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optiontimer

Trend & Momentum - Indicators of Choice II

Which indicator should I use to determine long-term trend for my trading system?  

106 members have voted

  1. 1. Which indicator should I use to determine long-term trend for my trading system?

    • Single Moving Average
      23
    • Dual Moving Averages (Short MA relative to Long MA)
      46
    • MACD
      13
    • Bollinger Bands
      10
    • Donchian Channel
      5
    • Other (Please post your suggestion to the thread when choosing this option)
      9


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This poll is related to this previous poll posted last week here at Traderslaboratory:

 

Lately, I see many posts/threads here at Traderslaboratory about traders who are struggling, wondering if they should give up and quit, wondering why they can't "get it."

 

I would like to try to help.

 

I am going to put together an indicator trading system and trading plan in real time here at Traderslaboratory.com

 

I want input from fellow posters/lurkers as to which indicators I should use.

 

I need one indicator to major trend, and one indicator to determine minor trend, which I consider most visible using a momentum oscillator.

 

I am going to try to post a poll. Please vote for your preferred indicator. In this poll, we will determine which momentum oscillator I will use to build the system. If you vote "other," please post in the thread which "other" you are suggesting.

 

As for the major trend indicator, that will be another poll. But if anyone would wish to make a suggestion for an indicator to include in that poll, please post your suggestions here.

 

Thank you for your participation.

 

-OT

 

The Traderslaboratory community selected the RSI as the indicator that I will use it to determine the short term trend for the trading system that we will put together here at Traderslaboratory.com. While the community selected the indicator, I will choose the period for the indicator as it will be applied to the system at hand.

 

Again, if you vote "other," be so kind as to post to this thread just what "other" indicator you would select.

 

Thank you for your participation,

 

-OT

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suggestion -

donchian channel - but the mid point is used for determining the trend.

Below - generally downtrend, above uptrend

either use weekly (eg: 20 week) on the daily - or use 100 day (5days*20weeks)

They will give slightly different levels on many systems

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suggestion -

donchian channel - but the mid point is used for determining the trend.

Below - generally downtrend, above uptrend

either use weekly (eg: 20 week) on the daily - or use 100 day (5days*20weeks)

They will give slightly different levels on many systems

 

Thank you, SIUYA, would you mind posting a chart as a visual aid to your explanation?

 

Thank you,

 

-OT

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I assume you're talking about long term trend on a daily, weekly, or monthly chart. I'm not being facetious, but if a trader can't see the current trend on one of those charts without an indicator, I would suggest that either there isn't a clear current trend to trade, or the trader may benefit more from some fundamental advice on what a trend is, than from an indicator which, being further removed from price action, he is less likely to understand?

 

Max

Edited by maxr

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I assume you're talking about long term trend on a daily, weekly, or monthly chart. I'm not being facetious, but if a trader can't see the current trend on one of those charts without an indicator, I would suggest that either there isn't a clear current trend to trade, or the trader may benefit more from some fundamental advice on what a trend is, than from an indicator which, being further removed from price action, he is less likely to understand?

 

Max

 

Hi Maxr

 

Normally what you are saying would be a valid, and nobody would argue with that.

But it may be off the mark here today.

And that may be because you have missed the point of this thread, and its predecessor here:

 

http://www.traderslaboratory.com/forums/f34/trend-momentum-indicators-choice-9893.html

 

Hopefully after reading the first thread you will understand what Optiontimer is constructing as a project.

 

He is doing this freely, and is simply asking members for their choice of long term and short term indicators, via a poll,

from which he will build a strategy shortly, and from there a trading plan.

 

Your statement is understandable, in the absence of the full context.

 

You seem to have a bit of knowledge and interest, so you are welcome to work within the intent of the project I am sure.

I am thrilled to have the opportunity to participate here, because I am not a profitable trader over a longer term.

My trading is like a Leopard - it looks good in spots!

 

By the way - Optiontimer was able to grow an a/c by nearly 50% under competition conditions during the month of May:

 

http://www.traderslaboratory.com/forums/24/traders-laboratory-forex-trading-contest-9303-3.html

 

See post #87. I look forward to what he has to say, much as a student would.

 

Also, if you go here:

 

https://fx2.oanda.com/mod_perl/fxcontest/fxcontest.pl?rm=contestDetails&contestId=1855

 

and select "Membership" it is easy to see Optiontimer had 29.1% profit for the first 2 trading days in June, before the comp folded.

I only mention this to establish that Optiontimer knows what he is doing, and has the credentials to accomplish something here,

if we are patient and give him room to develop his threads.

 

I am sure you are already aware of much of that, but I think it needed to be said to prevent further off-topic discussion.

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suggestion -

donchian channel - but the mid point is used for determining the trend.

Below - generally downtrend, above uptrend

either use weekly (eg: 20 week) on the daily - or use 100 day (5days*20weeks)

They will give slightly different levels on many systems

 

I am with you on the Donchian Channel, Siuya.

 

It is a little-understood indicator, developed by a man who is widely regarded as

the "father of trend following", Richard Donchian:

 

Richard Donchian - Wikipedia, the free encyclopedia

.

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example attached.

http://www.traderslaboratory.com/forums/attachment.php?attachmentid=24881&stc=1&d=1307838912

 

It shows two sets of lines - one dark blue the other light blue.

The dark blue is a 20 bar Donchian channel based on weekly charts

The light blue is a 100 bar (5 days x 20 weeks) channel based on daily charts

 

Due to the nature of the program (in this case Esignal) the weekly seems more immediately reactive to moves and adjusts (or so it seems to Mondays, rather than waiting until the move may occur), hence from a historical point of view seems early, but when using it live it will be different.

Personally I dont think it matters which you use, so long as its consistent, and you understand why you are using it. Pick one or the other.

 

the reason for using the mid point is simple it gives a very clear indication to avoid certain bottom picking/top picking trades. It is an indicator as a filter only for me....and i dont use it to exit or enter (you will have similar issues as with a Moving avg) but unlike a MA it gives definite horizontal levels in the price.

 

(as per maxr - yes you are right - squint your eyes look at the chart and you can clearly see a trend - thats why these are indicators and can be used to filter out trades, keep traders on a checklist and help stop them punting wildly - it gives them the definition of a trend - plus a computer often needs something like a mathematical filter to be able to squint its eyes and see the same thing :))

snapshot-1.thumb.png.fe93eab41becb45b2fdb067eeb123850.png

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...By the way - Optiontimer was able to grow an a/c by nearly 50% under competition conditions during the month of May...Also, if you go here...and select "Membership" it is easy to see Optiontimer had 29.1% profit for the first 2 trading days in June, before the comp folded. I only mention this to establish that Optiontimer knows what he is doing, and has the credentials to accomplish something here, if we are patient and give him room to develop his threads...

 

Thank you for the kind words, Ingot54.

 

I would like to point out two things:

 

1) My plan is eventually to develop a system which I will trade in a real money account as this project progresses, and

 

2) the results from trading a highly levered demo account in a contest will differ greatly in magnitude from what I would achieve trading a real money account.

 

My main goal will not be to gain x% per day or week or month. Rather, my main goal will be simple: No Losing Months. Losing trades? Of course. Net/net at the end of each month, the goal is to be flat to positive.

 

So let's get ready to not lose some money! (sometimes you need to split an infinitve to get you meaning across).

 

Thank You,

 

-OT

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What do you plan on using the system to trade - forex, stocks, options?

 

 

I'm glad you decided to join us, Carpet Cleaner.

 

What do I plan on trading? I might need yet another poll, hmmm?

 

For now, I'm open to suggestions from anyone who wishes to voice a preference as a sort of informal poll. I'll reserve the right to make the final decision as to what I'll be trading. I can say that I plan on setting up a sub-account at Interactivebrokers to trade the system, so I will have no limit as to which instrument(s) I trade except that of margin requirements and whatever money management regimen I implement. I'll transfer 25K into the sub-account it to prevent a PDT problem from arising should I choose to trade stocks or stock options.

 

As far as what to trade using the system we'll develop here, I'm open to suggestions. I may add a poll addressing the issue if for no other reason than to see where the preferences of Traderslaboratory.com users is concentrated.

 

Thank You,

 

-OT

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optiontimer said:

 

....For now, I'm open to suggestions from anyone who wishes to voice a preference as a sort of informal poll. I'll reserve the right to make the final decision as to what I'll be trading....

 

Can I suggest Forex, optionstimer? When I was looking to find a good FX broker a while back, I found many unhappy bunnies in that area, and they weren't all on forexpeacearmy :-). Their woes extend from unscupulous brokers manipulating accounts, to the many expensive 'get rick quick' Forex systems that don't.

 

Anyyone, almost anywhere, can open a demo FX account for nothing, and a simple system which loses little or no money overall would really brighten up these traders' lives. I guess Forex would preclude using volume based indicators, but personally, as a long term student verging on trading seriously for real, I'd be very interested to see a good simple system largely based on price or analysis thereof. I think we'd also all benefit from your advice in passing on how to, err, avoid choosing the wrong broker when trading FX - that seems to be much more of an issue than with other instruments.

 

Max

Edited by maxr

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Can I suggest Forex, optiontimer? When I was looking to find a good FX broker a while back, I found many unhappy bunnies in that area, and they weren't all on forexpeacearmy :-). Their woes extend from unscrupulous brokers manipulating accounts, to the many expensive 'get rick quick' Forex systems that don't.

 

Anyone, almost anywhere, can open a demo FX account for nothing, and a simple system which loses little or no money overall would really brighten up these traders' lives.

 

Max

I agree 100% with you Max. My reasons are selfish - I trade retail Forex.

 

But happy to go with the flow. I know that futures traders are also heavily represented on TL.

 

Ivan

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I'll take all suggestions under advisement, but again, I reserve the final decison for myself.

 

I'd still like to hear from more traderslaboratory.com members about what they would prefer to see traded.

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I'll take all suggestions under advisement, but again, I reserve the final decison for myself.

 

I'd still like to hear from more traderslaboratory.com members about what they would prefer to see traded.

 

ES, thanks for asking.

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if its reasonably automated and not too high frequency how about a range of products.

eg; CL, EURUSD, USDJPY, AUDUSD, ES...... some of the currencies will get a bit correlated maybe.

 

If going for just one instrument my vote is EURUSD

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I'll take all suggestions under advisement, but again, I reserve the final decison for myself.

 

I'd still like to hear from more traderslaboratory.com members about what they would prefer to see traded.

 

I'd have to vote ES for selfish reasons. I've been away for over a year and trying to get back into trading. The indicators that I was migrating to don't work under NT v7. So, I'm starting over but I don't want to try Forex yet.

 

There seems to be a lot of Forex interest now days, so I'll be watching no matter what.

 

Thanks for the thread OT!

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