Top 3 Indicators

[GlassOnion 12]

If you could use only 3 indicators on your chart what would the be?

( and yes I am aware that some traders use no indicators ).

[Tams 20]

If you could use only 3 indicators on your chart what would the be?

( and yes I am aware that some traders use no indicators ).

 

volume

color bars

20 ma

[Tams 20]

volume

color bars

20 ma

 

but of course i have more than that...

 

Lateral

PRV

Shifted

autotrendline

Inside Bar (with harmonics)

DOM wall

[Colonel B 10]

Do types of charts count and trading concepts or does it have to be P.O.S. math based indicators?

[EminiLive 10]

Over 75% of my trade setups are based on three indicators:

 

Wavetrend, BullsEye and BullsEye Forecaster.

 

For me, these have help identify the most reliable and profitable of all my trades over the past three years.

[EminiLive 10]

For those of you that have strong opinions of particular indicators, can you explain why you do so, and perhaps provide a chart image? This could become an interesting discussion.

[Galacticus 10]

If you could use only 3 indicators on your chart what would the be?

( and yes I am aware that some traders use no indicators ).

 

Direction

Exposure

Cointegration

 

Check out:

Metrics for Algorithmic Trading by Tom Gastaldi

[SIUYA 11]

donchian (or HHV LLV channels)

Price

Occasionally moving average - but i generally find it distracting

[Colonel B 10]

I will explain why I don't like math based indicators. It really boils down to they don't work. They don't give a trader any edge what so ever. When they do work they create more risk instead of less risk. Anyone who has ever tried to trade off of moving averages or some indicator that works off of them will know that they are not static. There is nothing better then having a signal at one point and then have it go away after the candle closes. MAs, stochastics, and MACDs are great for back testers. You can look back over the last 20 years and see all the money you would of made had you of just went off the indicators because its so clear. When you try to replicate that with real time on even a 5 min. chart you have situations where you get a signal and by the time the candle closes its gone away. If you trade this way you are forced to wait. This can also create another type of situation where price reaches the MA and the MA moves. This is all math based indicators and not just the few I mentioned.

 

You really have no edge with these indicators as well. They don't tell you when or where buyers or sellers may, can, or will step in. They don't in any way help you to limit the traders stop out. They can help you determine the direction of the market but a 10 year old can do that. They for sure don't help a person to understand why or how a market works. Can you make money with them? Yea sure maybe. But don't quit your day job. They simply are not a stand alone way to trade.

 

The math based indicator argument is really broken and divided into two groups. One group that believes similar to me. And the other group swears by them. Since so far I haven't heard a compelling argument to resolve the obvious flaws. This is really a bad thing because this suggests that the traders that swear by them I doubt are making money and are only looking at them in the past or in back testing.

[EminiLive 10]

I will explain why I don't like math based indicators. It really boils down to they don't work. They don't give a trader any edge what so ever. When they do work they create more risk instead of less risk. Anyone who has ever tried to trade off of moving averages or some indicator that works off of them will know that they are not static. There is nothing better then having a signal at one point and then have it go away after the candle closes. MAs, stochastics, and MACDs are great for back testers. You can look back over the last 20 years and see all the money you would of made had you of just went off the indicators because its so clear. When you try to replicate that with real time on even a 5 min. chart you have situations where you get a signal and by the time the candle closes its gone away. If you trade this way you are forced to wait. This can also create another type of situation where price reaches the MA and the MA moves. This is all math based indicators and not just the few I mentioned.

 

You really have no edge with these indicators as well. They don't tell you when or where buyers or sellers may, can, or will step in. They don't in any way help you to limit the traders stop out. They can help you determine the direction of the market but a 10 year old can do that. They for sure don't help a person to understand why or how a market works. Can you make money with them? Yea sure maybe. But don't quit your day job. They simply are not a stand alone way to trade.

 

The math based indicator argument is really broken and divided into two groups. One group that believes similar to me. And the other group swears by them. Since so far I haven't heard a compelling argument to resolve the obvious flaws. This is really a bad thing because this suggests that the traders that swear by them I doubt are making money and are only looking at them in the past or in back testing.

 

So, what works for you? Please explain in detail.

 

Also, to categorize indicators which can disappear after the bar closes is being "closed minded" in my opinion. Only a fraction of indicators paint during the formation of bar, and of course the good ones paint only after a candle has closed. I believe this is essential as to not change the OHLC. Most repainting indicators would disappear! But, you are correct for those indicators that paint intra-bar, and thus become repainting indicators... they are near worthless.

[TheRumpledOne 14]

ALL YOU NEED TO TRADE IS A HORIZONTAL LINE...

 

 

Candle color multimeter

 

Price GPS

 

RAT ZONE

[Trader LAMP 10]

I will explain why I don't like math based indicators. It really boils down to they don't work. They don't give a trader any edge what so ever. When they do work they create more risk instead of less risk. Anyone who has ever tried to trade off of moving averages or some indicator that works off of them will know that they are not static. There is nothing better then having a signal at one point and then have it go away after the candle closes. MAs, stochastics, and MACDs are great for back testers. You can look back over the last 20 years and see all the money you would of made had you of just went off the indicators because its so clear. When you try to replicate that with real time on even a 5 min. chart you have situations where you get a signal and by the time the candle closes its gone away. If you trade this way you are forced to wait. This can also create another type of situation where price reaches the MA and the MA moves. This is all math based indicators and not just the few I mentioned.

 

You really have no edge with these indicators as well. They don't tell you when or where buyers or sellers may, can, or will step in. They don't in any way help you to limit the traders stop out. They can help you determine the direction of the market but a 10 year old can do that. They for sure don't help a person to understand why or how a market works. Can you make money with them? Yea sure maybe. But don't quit your day job. They simply are not a stand alone way to trade.

 

The math based indicator argument is really broken and divided into two groups. One group that believes similar to me. And the other group swears by them. Since so far I haven't heard a compelling argument to resolve the obvious flaws. This is really a bad thing because this suggests that the traders that swear by them I doubt are making money and are only looking at them in the past or in back testing.

 

When I first started out, the first thing I "discovered" was MA's and MACD. I was convinced I found the holy grail to making money and wondered why everyone in the world wasn't using this indicator. Next day I discovered it's not what I thought; the indicator comes out too "late" and it seems it's good to use for backtesting only. I guess some do use it to trade. Didn't work for me though!

[Tams 20]

I will explain why I don't like math based indicators. It really boils down to they don't work. ...

 

there is a difference between "they don't work" and "I don't know how to use them".

[Colonel B 10]

Yes that is true. I should of clarified. I have not had much success with them. Its quite possible that I wasn't shown or taught how to use them correctly. But while I am clarifying I forgot to mention Fibs. I don't believe in them as well for the same reasons. And that could vary well be that I don't know where to Fib from. But so far I find it hard to find accurate information that trades real time and has decent rules to follow that uses exclusively just math based indicators. In back testing this stuff works awesome and its amazing. The problem is that I haven't found a broker that will allow me to place a trade into a position that happens 10+ minutes ago. Usually the retail market eats this up because of the back testing aspect. I am still hard pressed to find some one who is making decent money that watches 1 market in 3-5 different time frames with all math based indicators. The folks I know that make decent money watch 3-5 markets on 0-1 time frame and don't use any math based indicators.

 

Again this is just me and my experience and I still hold to the fact that they give you no edge as far as where buyer/seller can, may, and will step in. But hey if you are making money contrary to what I said doesn't work then by all means you think of me when you are sitting on the beach drinking drinks out of those pineapple things. At least you will get a laugh out of it.

[Tams 20]

Yes that is true. I should of clarified. I have not had much success with them. Its quite possible that I wasn't shown or taught how to use them correctly. But while I am clarifying I forgot to mention Fibs. I don't believe in them as well for the same reasons. And that could vary well be that I don't know where to Fib from. But so far I find it hard to find accurate information that trades real time and has decent rules to follow that uses exclusively just math based indicators. In back testing this stuff works awesome and its amazing. The problem is that I haven't found a broker that will allow me to place a trade into a position that happens 10+ minutes ago. Usually the retail market eats this up because of the back testing aspect. I am still hard pressed to find some one who is making decent money that watches 1 market in 3-5 different time frames with all math based indicators. The folks I know that make decent money watch 3-5 markets on 0-1 time frame and don't use any math based indicators.

 

Again this is just me and my experience and I still hold to the fact that they give you no edge as far as where buyer/seller can, may, and will step in. But hey if you are making money contrary to what I said doesn't work then by all means you think of me when you are sitting on the beach drinking drinks out of those pineapple things. At least you will get a laugh out of it.

 

The market is generous and indiscriminent; it beams out signals of its intentions to everybody around the world. Some can see the signals in tapes, some can see signals in price action, some can see the signals in math-based indicators, some can see signals in fibs, some can see signals in voodoo. Use whatever you can to meet your purpose. Most people talk about things that work for them. You have chose to talk about things that don't work for you. It shows that deep inside you, you believe that they should work, but you are angry (or disappointed?) that you have not found a way to profit from them.

 

I can tell you truthfully right now, so that I do not set up the wrong expectation: off the surface, I mean on the surface, without drilling too deep into any complicated multi-indicator analysis, I can tell you most of the "indicators" works 50% of the time. 50% is not a bad statistics, just ask any baseball player and they will tell you that you can be a millionaire and die and go to heaven for a point 500 average.

 

I noticed in your previous post you mention a 5 min chart... my suggestion is to take a step back, look at the big picture, then develop a strategy to tackle the intraday challenges. Since you are such a nice guy, I am going to give you an illustration... it is already posted here on TL.

http://www.traderslaboratory.com/forums/trading-markets/13963-show-us-your-chart.html

 

take a look at post #2... take a look at the turning points. This is an EOD daily chart. ie. there is no rush for any decisions, you have the whole night to digest the chart and think about the possibilities before the market opens again in the morning.

 

I am picking this example because you have mentioned those indicators in a previous post. You can decide, base on your observation and your analysis, if these wavy lines are of any value to you. (some might not see what I see even if I use a thousand arrows and hundred rainbow colors to highlight the key areas).

 

If you see what I see, you might ask: is this repeatable before and beyond the scope of this chart? can I use this on other instruments? what guarantees do you have? I would say, they are fair questions. I would ask the same if I were presented with such a chart. I would also look deeper, to see if those indicators and those vertical lines are the only deciding factors. But for now, I would question myself, why do I see this in hindsight, but not in real time? After all, we have more than 8 hours after the publish of those charts to read and think and analyze and to debate before we have to decide if the market is going up or down. And those charts and indicators are freely available to everybody around the world; there is no subscription, no fees, no black box, no esoteric riddles... everything is out in the open. So where is the problem? is it me? or is it the indicator?

 

Reading the market is easy... just don't argue with it and it will give you the message.

 

Good luck.

Edited December 8, 2012 by Tams

[BlueHorseshoe 10]

This is an EOD daily chart. ie. there is no rush for any decisions, you have the whole night to digest the chart and think about the possibilities before the market opens again in the morning.

 

Hi Tams,

 

In every single instance on this chart the stock had gapped to give you a worse price buying on the next day's open. If you're using EOD closing price, would it not be better to enter on the close?

 

And if you don't want the overnight exposure, why not just trade with opening price data?

 

BlueHorseshoe

[Tams 20]

Originally Posted by Tams »

This is an EOD daily chart. ie. there is no rush for any decisions, you have the whole night to digest the chart and think about the possibilities before the market opens again in the morning.

Hi Tams,

 

In every single instance on this chart the stock had gapped to give you a worse price buying on the next day's open. If you're using EOD closing price, would it not be better to enter on the close?

 

And if you don't want the overnight exposure, why not just trade with opening price data?

 

BlueHorseshoe

 

Hope this answers your question:

 

...

I noticed in your previous post you mention a 5 min chart...

my suggestion is to take a step back, look at the big picture,

then develop a strategy to tackle the intraday challenges.

...

[BlueHorseshoe 10]

Hope this answers your question:

 

Well, sort of . . . The close of day is at the end of 5 minutes though, isn't it?

 

But I do see that you're trying to respond to what someone else asked.

 

BlueHorseshoe

[Tams 20]

Well, sort of . . . The close of day is at the end of 5 minutes though, isn't it?

 

But I do see that you're trying to respond to what someone else asked.

 

BlueHorseshoe

 

if you are daytrading, you don't hold overnight.

if you are daytrading, where the market opens is irrelevant. You are only concerned with what is happening during the day.

 

if you are swing trading, look at the future potential...

forget about the pennies you have left behind.

enter on signal, but never jump the gun.

 

Yes, you can enter on close (or anytime you like)... my post is an illustration, not a trading instruction.

each trader has a different account size, risk tolerance, and expectation. If you see the prospect, go for it.

Edited December 8, 2012 by Tams

[smmatrix 11]

I'm lost here. Can someone please explain how these recent posts are relative, contribute to the discussion of top three indicators, and answer the question of the OP?

 

Seems like this thread, which could have been evolved well with the discussion of how people view and use indicators, has turned into a private conversation.

 

:crap:

[Tams 20]

I'm lost here. Can someone please explain how these recent posts are relative, contribute to the discussion of top three indicators, and answer the question of the OP?

 

Seems like this thread, which could have been evolved well with the discussion of how people view and use indicators, has turned into a private conversation.

 

:crap:

 

You must be new to the public forum media. :helloooo:

 

Let's see how many "Like" you will get for your post.

Edited December 8, 2012 by Tams

[1timer 10]

1 Price - Structure first, then S&R

2 Fisher - Mostly for historical placement (ala MACD 34/5)

3 Kumo - Leading & confluence w/ linear S&R

[optiontimer 10]

Seems like this thread, which could have been evolved well with the discussion of how people view and use indicators, has turned into a private conversation.

 

Starting with Tams response in post #14, the discussion has become one of the best I've read on a trading forum. Tam's responses are thoughtful, intelligent, well-written, and in my opinion 100% correct.

[BlueHorseshoe 10]

I'm lost here. Can someone please explain how these recent posts are relative, contribute to the discussion of top three indicators, and answer the question of the OP?

 

Seems like this thread, which could have been evolved well with the discussion of how people view and use indicators, has turned into a private conversation.

 

:crap:

 

Very sorry for not contributing in the exact way that you would like me to, SMMatrix.

 

Here, is this better?

 

1. Simple Moving Average
   
2. Donchian Channel
   
3. GRAB Index*
   

 

That's obviously a much more informative and on-topic post, and I'm sure everyone will have learnt a lot from it.

 

Regards,

 

BlueHorseshoe

 

* The GRAB (Goldfish Revolutions Around Bowl) Index was the result of my attempts to incorporate aquatically-backpropogated non-artificial neural networks into my trading. Basically, I generated a Pavlovian response by only feeding the goldfish following a significant price change. Their tank now sits opposite my screens, and every time a big move is about to unfold the fish sense this and increase the rate at which they swim around their bowl. This has worked very well for me, except during the flash-crash, when the fish swam so fast that they churned their water to boiling point. Apparently RenTech were developing a similar idea but with wolf-cubs, but abandoned the experiment because the combined costs of commission, slippage, and wolf-feed were too high . . .

Edited December 9, 2012 by BlueHorseshoe

[smmatrix 11]

Very sorry for not contributing in the exact way that you would like me to, SMMatrix.

 

Here, is this better?

 

1. Simple Moving Average
   
2. Donchian Channel
   
3. GRAB Index*
   

 

* The GRAB (Goldfish Revolutions Around Bowl) Index was the result of my attempts to incorporate aquatically-backpropogated non-artificial neural networks into my trading. Basically, I generated a Pavlovian response by only feeding the goldfish following a significant price change. Their tank now sits opposite my screens, and every time a big move is about to unfold the fish sense this and increase the rate at which they swim around their bowl. This has worked very well for me, except during the flash-crash, when the fish swam so fast that they churned their water to boiling point. Apparently RenTech were developing a similar idea but with wolf-cubs, but abandoned the experiment because the combined costs of commission, slippage, and wolf-feed were too high . . .

 

No problem my trading brother. Interesting concept with the goldfish indicator. Do you have backtested results which you can share?