Saturday, August 9, 2008

Indicators

DAX, QQQQ, SPY, IWM, TSX Stocks, Forex, whatever you trade, price patterns and understanding why price moves is probably better than memorizing patterns. Take a look at a MACD divergence and a price chart that uses the same MA's as the MACD. Find a divergence. Look at the patterns of higher highs and lowers lows. Notice that you can see these if you look. I find the most use for indicators is to filter my scan results.

Here is an interesting concept that I have looked at, it comes from some forum somewhere. I believe it has merit.

Crossover systems will generally do well when traded intraday, not so good when traded of daily prices. By substituting different filters based on the most recent action of the chosen market, you can use their basic rules (idea) forever. You can program this to be self adjusting (auto optimize).

As part of my exploration scan for trending stocks, I use the double stochastic, it filters out stocks that aren't pulling back quite to where I would like to see. This is a good use for an indicator, not as sole selection criteria. Support and resistance, and a dose of anticipation.

Disclaimer

The information presented on this site is for educational and entertainment purposes only. This site contains no suggestions or instructions that you must follow, do your own research and due diligence before committing your cash to the markets. Your on your own.