Help! How To Use Multiple Technical Indicators And The Relation Between Them

Trading Systems Free Forex Trading Systems
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Hello Siniors

I can be considered as new to trading, and while I know that stumbling, falling and getting up from that is the path of learning to walk, I would also really like to receive some guidance from seniors to avoid such obstacles.

First of all, I am trying to trade in equities not in Forex and it is an intraday strategy. But I believe, while the constructing building may change, the tools should mostly be similar!

I have a simulation where I am calculating Candle-Type, SMA(5, 10, 15, 20), EMA(5, 10, 20), RSI, Pivot-Points, MACD, PSAR, Stochastic, ORB, PRB, GAP, Doji, Engulfing, Hammer-S.Star, ATR(14, 20), Supertrend, ADX, B.Bands(5, 20).

I have tried some simulations like BUY when all signals point to Buy and SELL when all signals point to Sell or on different values of the above indicators. I have 2 exit points 1. price hit Stop-Loss(Trailing-Stop-Loss) or price hits back after Target is reached(Target also moves like if a target is reached another is formed).

While I admit I have some good Gains, I also hit some Losses and the end result is always backstabbing.

I am wondering, if you seniors have any Suggestion/Advice/Trick for me. Any Logic?

I am ready to be a gofer as I am receiving you siniors benevolence and as primarily a coder, I am somewhat good at this.

Thanks & Regards
SiddM

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Too many tools, surely?

If you want to build a great house, its better to design the house before you start building, rather than collecting all the tools you might need to build it.

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Thank you for the suggestion. As I have mentioned, I am a coder primarily and practically a novice at trading, I would rather have much and not need them than need them but not have them.

Besides, if they are there and can help then why not.

Finally, I need a logic that get me some profits and avoid losses.

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Because, especially on an intraday timeframe, they are not all going to help at all. On the contrary, you will end up in what is commonly called a state of “analysis paralysis”, where anything indicated by one tool is sure to be negated by another.

Many of those tools you mention have multiple settings alternatives and you will end up constantly adjusting them to find the best fit…

…but the best fit is always historical and the future is often different.

Simple but effective is the best way forward. as @Tommor says above, know what you want to achieve and then find the right tool to do it- But also remember that nothing works all the time. Forex is all about probabilities and ensuring the gains exceed the losses because there will be both, of course!

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Thank you.

The thing is, I have already coded them and they are no more taking any time or effort of mine any more and just because they are there I have to use them all. I may not use most of them and that is absolutely fine.

What I want is some guidance in creating a strategy for Profit with the help of some of these(or might be some other) indicators.

What relationship I should be looking for… For example SMA(5) Vs. SMA(20) or MACD Vs. RSI(maybe exact value?) PSAR Vs. BBands ? Maybe multiple relation?

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Just to go off the subject entirely for just a second, I recall the interesting story of a man who applied to enter the Grand National. But he was unable to supply the name of his horse: “Horse?”, he said, “Horse? Oh, I haven’t got a horse. But I’m a dab hand at making horse-shoes and I found I had a whole crate of them just lying around so I thought I’d have a go.”

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Thank You

You are right. Again just to go with the flow, I recall a story.

In a class room, a teacher was teaching to some children. The lession were flowing smoothly. Suddenly a child stood up and while pointing to the lackboard asked the teacher “Teacher I do not understand this. Can you please explain? What will happen when you change this to that?”

The teacher being wise and learned smiled at the child and answered “Child, why is your finger crooked? Why are you pointing wrongly? Why do you have so many pen instead of having only 1 good one?”

The child very nervously cleans his finger with his tattered shirt sleeve and points at the blackboard and repeats his doubts.

And the teacher being kind hearted, much smarter, very benevolente repeats his previous answer.

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that’s putting it mildly

SiddM, it would help you a lot to read very carefully this recent post by Manxx, and what he quotes in it -

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i believe that using too many indicators can lead to a bunch of confusion

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May be I am not unable to explain clearly, so lets forget that I have any indicator. Lets say I do not have any indicator…

Now what could be a good strategy/logic for a good trade. I mean there are always false signals with real signals. How do I know at the current time that this signal is going to be a real one and not a pothole?

While reading on a topic, I found a strategy which says to
BUY when SMA5 crosses over to SMA10 and RSI crosses over 50 coming from below.
The same in reversal for SELL signal.

But on a broad spectrum, there are always a few loosing signals to less profitable signals.

How do I make sure before trading that this trade I am trying is going to be a winner and not a loser?

Thank You

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ah, well you have asked the ultimate question to which, I am afraid, there is no answer. The best you can hope for is a system that generates more winners than losers, where the wins are larger than the losers and all of this is combined with sound money management.

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Hey hope this helps
There is a chasm of knowledge between a developer and a trader.
I am a developer as well but I’ve also had to spend years studying trading.
So in a nutshell:
"How do I make sure before trading that this trade I am trying is going to be a winner and not a loser?"
You need to understand what it means to take on risk. Risk is a number, there is a certain amount of money you are willing to lose in order to find out if a trade will make a profit. You need to think in probabilities. There is no certain gain to be made in the markets.
Here’s a poker example:
You have a 33% chance to make the best hand and win the pot. One player raises and the other calls, the cost for you to call is 33% of the pot. This means if you call but only win 33% of the time and you keep doing this infinitely, you will eventually break even. If it costs you less than 33% of the pot (maybe there’s another player who also called) then you make a profit over the long run. Winrate is a newbie trap, be selective with trades. Aim for high Risk/Reward ratios. Do not worry about the quantity of winners and losers. Magnitude of winners and losers matters more.
Expected Value = (winrate * avgWin - lossrate * avgLoss)/avgRisk
If you play around in Excel with this equation you’ll notice which parameters carry the most weight.
Quality over quantity. However there are systems that have high winrate and low risk reward ratios. There is no black and white, it’s all grey.

If you’re a system’s developer you need to understand backtesting. Backtest over a sample period and get some results for your system, is it profitable or not? Maybe you find it’s not but you use some machine learning or other method to optimize the system. Now you get great results. The problem is you’ve now curve fitted your system for the past, or rather for the data set you’ve given it. So now you must use out of sample data and test your system with the already optimized parameters. If that works then you might have something of value.

You have a lot of indicators, possibly you are curve fitting too much because you’re trying to look for certainty in a world of uncertainty.
The best systems tend to be simple and robust.
It’s simple to make it complex and it’s complex to make it simple.

Check out these resources:
-Bettersystemtrader
-Chatwithtraders
-The Definitive Guide to Position Sizing - Van Tharp (in here there is also a great question of asking what it is you are trying to achieve, the kinds of gains you are looking for and the amount of drawdown and the risk of ruin you must be willing to tolerate in order to achieve your returns on your risk capital)
-Laurent Bernut (He’s got great blog posts on Quora and Medium)
-Market Wizards books
-Reminiscences of a Stock Operator

You need to understand trading in order to code for trading. Typically when you code anything in your day job you know that you must understand the requirements intimately in order to code the system. It’s no different with trading.

Send me a pm or find me at my username with google mail. I’d be keen to chat as I myself have some questions from a coding perspective about how to put some trading ideas into code.

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13

What you trying to do is find “The Legendary HOLY Grail” in trading. Meaning a system that will never give you a loss.

Sadly you need to understand that trading is a probability kind of game. You can analyze the charts how much you want and use any combination of indicators and set them how you would prefer but every once in a while a loss will came knocking.

Indicators, if you really know what they are is an indication of past performance of the price. It tells you what the price has been doing for the past given period. Those things no matter how many you cluster up and tweak will never be able to accurately predict the future since it really is just following the price.

There are no such system yet, as of now. And probably will never be.
People all over the world use different strategies, different time frames, different indicators. Anyone who told you they have a system that never lose is probably lying. You have to accept that there is no such thing as “Holy Grail” in trading.

Instead successful people more focused on things less related to the charts like money management, mindset, attitude and the likes.

Well if you not really want to trade because you want to be profitable but instead take up the challenge of making the first ever “Holy Grail” system then good luck! But if you actually want to earn money then i suggest you stay away from the idea of having a “perfect” indicator.

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Books and info on economics and psychology helps also!

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Thank you.

I may not have explained clearly. I am not trying to build a perfect system, just one that makes me a winner overall rather than a looser, I mean 51-49 is good enough for me right now. After that I shall look for a higher summit because as long as I have that 51-49 that’s money in the bank.

Well I am trying some ideas manually with little wins and more losses but I am getting a hint of light at the end of the tunnel, so I shall take your good wishes with thanks.

When I have achieved my first goal I shall inform you.

Lastly Thank You for your reply because from your replies, I can at least decipher that I am not the only one on the track, so what there are some ahead of me at least there are some with me also.

SiddM

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That’s a foolish statement. Forex has no mercy on mediocre trader. You better think twice before you are content with 51 - 49 edge.

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Well read before comment. I am not playing in Forex. DUH!!

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Oh. Please pardon me then. I didn’t realise that. Just to offer my little opinion. For stocks, Volume may play a significant role in determining whether a bullish candle will continue to head in the direction of its candlestick bias. What i meant by candlestick bias is this, for example, a closed up candlestick above the mean illustrates buying pressure and vice versa. Assumption here is that price will continue to head in the direction of its bias. By combining the candlestick bias with signs of High volume, that may give hint of a possible trend continuation.

Good Luck.

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Thank You and PLEASE FORGIVE ME for my earlier outburst.

Well that’s a good idea. Also as Nyad55 suggested, I may have to create candlesticks of different time frames as the per second data I am using right now gets too many vibrations resulting crazy trades.

Any more such good ideas?

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No worries.

How about creating a multi timeframe EA or indicator to generate signals for yourself.