Hello,as someone who has been studying stock trading (swing),for the last 6 months or so,i have now become interested in market timing/direction,& have come to the conclusion that tech indicators such as macd,stochastics,rsi should be secondary vs candlesticks,patterns & volume?
If you look on the s&p 500 weekly chart,there was a clear warning with candlesticks & volume in the early weeks of september 2008,that the market was going to fall (or as clear as could be hoped for).The nasdaq & dji showed similar signs.
If you waited for the indicators youd be too late,unless you were willing to get in late,& the candlesticks & volume were screaming at you.
But with forex the only volume you can check is your broker’s. There is no central clearing or exchange. The ECN traders may have a better shot of seeing what the big banks are doing, or so I’ve read, but if I could build an acct up to $50,000 necessary for opening an ECN account then I would probably have a good handle on how forex volume works. d
All indicators are not the same. All markets are not the same.
Even volume indication is not the same because you have to know how the different categories who push volume are positioned and what their delay is.
And when volume get’s pushed you have to be positioned way before it happens because you won’t get in when it happens and volume get’s pushed outside peak trading times. Also you have to know about time cycles.
That’s why you need to read and analyse the global COT reports of the markets you’re trading in and not just NY.
Candlesticks won’t help you much when trading volume because you need to prepare Limit Orders way before volume action.
RSI…?
For instance using RSI for Crude Oil is useless in my experience. Even RSI custom settings are unreliable for Crude Oil. Same for Indexes. I’ve read studies that RSI custom settings for Indexes give you a 65% accuracy at best.
For Crude Oil I use the Commodity Channel Index Indicator.
That indicator shows me what I need to know.
Volume in the forex world isn’t the same thing as what you would normally think of as volume.
Volume is measured by counting the number of ticks in a candle, it’s not the actual dollar amounts traded. If you’re watching a 1 minute chart and price move from 1.0000 to 1.0001, and then back down to 1.0000 then that candle has a volume of 2.
The volume ratios should be somewhat the same between all brokers. The actual numbers may be different because they all update at different rates though.