat or riseing upward.

 

Put this on a chart (greater than 5 min) and look back and see what it tells you.

[sep34 10]

what are the best indicators for the ES.

 

Price Action alone + Ample Screen Time,

 

however if you need to use other indicators, then you need to ask and answer from your self what diablo272 proposed in post #2

 

"This is completely dependent on what you want to use the indicators for. Each indicator needs to serve a purpose--what do you want the indicator to tell you? How will each indicator improve your strategy?"

 

Good Luck...

[Tams 20]

...

OSCILLATORS (such as MACD) = can work well in non-trend, can try to catch a falling knife in a trend...

 

 

different class of indicator complement each other

 

oscillators are never used alone, or with another oscillator.

they are always meant to work with a trend indicator.

[Robert Joyce 10]

Tams, how do you differentiate between indicators and oscillators, and could you give me a few examples.

[Tams 20]

Tams, how do you differentiate between indicators and oscillators, and could you give me a few examples.

 

 

when you say indicator (the red highlight above), I assume you missed the word "trend" from my post.

 

 

oscillator is a type of indicator.

 

oscillator goes up and down...

usually centered around zero, for scales of +1 to -1,

or,

centered around 50, for scale of 0 to 100.

oscillator has bounds -- it will not go above the upper limit, nor below the lower limit.

 

(ps. MACD can seem to go "boundless"... )

 

 

 

a trend indicator might look like it oscillate too,

but it is not centered around a value,

nor does it have bounds.

 

 

 

 

stochastic is an oscillator

moving average is a trend indicator.

[Robert Joyce 10]

great answer, I left another post to explain how I do use as you say, oscillators and trend indicators. thanks again for the clarity.

[BlowFish 10]

Personally I split oscillators into two types bounded or unbounded (which I think is probably the norm). As Tams says they should all be centred. You can usually make an unbounded oscillator bounded by some sort of normalisation. CCI is another example of an unbounded oscillator. Unbounded oscillators still don't reach infinity they are 'bounded' by statistics.