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I'm new to trading and I'm studying indicators and chart patterns. I've heard that some indicators work best when price patterns are ranging and other indicators work best when price patterns are trending. However, I can't remember where I read that. Does anyone know which indicators to use in a ranging market and which indicators to use in a trending market?

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I'm new to trading and I'm studying indicators and chart patterns. I've heard that some indicators work best when price patterns are ranging and other indicators work best when price patterns are trending. However, I can't remember where I read that. Does anyone know which indicators to use in a ranging market and which indicators to use in a trending market?

 

I don't come into this site much and just noticed what you wrote in February. It's best to use indicatores, any indicators, to confirm a decision already made. Indicators, because of their construction are ALWAYS delayed and usually too late to use successfully to trade with. That goes no matter who tells you differently. May I suggest that you learn to read price with good (meaning tight) Stop Loss.

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Books by Martin Pring or John Murphy will help you sort out indicators from oscillators. Oscillators such as RSI, CCI, Stochastics and Williams %R are popular for range bound instruments. All indicators are only decision support tools, not decision making tools. Your trade decisions should be based on price action it's self. Indicators are derivatives of price and sometimes volume and time as well. Go to the source, price. Use support and resistance, trendlines and momentum ( a mixture of time and price ) to make your decisions.

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I'm new to trading and I'm studying indicators and chart patterns. I've heard that some indicators work best when price patterns are ranging and other indicators work best when price patterns are trending. However, I can't remember where I read that. Does anyone know which indicators to use in a ranging market and which indicators to use in a trending market?

 

Most daytraders who make money do not use indicator signals to trade. They use price patterns instead, ie. price actions on S/R levels, retracements,etc..

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Most daytraders who make money do not use indicator signals to trade. They use price patterns instead, ie. price actions on S/R levels, retracements,etc..

 

that's an unsubstantiated generalization.

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Hi Stock.Jock. I might be wrong for what I will say and let more experienced traders correct me. Maybe I will learn something along with you.

 

For trending markets I would prefer moving averages or donchain channels. For ranging markets more something like MACD or RSI or even better stay completely out. But how can you know when markets are ranging and when are trending? Indicators by them selfs don't help much, except maybe if you use ADX.

 

In ranging markets price jumps up and down of the moving average and in trending markets oscillators are constantly overbought or oversold. In this case you might end up with many false signals. This is why you need to learn to read price action also. Really, identifying support and resistance along with some candlestick formations + patterns like head and shoulders and flags can help you much more in understanding what is going on. You will see that every pattern tells a story and bars/candles are the words that story is written with. Indicators are the pretty illustration that maybe can help you understand better the subject.

 

These words come from someone who discovered price action a month a go and now doesn't use even a moving average so maybe I am just over excited. I too was obsessed with indicators afraid of the learning curve of price action. Now every day I like it more and more.

 

BTW there is no ranging pattern or trending pattern. Only price ranges or trends. Price then forms patterns that give us hints about what it might do next.

Edited by b4gt

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What a misleading thread,MACD is a trend following indicator,RSI mimic's a line chart,ADX is a waste of time,Price is a finish product like a loaf of bread,Price with out structure is a waste of time,if you are so hung up on price then you should also know order flow,volume and strong supply or demand areas on a price chart.As for indicators they are all trading tools,you always find that people who are not trade oriented always bad talk tools.I guess you don't know much about the RSI,if you open up RSI to 1/3 of the Chart and use 60/40 zone there's a whole new ball game,within that range the market is oscillating,a trending market must break above 60 or below 40 and stay out there.Then trend line drawn on RSI shows a clearer picture than on price chart.RSI also shows better support and resistance than the price chart,this indicator is so indept that I will say is only fools will use it as an Over B/S indicator.I guess you have not heard of Andrew Cardwell.I created my own use of CCI as an entry indicator only, for precise entry,No zero line cross or over bought/sold area.What about bollinger bands,I use my own settings to create a trend indicator which shows what side of the market you must be on,it also gives strong retracements areas and stop placements.Indicators offers such an array innovation,if you just open up the box and use them as,you will have no edge and trading is all about having an edge.To each his own, as for me I don't use chart patterns,candle patterns,trend lines,price patterns and all the other normal stuff,I created my own SET UPS.As for any new trader I will advise learn the structure of the market,also there's a price you will have to pay with either with money or time.I choose time why because the more screen time you put in the better you will become,forget about about back testing and look at real live markets for hours you will learn alot on your own.

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I am relatively new to trading and still learning. Like most new traders, I'm still exploring various indicators. However, I keep hearing from experienced traders to focus on price and volume action; so I've taken a keen interest in reading through this forum's treads on Volume Spread Analysis. As well as reading through the abundance of pdf documents on the subject. Current I've been reading the book Reminiscences of a Stock Operator.

 

I wish to thank all of you for your answers to my question. All your input is valuable.

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Indicators are good trading tool, but you cannot stick to buying/selling signals of one indicator "blindly". You have to use more tools (chart patterns, drawing tools, more indicators). If you follow one indicator blindly, your profit will most likely oscillate around zero.

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trading is like flying an airplane...

 

some people will tell you that you need to "feel" the wind, listen to the engine, and be one with the airplane.

 

others will tell you to look at the instruments.

 

attachment.php?attachmentid=22386&stc=1&d=1285078839

 

 

doing one without the other is a recipe for disaster.

6p.jpg.9127e14912c81efed593934dd845a1c7.jpg

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