Hey guys, I’m so glad there is a whole section for me to ask potentially silly questions that I would normally research on my own in order to avoid having to ask.
I’m still a newbie but I am fascinated with technicals and I love to experiment… So MT4’s ability to combine all kinds of indicators is like a super fun technical indicator sandbox for me.
I realize that once I have a more solid understanding of how each indicator is calculated, I should be able to come up with more efficient and useful combinations… But for now, with my limited knowledge of how they work, I have been combining indicators and just observing the results.
I recently put Bollinger bands on top of a stocastics (the BB is based on the stocashatic itself, not the price)… And I went looking for patterns … I noticed that the bands pretty reliably restrict the movement of the stocastics as expected… But this means it’s easier to visualize and better predict cases when the stochastic will cross and reverse prior to reaching overbought or oversold zones.
Can anyone explain to me what other advantages this might have? Or, on the same topic, could anyone suggest any other creative indicator concoctions(I might create a separate thread for this)?
Or perhaps why you may have used such concoctions only to later get a better understanding of standard indicators and realized you didn’t need the combinations Afterall?
Any comments/advice is greatly appreciated. Thankyou!
Out of curiosity I slapped some Bollingers on the Stochs (5,3,3). I am pretty good at recognizing patterns but in this case I didn’t see anything of predictive value. I may, however, just be missing whatever revelation it is you have found.
There is a banned member (can’t recall his name) who used all kinds of wild indicator on indicator combinations that he claimed would predict where the base indicator would go and since indicators lag price, price was forced to follow to make the indicators correct – or something along those lines. He may have been the only person ever banned from this site, not for violating the rules but for being genuinely insane.
He had a thread going at FF under a different name but banned everyone from his thread who, I think, didn’t open every post with exalting praise and deference. Neat guy. Always good for a few laughs as he would past post his trades and was claiming something like 600 consecutive wins before he apparently banned himself from his own thread. Like I said – neat guy.
Buried in the rubbish of his threads he had the idea of changing the settings making stochastics mimic price to where stochastics and price moved together 90% of the time, using Bollingers on stochastics and price and trading when one broke the bands and the other didn’t – a different kind of divergence trade. Interesting idea that I thought I might look into one day. Haven’t gotten around to it though.
He was also using Bollingers to predict where the zig-zag indicator (which repaints) would end up. Another interesting idea that, unbelievably, may have a tad bit of merit to it as the zig-zag will usually settle at a point outside of the Bollingers before moving in the other direction. If the zig-zag turned inside the Bollingers then it would be a false signal and you could expect price to continue in the same direction.
I doubt there is anything to either of this guy’s methods but I have never really looked into them either. I just want more genuinely insane people posting because they are endlessly entertaining.
The better you understand indicators, the more of an edge you give yourself. The problem with most people who don’t like indicators, is most of the time they don’t understand or take the time to learn what they were designed for and how to best use it, so when they don’t have success they blame the indicator when they should be blaming how they used it. I have used and use Simple Moving Average indicators to see a trend and to time entries and exits along with a stochastic and RSI to measure strength and momentum. Spend some time in your trading platform to learn what indicators are available and the how, where and why to use them. When I started I grouped the indicators available to me, under the following headings: Trend, Momentum, Strength, Cycle, Support and Resistance. I found by doing that I not only learned about the indicators assigned to that heading, but learned a lot about the heading. Win/Win