Hope you are all good and enjoying the friday before trading closes for the week
I have been following the advice from the School and devising different systems to better manage my trading but would be very grateful if you provide me with some assistance.
Now for one system I am making use of SMA crossover, MACD, P. SAR, Stochastic
For the other system I am using SMA crossover, RSI, ADX
Can you give me some tips of which indicators âgo alongâ well.
E.g. RSI or Stochastic is better with MACD and SMAs ?
What SMA periods to use, 9, 21, 50 ?
(I have been through the lessons and understand the basics of how to operate them 1 at a time, but not sure how to eliminate fakeouts by correctly combining a few indicators together)
Please provide some info or direct me to somewhere I can gain further understanding
I would recommend you take it easier on your system development. K.I.S.S. is key, and it seems like those systems are a little over-doing it. Take a deep breath, relax.
As far as technical indicators go, do not invest too much time into them, but if you do wish to know how to better use them perhaps buying an A-Z book of technical indicators might help.
Iâll give you one hint though, RSI was NOT made for identifying OS/OB. Try and see what you can find on it
I donât use indicators but if you are going to use them, please learn how to set them up. The default settings are not necessarily the best ones. It depends on the market, the volatility, the trend etc. Eg, the settings of an oscillator should be such that it âoscillatesâ, ie moves between its upper and lower limits or near them. If you notice that your oscillator moves in a very limited range for a large period, then itâs time to change its settings.
yep classical techinical analysis, S/R trend lines, or any other way to do analysis on the chart of price alone. THere are a lot of ways to do that. But in system development less indicators is usually better. If you take a page out of automated trade development, there is an inverse correlation between the addition of indicators to the overall robustness of the system. Boiled down the less indicators/ossolaters wiggly things you have the more robust your system and the more it can stand up to unseen data (the future).
Okay so it goes I guess that I have to get more info on price action analysis and fundamentals. One thing about fundamentals and news releases though. I find myself overwhelmed with the amount of data out there and have yet to find only a few but good sources of relevant information and stick to thoseâŚany personal preference you might be willing to share ?
I wouldnât bother with fundamentals either, unless you intend to be a position trader and hold open positions for months using huge stop losses. I had built an indicator sometime ago that was reading a news calendar and was plotting arrows on the charts in real-time. The arrows would be pointing up or down depending on whether the news release was bullish or bearish for the pair. I soon found out that the news would very rarely have any predictable result on the currency movement. Eg, some important announcement would indicate that the EURUSD should fall, but instead it would rise. You canât trade with fundamentals on a month-to-month base.
I also donât pay any attention at all to candle patterns. For me, the only important things are these:
Support/Resistance (levels that price is more likely to visit and react)
Time element (how long it takes for price to move between S/R levels, whether it lingers or moves quickly)
Correlation between pairs (what is each currency doing in all of its pairs)
I donât doubt that there must be people who make money using popular indicators, fibos, pivots, candlestick patterns, moving averages, trendlines, signal services, zulutrade, astronomy, astrology, ouija boards and voodoo. I just havenât found any value to the above.
By the way, âindicatorâ doesnât mean much because one can build an indicator for any system in the world. Eg, people have built indicators that highlight pinbars or other candlestick patterns that occur near S/R levels. I could build an âindicatorâ that monitors the things I consider important myself. So Iâm not saying that indicators are necessarily useless, itâs just that I would only go from trading practice to custom indicator, and not the other way around. I would only use an indicator in order to make calculations that I know why I need them and how to do them, but are too tedious to do manually.
Thank you for your replies. It is very good to hear that you are able to make money the way you do! Gives me hope I will be able to do so as well! Advice noted
I wish you the best success in your trading career.
One thought along this line is to combine a trend following indicator with an oscillator, MACD and RSI for example. Trade only in the direction of the trend follower, and use the oscillator to identify entry and exit points.
A couple of points Iâd add. Trend is relative. By that I mean, looking at say the 15m tf, you might well conclude that the âtrendâ is up. But looking to say the 4h it might appear to be down. And on the weekly, the opposite. This is confusing at first but with time you will better understand what price action is doing short, medium and longer term. This brings me to my second point on trading MA cross overs. Beware here! Trading a MA 15m crossover might look good, but then you get âwhipsawedâ why? Because price is merely correcting on a loger tf. What looks solid on a shorter tf is often only a correction on a longer tf.
EDIT: I donât use MA cross overs myself, but if I did, Iâd use the same settings on multiple tfâs and when I see PA starting to retrace on one tf look to the others to put the move into context.
