i'm looking around for new indicators



curious what folks have found to be the one indicator they use the most for equities?


thanks for any answers

-Dollarbear

for those willing to put in some input here's a little reward

http://research.stlouisfed.org/fred2/series/LGTDCBNS/24


personally i've found high yield bond spreads to be one of the best indicators around....

woops! wrong link...


here ya go....


http://www.ml.com/researchmarketing/conten...lfundsurvey.pdf

one of my favs
[img]http://stockcharts.com/def/servlet/SharpChartv05.ServletDriver?chart=$namo,uu[e,a]dbclyyay[dc][pb2!b7][vc60][iuh14,3!ld20!lv25][j21700347,y]&r=8955.gif[/img]

If I had to pick just one, it would be stochastics. You can fine tune the sensitivity and use it in multiple time frames to match your trading style. I'm surprised it doesn't get more mention here. Many traders consider it a touch dated and archaic, but it's still a powerful tool.

U.F.O.

Dollarbear,
I like to use money flow along with stoch. and rsi. Accumulation and dist. works well too.
I use alot of elliott but I use the other tech. to confirm my wave counts.

Dollarbear

'ROC'...(Rate of Change) is the "one" indicator i'd choose(if i had to)

I read a 'Jake Bernstein' book "Momentum Stock Selection" a couple of years ago in which he explains why the 'ROC' indicator seems to be more of a leading indicator than say the 'RSI'..(Relative Strength Index).

Mind you,it depends on your time-frame for trades i suppose....I 'position' trade,so i've personally found 'ROC' a useful charting-tool...(Tis not perfect,like any other indicator you still get 'false' breakout/down readings with it).

But then if you're short/day trader,the 'RSI' might give you better results than the 'ROC' indicator...(I don't know,i've never looked into it,not being a day-trader)

Hope it helps.

Regards.V

thanks for the replies : )

If one combines the derivation of "stochastic" from its Greek and French roots, one might understand a literal meaning to be "skillful aim at a guess".

Sounds like a flaky application to TA, but it's the only "range" indicator I use.

All indicators boil down to simple EMAs or SMAs.

I think one of the better indicators is a weekly MACD. Don't wait for a cross over the signal line, but rather just an upturn. 13 21 8.

That's usually good for a 2+ week move in the direction of the turn.

Of course, I really like my Rydex Speculation Oscillator (RSO), that and any daily MACD or useful MA are likely to get you in or out for the majority of a move.

Mark

There is very little difference between 'numerical' indicators.
2 categories
Leading: ROC/RSI/Stoch/MACD-Histo etc
Lagging: EMA/MACD

If you look across multiple timeframes you soon see that Leading indicators in a higher timeframe look similar to lagging indicators in lower timeframes.

I would suggest you experiment with your timeframe.
Find the one you like with 2-3 indicators, and then keep an eye on the same period indicators in the one higher and one lower timeframe.

This will give you good insights on your timeframe.

-macavity

McCavity, Please explain to me why MCAD hist is a leading indicator and MCAD is a lagging indicator. It is my understanding MACD Hist is an other way of expressing MACD.

The histogram is derived from the difference between the MACD and the signal line. They are both lagging. It is still a great indicator for weekly charts.

The ADX, DMI is still the best all around indicator for all time frames including intraday. You get strength of buying / selling AND strength of trend. Stochastic momentum would be a close second.

Anyone that likes using MACD should do some reading on Alvim Alpha MACD. It shows how easy it is to tell when the huge moves are setting up from histogram formations.

I would like to post my thoughts since we already know what indicators I like, hehe.


My thoughts are there are many good indicators although nothing is 100%,, but when you

find one that speaks to you ,,Take the Dang Signals Every time..this so that you can

benefit from the 80/20 rule. If you do Not take All the GOOD signals ie.. Hook at

extremes or3/6 cross or crossing the zero line..or what ever your sigs are ...

you reduce your win rate to a more average ratio. Hesitatioin also leave you much

less room for mistakes... in money mgmt for exampel or even timely exits.

Many things work well.. try using only 1 or 2 that speak to you and get to know them well.

Then leave the noise behind if they the signals dont work and you're wrong then your'e out and

looking for the next signal.

Traders are always looking for the next likely set up to their indicators...you can

only do this if you know what your indicator is currently doing, and if it is above or

below sup/res and or at extremes ....

I feel like you need an Indicator that gives you this type of character to trade well with it.

IF you would like to share a week or two going over my favorite daytrading

indicator that does exactly this you are welcome to join me and

many other traders in a free rooom. Just Pm me.

I probably had 22 trades today 2-3 sml loosers 1 breakeven and 18-20 wins for more than +10 points on the Rut-ER2 today.

I couldn't do that without a trending indicator that also has sup / res and extremes that are easy to read.

best

thats a good point Mr. Dev.


appreciate your response and all the responses...

I tend not to be any good at daytrading... but rather trades that avg a week to a month... not sure why...but thats the timeframe i've had more success and comfort in.my 3 indicators that have helped me avoid problems and make some money while the media did the opposite have been 1) keeping a eye on bond spreads as a indicator of interest or lack thereof in corp profit growth... when i say bond spreads i mean high yield over treasuries, moody's baa/Aaa , moody's Baa/treasuries... its very difficult though to get data on the high yield indices unless one has access to a bloomberg terminal so its not always available... having spent a modest amount of time on a bond desk at one point and being acquainted with some folks who ran bond desk I always foudn the took a far more sober view of the pricing of corporate paper and the future cash flow probabilities of a company than did equity folks... not that they are smarter... just their focus is different..
2) weekly MACD... doesnt give too many fakeouts ....
3) daily stochastic using a slower period ...


again thanks for the responses i like some of the ideas ... will check em out..

if i make any serious money with em i'll buy yall some bordeaux : )

Guru Dudette or Mark,

Would you please consider moving this thread to the Investor's University board for the future benefit of many? Thanks....

Hi Db,

Take a look which indicator is more profitable.

http://quote.barchart.com/performance.asp?sym=QQQ

Thanks for a Link vita,

Something wrong in China Town with that Scan of Indicators tho!!

Not sure what it is yet but certain Longer Term Trending indicators are trading

within a week, and although I know there are various exits and entries for different

styles of trading a simple zeroline cross would be MOst Unlikely in 7days for long

term trending indicators for most indicies. I'll try and look again later after I get some rest.

7 days directinal datas for SMH
http://quote.barchart.com/performance.asp?sym=SMH&sig=03

apologies for not replying earlier.

If we take an EMA as lagging.
The difference of two EMAs (a sort of derivative) - MACD- is faster.
The difference of the difference of two EMAs - MACDHisto - is faster still

By leading or lagging I mean it typically turns before or after price does.
Not that it crosses the zero/neutral line.

For MACD i use (8,21,13) but this is still true for the classical settings of (12,26,9).

-macavity

Mark Young said:



First for those who may not know, lets explain (using SMA) the Moving Average Convergence/Divergence. MACDi is the difference between the 13-week SMAi (Simple Moving Average) of the closing prices and the 21-week SMAi of the closing prices. You say: go long if this calulation increases (turns up).. go short if it decreases (turns down).

Algebraically you are saying this:

if (13MA1 - 21MA1) > (13MA2 - 21MA2) is TRUE then go LONG (vice versa for SHORT)

Lets simplify...

13SMA1 = (c1+c2+c3 ... c13) / 13
21SMA1 = (c1+c2+c3 ... c21) / 21

likewise:

13SMA2 = (c2+c3+c4 ... c14) / 13
21SMA2 = (c2+c3+c4 ... c22) / 21

Plugging those formuala into your equation we get:

{(c1+c2...c13)/13 - (c1+C2...c21)/21} > {(c2+c3...c14)/13 - (c2+c3...c22)/21}

multiplying both sides by 13 gives:

{.381*(c1+c2+...c13) - .619*(c14+c15...c21)} > {.381*(c2+c3...c14) - .619*(c15+c16...c22)}

which can be reduced as follows:

.381*c1 - .619*c14 > .381*c14 - .619*c22
.381*c1 - .619*c14 + .619*c14 > .381*c14 +.619*c14 -.619*c22
.381*c1 > c14 - .619*c22

or

c1 > 2.624*c14 - 1.624*C22 <-- your simplified MACD system

So what you are saying is BUY if: this weeks close is greater than 2.624 times the close 14 weeks ago minus 1.624 times the close 22 weeks ago. Just the opposite is true for a SELL signal.

Personally I'm skeptical of such a system. What is so special about these weeks (1, 14 and 22) and that particular relationship? TA should have some logical basis. Please tell me...why should it should perform?

This analysis applies to all MACD regardless of parameters. I would like to see McCavity explain how one gets a "leading system" out of (potentially very) old price information. Now THAT would be a good trick!

Minitrader wrote:


Oh really! Lets look at DMI shall we.

DMI is based on positive and negative movement (assume 14 day): +DI14 and -DI14

Algebraically what you are saying is If +DI14 > -DI14 then buy

+DI14 is the ratio of two functions,

+DI14 = +DM14/TR14 where;

TR14 is the 14-day sum of the true price range and

+DM14 is the 14-day sum of the high price for the current day, H, minus the high price for the preceding day, H+1 or:

+DM14 = (H1-H2)+(H2-H3)+....+(H14-H15) = H1-H15 likewise

-DI14, is:

-DI14 =-DM14/TR14

and -DM14 is the 14-day sum of the low price, L, minus the low price for the preceding day, L+1...again simplifying gives:

-DM14 = L1 - L15

If we plug these +/-DM equations into the original inequality, we have:

(H1-H15)/TR14 > (L1-L15)/TR14

which simplifies to:

H1-H15 > L1-L15

Which can be further simplified by adding (H15-L1) to both sides which gives:

If H1-L1 > H15-L15 then buy

Again... I very skeptical of a system that says go long if today's price range is greater than the price range 15 days ago. Why should that matter? Where is the logic?

When I analyze what my networks generate, I see the following:

1) No single indicator correlates very well with the future direction of the market on any time scale. The nets form functions of usually three or four indicators. These functions are usually non-linear, meaning they appear as products and/or logical branching functions.

2) The nets switch from one set of indicators to another depending on values of functions of indicators. I've seen nets that have branches within branches.

3) No system that I have created seems to be able to predict anything on a short time-scale; that is, less than about 10 days. My nets use a 15-day forecast period.

4) For neural networks, normalization of inputs is very important. Input values have to be relative to one another and be on the same scale.

Regards,
Rich

I try not to let LOGIC cloud my judgement...LOL This is the market...not a math exam.

I gave an answer based on what 1 indicator works best for me and I mainly Index trade. I never really tried to understand why...just like I never really tried to understand why it does SOOOOO much better on the weekly S&P and Naz and not the Dow.

I trade the mini's almost exclusively and nearly everyone of my systems is based mainly on DMI / ADX and moving averages and they work really well. That is all I based my reply on.

Firstly, I'd like to say thanks for the in depth analysis of the mathematics behind the indicators. I'll freely admit that I no longer get into the indicators deeply enough to understand all the math that goes into them. I merely get my brain around what they measure and then observe them over time.

Just eyeballing the chart for the past year and 1/2, I see that you had what appears to be 6 good signals (2 weeks of action in the direction of the signal) and about 3 bad ones, and some real slop. Over time, I've found that it works pretty well, and it gives you a trend context for other trades.

It isn't a SYSTEM, though. Just a useful indicator for trading--one that improves the effective use of OTHER indicators.

Anyway, "WHY" it works isn't important. All that matters is that it does and is helpful.

Best,
Mark

Cycle,

I posted weekly charts of a directional movement system applied to the S&P, Naz and Dow in the "backtesting pitfalls" thread just above this one so you can see the results for yourself. I will post some 3 minute charts here of today's action on the S&P, Naz and Dow e-mini's because that is what I trade. You can tell that chop is the worst enemy of the indicator (show me one that isn't) but all trends are picked up quick. I don't why it works but it does.

e-mini S&P



e-mini Naz



e-min Dow

MY BS;; I THINK THIS PLACE IS THE BEST...MAKES YOU THINK.T E A M

Mini-trader,
Today was a perfect day for ADX/DMI, market knew where it wanted to go, but most of the time you don't get Trend Days like today and ADX would whipsaw the trader all day with not much to show for... Also ADX/DMI may not be a solution for ER2, since it may react too slow for it and ER2 likes to move fast in a choppy day, but if you catch a trend day with it, you can be o.k.

nebt

Anyone follow T2108 (TC2000) as a macro indicator ??

Hi mitu,

please explain this macro indicator with chart.