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Old 12-28-2007, 08:47 AM   #1 (permalink)
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What Are the Best Indicators For Trading?


Received the below question on the InformedTrades . com trading blog which I have answered there but I thought I would also add a thread on the subject here in case anyone had any additional thoughts they would like to share on the subject . Below is the question and my thoughts .

The Question

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What are yr favorite indicators David ? And can I be so nosy as to ask if you have tracked success rate ?
Thanks tom
My Answer

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Hi Tom ,

Thanks for the question . There are times when I have used all of the indicators that I cover in my video lessons on indicators but if I had to choose favorites I would say the stochastic and the ADX are my favorite . The stochastic because it gives a good picture of how overbought or oversold the market is and the ADX because when plotted with the + DMI and the - DMI it gives a good picture of the strength of the up forces in the market and the down forces in the market .

My opinion is that indicators should only be one part of any strategy so no I have not tracked the success rate of the indicators as they are used simply as a guide and not as buy and sell signals by themselves .
If anyone else has thoughts on what indicators work the best for them I would appreciate you sharing them with the community below .

Best Regards ,
Dave

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Old 01-24-2008, 09:38 AM   #2 (permalink)
 
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Hi ,

It ' s good to have favourites , but whatever you choose , it ' s also important to learn what makes the tool work . By that , I mean the underlying formulas , math etc .
This is so you can avoid colinearity of indicators - a fancy way of saying that it would be pointless using , say a stochastic and RSI on the same chart - their data / calculations are too similar - and so , would be apt to give similar signals .

My own personal indicators include a volatility stop ( derived from ATR ), a stochastic to show OB / OS areas , and CCI ( with a long lookback 50 bars ) to give a more statistical meaning to the chart . This is all done using volume bars ( as opposed to standard bar / candle ).

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Old 04-18-2008, 06:50 PM   #3 (permalink)
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MFI


I am using the MFI ( 60 min / 14 periods ) to trade high volume stocks which are less prone to intense news events ( i . e ., pharmaceuticals ). Further , I tend to stay away from trading before and after earnings reports . Using the MFI in combination with the MACD has been pretty effective trading AXP , GE , MSFT , BA , TM , etc . I am a member of the ' keep it simple , stupid ' camp .

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Old 04-21-2008, 10:39 AM   #4 (permalink)
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Originally Posted by Unregistered View Post
I am using the MFI ( 60 min / 14 periods ) to trade high volume stocks which are less prone to intense news events ( i . e ., pharmaceuticals ). Further , I tend to stay away from trading before and after earnings reports . Using the MFI in combination with the MACD has been pretty effective trading AXP , GE , MSFT , BA , TM , etc . I am a member of the ' keep it simple , stupid ' camp .

PM
Hi ,

Thanks for the comment and for sharing . I am definitely with you on the KISS concept .

Best Regards ,
Dave
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Old 08-27-2008, 10:00 PM   #5 (permalink)
 
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Where do you find the ADX indicator?


I checked on my platform and don ' t have that one . Just wondering , great lesson on ADX I just learned what it is and I like it .
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Old 08-28-2008, 02:40 PM   #6 (permalink)
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Hey Mars401 ,

Glad to hear from you .

Check and see if there is an indicator there that is called the Directional Movement Index ( DMI ). Sometimes analysis packages separate out the DMI and the ADX and sometimes they include them all as one indicator under the DMI .

Hope that helps . If there are any other questions or comments on this one please feel free to post as always .

Best Regards ,
Dave
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Old 08-28-2008, 11:22 PM   #7 (permalink)
 
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Old 08-29-2008, 11:31 AM   #8 (permalink)
 
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Thanks David...


but my MT4 Platform that I use through Crown Forex does not include the ADX or DMI as you mentioned , I ' ll keep searching also I ' ve been wondering how come some people ' s stochastic indicator has the 2 horizontal lines indicating when the market is overbought and oversold , my stochastic chart just has the K and D lines but no horizontal lines above and below , does that make sense .

Thanks a ton .
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Old 08-29-2008, 04:20 PM   #9 (permalink)
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my pleasure . The lines on the stochastic are simply there to point out the 20 and the 80 level which most people associate with the indicator being oversold and overbought . While its nice to have the lines you don ' t really need them as the indicator should have the value denoted on the right hand side of the chart .

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Dave
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Old 08-29-2008, 09:31 PM   #10 (permalink)
 
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Quote:
....but my MT4 Platform that I use through Crown Forex does not include the ADX or DMI as you mentioned,..

I ' m VERY surprised at that as all ( I havent seen all of them though !) the MT4 brokers / platforms I ' ve seen have it as a standard indicator .
The MT4 platforms I ' ve seen call it the & quot ; Average Directional Movement Index & quot ;.


Quote:
some people's stochastic indicator has the 2 horizontal lines indicating when the market is overbought and oversold, my stochastic chart just has the K and D lines but no horizontal lines above and below,
When you & quot ; drag & quot ; the indicator onto the chart , click the & quot ; levels & quot ; tab and you can then & quot ; add & quot ; what values , style , colour for the lines you want .



Good Luck and Trade Well .....
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