What's your choice of Indicator

RogueTrader · #1 (**permalink**) 06-12-2008, 08:57 AM

Calling to any expert out there... Need help.

I'm sure one can survive without using all the indicators.

Some indicators are merely redundant with other indicators. Some
show momentum, direction, etc...

A)
For sake of efficiency, what indicators do you use in for each part of the chart? Then what's your second choice of indicator to confirm it.

Example

1. Momentum - 1st:RSI, 2nd:Momenteum
2. Direction - 1st:???, 2nd:

B)
Furthermore, some people declare they don't even use an indicator. They just use the chart patterns and candles.

Any thoughts on this?

David Waring · #2 (**permalink**) 06-12-2008, 09:35 AM

Hi RogueTrader,

Glad to hear from you and glad to give my two cents on this as I hope others will as well.

Quote:

A)
For sake of efficiency, what indicators do you use in for each part of the chart? Then what's your second choice of indicator to confirm it.

There is a good discussion covering the above question here:

What Are the Best Indicators For Trading?

In addition to that information I always encourage traders to learn about each of the major indicators for themselves so they have an understanding of what each tells you about the market and therefore when each is appropriate to use. For example some indicators are designed to tell you when the market is trending and some indicators are designed to tell you when it is due for a pullback. Most of the major indicators are covered in module 3 of our basics of trading course.

Quote:

B)
Furthermore, some people declare they don't even use an indicator. They just use the chart patterns and candles.

Yes this is correct some traders do not use indicators in their trading. The first thing that I think it is important for new traders to understand is that there is not one correct formula for profitable trading. There is a book called Market Wizards, in which the author travels the United States interviewing some of the world's top traders. Throughout all his interviews he said that the thing that he found that all of these traders (most of whom had very different strategies) had common, was that they developed a strategy that worked for them.

Because of this I always suggest to new traders that it is best to learn a little bit about the different aspects about technical analysis (indicators, chart patterns, trendlines etc) and a little about fundamental analysis (economic indicators, central banks, stock valuation etc). Once you understand a little bit of all the major stuff that different traders use, then you can pick and choose what you feel will work best for you.

A good quote from Bruce Lee that one of our members Pan always likes to give regarding this is:

"research your own experience, absorb what is useful,reject what is useless and add what is uniquely yours." bruce lee

Any thoughts on what I have said here?

Best Regards,
Dave

#3 (**permalink**) 06-19-2008, 06:49 PM

Dear David,

How come I dont find the ADI(Average Directional Index) on most of the trading sites?

David Waring · #4 (**permalink**) 06-19-2008, 07:12 PM

Quote:

Originally Posted by Unregistered

Dear David,

How come I dont find the ADI(Average Directional Index) on most of the trading sites?

Hi There,

Glad to hear from you.

I think there is some confusion over the acronym which may be causing the issue here. The abbreviation that most sites use for the Average Directional Index is ADX instead of ADI.

If you do not see ADX listed try looking for DMI (Directional Movement Index) which is a two line indicator that sometimes includes that ADX line.

Let me know if that is not what you are looking for.

Best,
Dave

RogueTrader · #5 (**permalink**) 07-01-2008, 07:44 AM

Quote:

Originally Posted by David Waring

Hi RogueTrader,

Glad to hear from you and glad to give my two cents on this as I hope others will as well.

There is a good discussion covering the above question here:

What Are the Best Indicators For Trading?

In addition to that information I always encourage traders to learn about each of the major indicators for themselves so they have an understanding of what each tells you about the market and therefore when each is appropriate to use. For example some indicators are designed to tell you when the market is trending and some indicators are designed to tell you when it is due for a pullback. Most of the major indicators are covered in module 3 of our basics of trading course.

Yes this is correct some traders do not use indicators in their trading. The first thing that I think it is important for new traders to understand is that there is not one correct formula for profitable trading. There is a book called Market Wizards, in which the author travels the United States interviewing some of the world's top traders. Throughout all his interviews he said that the thing that he found that all of these traders (most of whom had very different strategies) had common, was that they developed a strategy that worked for them.

Because of this I always suggest to new traders that it is best to learn a little bit about the different aspects about technical analysis (indicators, chart patterns, trendlines etc) and a little about fundamental analysis (economic indicators, central banks, stock valuation etc). Once you understand a little bit of all the major stuff that different traders use, then you can pick and choose what you feel will work best for you.

A good quote from Bruce Lee that one of our members Pan always likes to give regarding this is:

"research your own experience, absorb what is useful,reject what is useless and add what is uniquely yours." bruce lee

Any thoughts on what I have said here?

Best Regards,
Dave

I agree with learning which method can work for you. That's why my next step is to learn what methods are out there used by the best in the business, and then try out which one works for the market I'm in.

That's really why I asked that question in the first place. So I can learn from any of the responses.

Thanks for the inputs Dave!

Simon Parth · #6 (**permalink**) 07-01-2008, 09:49 AM

IMO what works best depends on what market you are trading. i trade eurusd, and i use moving averages and support/resistance lines. moving averages are by far my favorite thing to use.

David Waring · #7 (**permalink**) 07-01-2008, 05:14 PM

Quote:

Originally Posted by RogueTrader

I agree with learning which method can work for you. That's why my next step is to learn what methods are out there used by the best in the business, and then try out which one works for the market I'm in.

That's really why I asked that question in the first place. So I can learn from any of the responses.

Thanks for the inputs Dave!

Hi RogueTrader 56622,

Sounds like you are moving in the right direction please let me know if there is anything I can do to help you along the way.

Best Regards,
Dave

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