Alright, we all are looking for a perfect way to meet our 30-40 pip/day goals, and some were and are pretty impressive 
such as âPSAR - thatâs all!..â as well as âAwesome Oscillator - thatâs all!..â by Dale. What I thought was logical was to analyze the trend with the help of several indicators [my favorites are MACD, Momentum, PSAR and RSI; I donât use AO myself] and base my decisions upon the outcome of that analysis.
Iâve taken a few screens, where the white arrows mean that the trade vs the indicator made sense, whereas the red arrows represent nonsenses and the zigzags describe partially logical instances.
The GBPUSD-H4 says that most likely itâll go up in a day or two, so I bought it at 1.9836 and .30 volume; however, as Iâm looking at the graph, it keeps going down and down againâŚ
Here, for instance, the USDCHF is obviously going down on MACD and all other indicators, but, in reality, it goes up [very confusing]; whereas here, the MACD doesnât show much at all [nor does anybody else] and the trade slowly rises.
In this picture you may see that the H4 EURUSD looks like itâs going to be going up for the next couple of days, but Iâm not sure as to what I should go now b/c of all the miscalculations and misjudgments Iâve made over the other two pairs.
The first thing you must realize (if you donât already) is that most indicators are lagging, which means that they show you what has already happened, not what is going to happen.
Iâm not sure why you would say that âthe GBPUSD-H4 says that most likely itâll go up in a day or twoâ. Even if the indicators youâre using were not lagging, youâre looking at a H4 chart, not a Daily one. So, at most, it would tell you that the GBP/USD might go up in the next 4 to 8 hours (1 or 2 H4 periods), not 1 or 2 days. Youâd have to be looking at a Daily chart to decide what it might do in 1 or 2 days.
In my limited experience, and from reading other peopleâs experiences, I know that MACD is very popular, but MT4âs version is inaccurate. You should use their OsMA indicator instead. Some people use the Momentum indicator to give them an idea of the strength of a trend, but you can tell the same thing by looking at the candles themselves. I havenât read a lot about PSAR, but I do know that, quite often, the direction of a trend changes before the PSAR changes, so it depends on how youâre using it whether or not it will work well for you. As for RSI, itâs simply designed to indicate overbought/oversold conditions (shown by being above/below 50, respectively), but that doesnât always mean that the trend will change just because the RSI is in a particular area. Again, it depends on how youâre using it (incorporating it into your overall strategy) whether it will do anything for you.
As you mentioned, âPSAR - thatâs all!..â and âAwesome Oscillator - thatâs all!..â seem to work, so why not simply use one of those systems? Trying to come up with the âperfectâ system is an ongoing theme for many Forex traders (especially newbies), which usually leads to bankruptcy. Stick with what works, at least until youâre profitable. Then, you can experiment. If neither of those systems fit your trading style, then try another one. There are literally hundreds of them, both here and in Forex Factory. Test them and see how they feel. When you find one that youâre comfortable with, stick with it.
Thanks for your input. I [I]do[/I] know that those indicators are lagging [especially MACD], but what usually happens is a proportional rise/fall of a given pair when a particular indicator showed the same rise/fall movement. Thatâs why I thought [and actually still think] that this âstrategyâ [if you can call it a strategy] might work. A friend of mine and I are currently working on a neural networking system that, if properly weight-adjusted and taught, could show a probability of a future particular trend and its value based on whatâs been happening in a past. Again, thanks for your response and weâll see how that goes.
No problem. Let us know what you come up with. Itâs alway good to look at new possibilities.
The USDCHF H4 you posted up in picture 1⌠look at what its doing. You have price action making higher highs and your indicator making lower lows, i.e. DIVERGENCE. So in theory price action should reverse to the downside soon.
If you want some other âsystemsâ and other info check out the presentations and methods from the TTM folks here: 301 Moved Permanently
I recommend video 2 and 6 the most.
If youâre looking for something that isnât lagging your going to need to start looking at channels, trend lines, and Fibonacci.
When cross applied with other basic lagging indicators such as MAâs, MACDâs, RSI, etc you can find a happy medium that would out perform either setup on their own. And if nothing else the study of fibs, trend lines, channels and the like should allow you to have a better analytical sense of the market and where important support and resistance will lie in any chart.
This information is key to making any trading system that much more profitable.
Just ran across the daily PFXgroup video which was ironically on price pattern recognition as it relates to technical analysis⌠worth your timeâŚ
Profiting with Forex (PFX) - Watch Forex Professionals Currency Trade
Cheers