Technical indicators

[FiringSquad13]

Hi everyone

 

I wondered if anyone minded sharing what technical indicators they use when deciding whether to trade?  I think the range available on the IG web-platform are pretty good and I think there are more than enough to be able to make a trade.

 

I personally tend to trade in equities and set my chart to daily.  I then use the EMA (20, 50, 100), RSI 14 and the MACD (12, 26, 9).  I also use the MFI and W%R useful.  I find that the RSI is usually pretty reliable when identifying an entry or exit points.

 

What I do find difficult to interpert is when one indicator condradticts another.  For example it is not uncommon to find the W%R as overbought when the RSI is showing oversold or maybe about 40-50.  

 

What indicators do people find to be most reliable?

[Guest tiger131]

I only use fibonacci with the candlestick charts and set my stops at 61.8% 

[Guest ProTrader]

For short term trading I use 5, 10, and 50 ema and pivot points. For long term trading I use more or less the same as you 50, 100, and 200 ema. MACD and RSI.

[Guest Zero]

None.

 

I'm curious, with the suggestions made, what people trade - contract sizes, points made/duration of trade.  To provide a context for those technical indicators? 

[Guest idabida]

Hi,

 

I trade the DAX (Germany 30 (DFB)) from 7:00am to around 9:00am using the 5 min chart.

 

I use EMA 8 & 21 and MA 50 along with Stochastic Group 14, 3, 3.

 

Essentially I trade the break of a 5 min Pin Bar either on the turn or going with the Trend.

[Guest Trader_1707]

I sometimes use Parabolic Sar. Little tiresome to wait for change of direction of this indicator, especially on dayly charts, but if to combine the direction of Parabolic Sar (up and down, so when Sar is up - to buy, wait the price reaches maximum and close order, the same make with Sar direction "down") and fundamental analyses - things  becomes "nice":smileytongue::smileytongue::smileytongue:

[Mercury]

Hello all, I have recently joined the forum but have been trading for over 2 years.  I use the following to triangulate trade entries:

 

1. Tramline (TL) pairs that show lines of resistance and support along a trend - if a trend is applicable – also triangle formations and head & shoulder necklines where relevant
2. Fibonacci (Fib) retrace lines - especially on counter trend rally/pullback – and particularly look for intersection of Fib lines and TL lines as high likelihood turning points. Fib 50% and 62% are the usual turning points but in some markets at certain times 76% and even 82% can come into play (e.g. Dow Jones of late)
3. Elliott Wave (EW) counts - 1-5 on motive waves with the main trend and 1-3 (or A-B-C) of counter trend moves (see labels on charts attached)
4. In addition I use Momentum, Stochastic and RSI to support the first 3 methods in identifying turning points – especially seeking so-called divergences (lower price but higher momentum is a positive divergence and the reverse is negative)

 

Overall I seek to identify turning points, often contrarian in stance, using the above plus Commitment of Traders data where relevant.  I also look at 3 levels of price data starting with Weekly then Daily and finally Hourly.  Occasionally I use 15mins if I really need to hone in and clarify the Hourly chart but this is more risky in my experience.

 

I either take long term positions seeking to ride a long bull or bear run or swing trade the waves, depending on the circumstances.  I use to day trade on the 5mins but couldn’t make that work so am taking the bigger picture long term view no with more success (i.e. making money instead of loosing...)

 

I trade main stock indices; major currency pairs; Brent Crude; Gold and some individual FTSE100 shares (e.g. Shell as a proxy for oil and Rio/BHP as a proxy for metals etc)

 

Here is an example chart using the S&P Daily.  Here I assess we are clearly in a Bear with quite a long way down yet to go.  Of course there is a chance that we could see a new all time high so one has to keep stops in place to guard against that.  Short term I think we are in a counter trend rally, albeit a strong one, and should get a turn this week.  After that we may either be at the beginning of the long drop or see one more push up to hit the Fib 76% mark before the big drop.

 

The Fib 62% didn't hold but ont he Hourly chart I see good short signals, worth a bet with a tight stop.  As I said after that it depends on which scenario plays out as to whether that would be a short term trade of a long term hold for the big drop.  With a stop in place at break even I am in good shape as if it does come back to the 76% I get another chance at no cost.

 



[Guest Trader_1707]

Hi, Mercury!

If not difficult - can you say what settings of  Momentum and  Stochastic (default settings or your own settings) do you use and in which type of trading- Indices of Forex? I think to Momentum is good supplement is Moving Average, but again - all depends from settings of parameters of both -MA and Momentum.

 

[Mercury]

Momentum 12

Stochastic 14, 3, 5

RSI 14

 

I think these are the standard settings for the RealTimePro charting package, though IG regular charting uses Stochastic 5,3,3 I think?  Anyway these setting are the ones used by the guy I learned technical analysis from and the main point is it doesn't much matter so long as you have built up the experience of interpreting what they are showing.  There is no indicator that is foolproof at any setting and no single indicator that is always "right" so I use a number of them together with other methods to maximise my probability of being right.

 

I trade stock indices (some individual stocks); Oil. Gold, some FX crosses (mostly only XUSD).

 

Hope that helps. 

[Guest Soni]

Hi everyone

 

I was wondering how do you decide your profit taking points?  I find this the 2nd most difficult decision to make, the most difficult it trying to time entry right!  I am new to trading and I am still finding a method that suits me.  

 

Thanks

[FiringSquad13]



 

Good question.  I think the 3 hardest choices to make when trading are

 

1. Deciding what to trade
2. When to enter the trade
3. When to exit

 

I suppose it depends what kind of a trader you are.  Do you trade based on fundamentals or using technical analysis?  I tend to trade using TA.  A simple way to trade might be to buy on the lows and sell on the highs.  More advanced techniques might be using some other indicators such as the RSI.  Buy when it drops to 30 and sell when it crosses 70.

 

But my best piece of advice ........ go with your gut instinct.  If you are thinking that a trade is about to go against you, then close out.  Any profit is good.  

[Guest Soni]

Thanks for the advise.

 

I suppose, I find it difficult to take profit because I am still unsure which time frame to view things.  How do you decide which time frame to utilise?

[Mercury]

Soni,

 

I aim to be a purely technical trader, and thereby take emotion or gut feeling out of my trading.  I am not 100% successful and sometimes I also don't listen to my gut telling me to get out and regret it.  On reflection of those moments it was actually the technicals driving my gut and if I had analysed more thoughtfully I would have seen it but this is all about mastery of psychology really.

 

WRT timing of trades:

It is all too easy to identify trades and get in but how many of them are good trades?  I expect to take more losers than winners but aim to win big on the winners and lose small on the losers (using tight stops).  To maximise the probability on this I analyse the market to death, looking at it from different view points to try an reduce confirmation bias (what you want influencing what you see) and I like to offer my analysis to forums such as this to see if anyone had a different take (again to try and reduce confirmation bias).  

 

WRT timeframes:

I use a set method for analysis (Elliott Waves; Fibonacci retrace; Tramlines and triangles; supported with a few technical indicators to help spot turning points).  In analysing the markets this way I come up with a medium to long term route map on the weekly and daily charts and refine this as we move forward using the hourly charts, the so-called 3 screen method.  This approach indicates various turning points along the way and opportunities to take profit or hold for a longer trend.  The key to it really is correctly identifying where we are in the trends, likely turning points and how much stop space you need to allow to avoid getting washed out of a strong trend.  This is a major aspect of trading in my view and requires a clear and reliable analysis method, much practice and experience, and mastery of personal psychology and is many years, and many mistakes, in the making.

[Caseynotes]

Hi,

 

The time frame you use tends to be deterimend by your account size, you'll want to play as larger time frame as per the stop you can afford. Weekly and daily charts have large bars and therefore big stops meaning risk of 50 pip and greater which go against most retail traders money management rules. Therefore most traders find themselves using a 15, 10, or 5 min chart, but remember that support/resistance levels are the same so many traders will use a daily chart to plot levels but use the 5 min for execution.

 

Execution of trades is by far the hardest thing to master, many studies show most traders get direction right but still manage to lose money (FXCM Web site 'DailyFX' has a good study and explaination). When to get in and out is crucial but momentum indicators lag so much you will always be late for both. I only use price and 20 and 50 ema, so long as all three are sloping in the same direction and in order I know the chart is trending and there is momentum. For enries patiently await a pullback, then a candle pattern reverse at either the 20 or 50 ema to signal price turning to continue with trend. Exits are more difficult until you've learnt to control the fear/greed factor. Until you do set a realistic profit target based on levels or risk/reward ratio and trail your stop to it.

 

There are as many strategies as traders but if you are new stick to one that is known to have high probability and practice it over and over again.

 

 

[Guest Soni]

Thanks guys.

 

From your replies it looks like I need to practice lots! I may use a demo account then to hone my timing skills.

 

Your replies have been much appreciated.

 

Soni

[Mercury]

Definitely worth practicing on a demo but be advised that the psychology of the thing only really comes into play when real money is on the table.  Until then it is just like a computer game, you can always try again.

 

When you do go live start very small in terms of position value and only have max 3% of your total account balance at risk at any time.

 

Good luck.

[Caseynotes]

  

 

Fully agree with Mercury there, demos help you learn the platform but can never teach you to control your emotions (fear/greed), in fact demos can be detrimental in that they encourage you to be somewhat arbitrary (because decisions just really don't matter). It can can come as quite a shock when you start trading with your own real money and panic sets in. Micro accounts are a more realistic build up (unfortunately IG stopped doing a 50p min pip size sometime ago) but there is nothing wrong with running 2 accounts with different brokers if needs be. Or consider dropping your position size right down to 0.5% of your account total. The name of the game is always to build your position size rather than going for bigger pip winners or increasing the number of stategies you use.

[Guest Soni]

Thanks.

 

To ben honest, even in the demo account i am keeping position size small.  My real goal is to determine if i can enter and exit the market profitability, the actual amount will ony matter once i start using real money.

 

I do have question regarding 'trend it your friend'.  If on a daily chart the trend is up, however, on a hour chart the trend is down for a few days, which trend is my friend?

[Guest Trader_1707]

And who uses Pivot Points? And on which period - daily  (too small or not?)  or weekly?

[Caseynotes]

 

 

Pivot points are another useful way to determine levels, there are many, what are you going to do at them, look for a reversal? play a breakout? Lots of other indicators give levels too, Fib, Williams, Gartley, their success depends on how many other traders are using them (meaning it's limited) but all traders use obvious support/resistance levels that are the same no matter what time frame chart you are using. Use a time frame for pivot points that matches as close as possible to the time frame of the chart you are using. I think RealProtime even do 4hr pivot points.

 

The same applies to 'the trend is your friend' you might be happily buying failed dips in a up trend on a short time frame chart while a hedge fund is happily taking those contracts in a down trend on a long time frame chart. Ride the chart you are using and give thanks to the market.

 

 

[Guest Trader_1707]

Caseynotes, great thank for advise. 

In general, the subject of technical  indicators is my favorite – as, on the basis of  all my  knowledge and experience on the most well-known and widely used indicators  of technical analysis - I have a lot of questions, as well as  tips and practices. For example, Bollinger Bands:  in the  use of this indicator there are a lot of nuances, such as " not always the breakdown of  the lower band is considered  the certain upward trend,"  i.e., of course it is  an upward trend,  but sometimes it goes into a downward during some candels (bars) and only then goes up.

[Guest Justine]

Hi

 

Well I am pretty new to all this, have been trading shares pretty successfully for a year or so, but only started doing this 2 weeks ago, trading the indices and am finding this very fast moving!

 

I have been using Ichi cloud, trying to see a trend on the 1 min, then confirm it on the 2 min, as long as the signal is strong, then seems to be a good indicator, however, I have also noticed conflicting signals from stochastics!

 

Quite often, the Ichi will be indicating an upturn and the stochastics will be showing as oversold,

 

Tricky old game isn't it!

 

[Mercury]

Hi Soni, (Re "the Trend is you friend")

 

As Caseynotes indicated following a trend is a matter of which timeframe you are looking to trade from.  If you are day trading (not at all my thing) the hourly, 15min etc is what you are looking for but personally I find it hard to consider a short term move a trend.  I look for the long term trend and rarely bet against it unless I expect quite significant pullbacks and then I do what is called swing trading (looking to trade the ebbs and flows of a long term trend).  In such a case I seek the long term trend on the Weekly/Daily and then use the hourly to catch the swing points.

 

Whatever you do remember the rest of the saying, "til the bend in the end".  Many people follow trends right off the cliff edge.  A key objective for contrarians like me is finding the bend in he end and riding the next trend back or swing trading.  

[Caseynotes]

 

 

Indicies can certainly fly about the page especially the Dax so I understand the use of very low time frames. The price fluctuations will often leave lagging indicatiors well behind. The Ishu is quite broad and slow and may well be trending while Stol is faster and less steady is showing a pullback in that trend. Also, with overbought oversold type indicators remember overbought doesn't mean sell, sometimes it means buy. You could be looking at a prolonged up move that you will want to be aboard as it may last hours though the force behind the price move after the initial push may lessen so Stol drops away. Yes it is tricky.

 

Trader_1707

The good and bad thing about indicators is that there will always be another along in a minute which is why I tend to stick to the basics. One new one I am interested in studying is coming in the new ProRealtime update, VWAP Bands. I know a lot of traders use VWAP levels when trading on the depth of market price ladder.

 



[Guest Soni]

Thanks

 

I find trading short time frames like 15mins very difficult.  Has anybody got any tips for this short of a time frame.  I tend to stick to daily / hourly time frames.  However, I do struggle to find where I should take profits.

[Caseynotes]

  Hi

 

choosing a time frame depends on circumstance and personal preference. Large time frames need large stops but less continual attention, small time frames the opposite. RealProtime charts give the option to use multi-tick charts which are based on number of contracts exchanged rather than time, eg 1500 tick EUR/USD chart will give approx 30 min bars in quiet times but approx 5 min bars when there is a lot of activity eg tier 1 news.

You can only experiment to find which best suits you, which is another reason why experience is so important to trading so conserving your account is paramount.

 

Execution is crucial, entries (fear) and exits (greed). Until experienced, exiting can be by setting a profit target based on a realistic risk/reward (1:2) and leave it, taking emotion out of the equation. Experienced traders eyeball support/resistance levels, counter trendlines, round numbers, and see what happens and react if price gets there but relying on a trailing stop as a backup.

 

 

 

 

 

[Guest oilfxpro]

I have over 150 custom indicators , but i could get away  with rsi , stochastics and a few auto trendline /ranging /s/r indicators

 

most of these indicators are used by automated trading:smileyvery-happy:

 

 

 

 

 

 



[Poppychu]

Wow those indicators are mind blowing.

I only use SMA 20, 50 and 100 with a 5,3,3 stochastic for timing.

I believe in the keep it simple method - so many charts covered in lines and data just confuses the landscape for me. as for Fib levels and support, resistance and trendlines I can see these without lines everywhere !!!

I get a buzz out of pure timing. These 4 trades were small but highly profitable. 

Whiting was the pick of the bunch. Just traded the stocks off the oil price turn. 

The one that got away was SM energy.



[Guest Trader_1707]

Poppychu, rather "interesting" stochastic parameters - 5,3,3. In what time frames you use them? I can see different time frames on your scan pictures .

[Guest oilfxpro]

accurate indicator gives signal to buy or sell  with market analyzer