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Is your indicator a crutch, a brace, or a bike?
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Is your indicator a crutch, a brace, or a bike?

  #1 (permalink)
Trade with the flow
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Is your indicator a crutch, a brace, or a bike?

I walk about 90 minutes a day, one of the advantages of living in a "small" world capital with excellent public transportation. My commute to work is 60 minutes, 25 on the train and 35 by foot. That gives me a lot of time to think and learn (mostly using audio books).

So this morning I was thinking: We all can walk. Sometimes we want to go faster so we ride a bike. I have a coworker who lives on my side of town, he ride his bike to work. When we ride the bike there is no magic, we're doing the same thing we could do walking but faster & easier.

Let's say we get hit by a car. Ouch! So we have a hurt leg and need a crutch. After a few weeks or months we learn to walk again without the crutch. Slowly. First a little, 5 minutes maybe, then later 10 minutes, until we're walking all the time.

Maybe we never heal and we need a brace which is a more long-term solution. And maybe after a year or two on the brace we walk again.

So applying this analogy to indicators:

- a crutch is an indicator that you could probably do yourself but you temporarily need some help

- a brace is an indicator that you are unable to do youself

- a bike is an indicator that you can do yourself, but the indicator makes it faster & easier

What are your indicators & which are they?? My answer is in the next post.


Last edited by cunparis; November 25th, 2009 at 04:38 PM.
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  #2 (permalink)
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This little exercise was very revealing for me, because I found a 4th category. Here's what I use:

- Sharkfin: I use it with period of 2 which simply colors reversal bars grey (I use it on range & renko charts). I could spot the reversal bars myself but it makes them stand out very well. So it's a bike.

- Particle Shift Oscillator - I currently don't know how it does it. I hope to one day understand it. So this is a brace.

- Particle Oscillator - I threw this on my chart because everyone is raving about it. So far I have not been able to find a way to benefit from this indicator. Herein lies the problem. I believe one should add an indicator to fill a specific need, and I've added an indicator hoping to find a need! This is the fourth category and in my opinion it's not a good idea. So I plan to remove this one. This isn't a critique of the indicator, I'm just saying it's not telling me anything that price & my other tools aren't telling me.

- Volume Patterns - I could do this myself but it'd be time-consuming. It just compares the range with the volume. I wouldn't be exact but maybe that's a good thing. I currently use a lookback of 20. Maybe 15 is better in certain cases and 25 better in others? I could be self-adjusting while the indicator is not. I'm going to investigate this some day when I have time. Clearly a bike.

- Volume Momentum - I could do this one myself as well, so this is a bike.

- EMA 20 - I could do this myself but it wouldn't be as exact, but exact isn't necessary for my trading (I'm not using it to pinpoint entries or exits, just to have an idea of the strength of the trend). So I'm calling this one a bike.

- jtEconoNews - Clearly a bike

So mostly bikes, one brace, and one indicator not really filling a purpose, just experimental. I'm happy with that and I think I'm consistent with my previous views on indicators.

I look forward to seeing how you view your indicators.


Last edited by cunparis; November 25th, 2009 at 04:39 PM. Reason: Reversal bars are grey
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  #3 (permalink)
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Well, I play around with indicators but I don't use them very much except for analysing things. Then when trading I tend to only see the price bars. I respect volume though and 'need' indicators to tell me something about it. At least it feels that way.

So my main indies during trading are:

RPM - mainly so that if I step away for a while it rings to let me know things are moving. But also to gauge starts and ends of quick moves. This I could do on my own, but the indy makes it much easier. Bike for sure.

Volume Patterns: I don't think I could mentally keep track of many of them. I have never tried to change the lookback. 20 seems fine. I now have 21 on many because that way some of the patterns and combinations are plotted and I don't have to add another input for that option. Like if there is an up bar, a climax then a down, there is a little reminder on the screen. That is easy to keep track of, but the basic Climaxes, Churns, Low Bars etc. are harder bar by bar. I think it's a bike in some respects and a brace in others. Also were I to start using Cory's VolStop I think in theory you can observe those patterns yourself without the indy, but in practice it's pretty hard to keep track of. I'm going to add some of those to my BetterVolume in any case so all vol-related patterns are in one indy, most of them shown on the chart with little symbols or colors. These are not so obvious from the price action alone and I try to use the ones that don't so much depend on direction of close, relations of highs and lows etc. but just range, speed and volume which again you can't see so easily on the price bar. So I think all in all these type of volume thingies are more braces than bikes since they really would be hard to keep track of mentally/manually.

Ichi Clouds: basically impossible to calculate intraday bar by bar and plot out in the future as it does, but very helpful - at least for me. It's a bit like having a Market Profile forecast which when it goes right you know pretty much what is going to happen, and when it goes wrong that gives a clear read on the market as well. Possibly the best indicator I use. A brace.

Market profile - when I use it. You can sort of tell those zones by reviewing congestion zones but its not quite that simple and also not nearly as accurate. Brace.

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  #4 (permalink)
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This thread really deserves more discussion.

I really wanted to see how people changed (or did not change) their answers over time. So cclsys, I'll pick on you -- -- do you still use these same indicators two weeks later, or have you found something better?

Mike

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  #5 (permalink)
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Big Mike View Post
This thread really deserves more discussion.

I really wanted to see how people changed (or did not change) their answers over time. So cclsys, I'll pick on you -- -- do you still use these same indicators two weeks later, or have you found something better?

Mike

I was disappointed that more people weren't interested enough to participate.

In my case, I'm currently back to trading naked.

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  #6 (permalink)
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I use the same indis that cunparis posted about except for volume patterns and pso. TEMA was on my higher TF chart but I just deleted it. It's not necessary for me. I'm still deciding on the usefulness of the PO and observing. I agree that everything else is a bike.

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  #7 (permalink)
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cunparis View Post
I was disappointed that more people weren't interested enough to participate.

In my case, I'm currently back to trading naked.

I leave my underpants on. It's a crotch (oops, crutch)

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  #8 (permalink)
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Hi Guys, the new guy here. Coming from stock trading for the last 12 years, I have only used indicators after I see a stock that has a nice healthy price action. I use indicators to see if a stock is OB/OS at the current TF. Since I had 9-10 years of stock swing trading...I thought e-mini's would be an easy challange. Well, guess what...its hard, making the fast decisions takes a lot of RT market knowledge and preperation to make the right decisions....this is where indicators help me to see OB/OS areas to make sure a technical market is still a buy at the 50%Fib and sell at the 123%Fib. I need them to help take the emotion out of my trading and follow my entry/exit plan. Well for trading naked....no, I guess you can say I still wear a bunny suit.

Take care....and great site BTW....thanks for thinking as professionals.

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  #9 (permalink)
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interesting comparison: crutch, bike, brace, naked

I use 7 indicators:

5 for entries
1 for s/r
1 as an up or down bias

for me they're all bikes. could do it without them, no problem. But here's why I leave them on the chart. if you're in that business as long as I have, you have your own opinion what the market should do. let's say you're bullish and not using any indicators. that bullish sentiment in your mind will influence your trades. you see something bullish on your chart and you jump on that long. don't need to say the market doesn't care about your sentiment. but by using indicators you might have skipped that trade. so in other words, for me indicators are more like an insurance.

are you in good hands?

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  #10 (permalink)
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Hi all,

I've used so many different things looking for the one "Holly Grail" (being a typical newbie) that I can't recall them all. I've paid money for indicators. I've paid money for indicators more than once. At one point in time I had so many sub graphs that I could barely see the price pane. Talking about trading naked is interesting. There is even a website called ► TradingNaked - "The interpretation and application of price action concepts" The unfortunate thing is that all the setups on the site use some indicators. I've tried to pick one setup, but find it tough to duplicate results. At this point in time I don't know what to do.

David

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