How Many Indicators?

As few as you need.

The ones that display the information you’ve previously decided you need to have displayed.

The big, important mistake to avoid is starting off with the assumption that indicators tell you when to enter trades. That error’s really high on the list of reasons why so few people ever trade profitably.

6 Likes

I think from the way you’re asking that you’re looking at it back-to-front, Kevin.

It’s not a criticism. Most people do that, when they start. It’s just that the people who don’t re-orientate themselves from that position don’t often become profitable.

All the bits quoted below are sentences from this thread! Reading them all and thinking about why everyone’s saying these things will help you enormously! :wink:

Don’t imagine I’m telling you not to use indicators. I use two myself (see above). I’m offering a suggestion on how and why to use them, which I think approaches them from a different (180 degrees different!) angle from your current perspective. :wink:

14 Likes

Is Heikin Ashi an indiciator? :grinning:

(I’m asking rhetorically - I know some people say it is and others say it isn’t. I think it’s a cross between a display-method and an indicator, myself.)

I use 1.5 indicators. The 1 is a simple moving average for directional bias. The extra 0.5 is for Heikin Ashi. :wink:

1 Like

An indiciator? I don’t think so, no. I think an indiciator is maybe a cross between an indicator and an initiator? And a display method …

Is Renko an indicator?

Is price an indicator? :upside_down_face:

1 Like

Interesting answers, here!

I use two moving averages, both displaced. A weighted one and a smoothed one (or exponential - same thing, really). They’re my direction bias (I’m not entering trades when they cross over!).

1 Like

This aroused my curiosity! I hope you don’t mind a question, but if you’re not entering trades when they cross, why are they both displaced, and by equal or different distances?

By different distances.

It’s not about whether or where or how they cross over. It’s about where the highs and lows of the price bars are, in relation to them (and about whether they’re both rising, both falling, or neither).

It’s a price action method, with 2 MAs used just for direction bias.

I backtested over 100 combinations, on a range of financial instruments and timescales and sample sizes, including out-of-sample testing (as one must) and went with the “best” one.

For me, “best” means lowest drawdowns, not highest profits! :wink:

6 Likes

Very unusual to see those three opinions, all together, in a forum-post, here! They’re nearly universal views among professional traders, though. Welcome to Babypips, @ChampagneCocktail :slight_smile:

4 Likes