Good question BLZ, here are my thoughts on your dilemma and here's what I do:
#1 - add indicators one at a time, only if you have a need, and only keep it if you see an improvement. This could take several weeks or a month.
There is always risk in adding too many timeframes, indicators, setups, etc. that you get conflicting signals. This is why I recommend adding them one at a time. I honestly believe someone can be profitable with price only. I was but I wanted to go for a lower-risk approach, and to do that I added some indicators.
#2 - before trading with an indicator, do extensive manual backtesting
Just cause it works in the past doesn't mean it'll work in the future, especially real time. But if it doesn't work in the past in hindsight, it'll never work in the future in real time. So this is a mandatory step for me. Sometimes I try to automate a bit of it, like I make an indicator to draw a dot around a setup I'm interested in and then I manually go over them and see if they'd be profitable
#3 - before using it in your trading, put it on your real time chart for a week or two and just observe it
I always do this. I have the EMA colors on my chart but I do not use it for any trade decisions. In 2 weeks I can't say it has helped me so if I don't find a good use for it soon i'm taking it off. I have the volume spike & stop but I'm not requiring them for a trade. Not yet at least. I need more data & experience.
In my CL trades above, you'll see that the big trade didn't have volume stop or volume spike. The very bearish doji HVC and sine cross was all I needed to see to anticipate a retractment.
So far I'm very impressed with the volume stop & spike but you cannot take every signal. You have to work it into your own trading.
finally, If I could only pick one volume indicator, it'd still be HVC.
I was very bummed to have missed it. Often when I exit a winning trade I'm dancing around the room and end up missing another trade right after.
I may change my mind, I just need to see them in operation for a few weeks. What concerns me is false positives. I have been using hVC for 6 months so I know that sometimes they appear for profit taking and sometimes the pros just end up on the wrong side. But I am familiar with those instances and can often use them to my advantage.
I want to learn to do the same with volume stop & spike. I forget if it was you who turned me on to the volume spike, if so thanks again. I had a lot of fun this weekend studying past charts and figuring out how to use it. Volume spike gives the most false signals so for me it'll be an additional confirmation signal. Still working it out.
I'm also working on a new HVC pattern - High Volume Doji.
I just wanted to say this is a fantastic thread. I've skimmed through it (and numerous others on futures.io (formerly BMT)) and there is a lot of good info and great work being done. I've been a small trader for a few years - mainly trading currencies and Oil. Most of my work/style is based on cycle analysis (including Ehlers/JM Hurst). I think I have a lot of ideas to contribute and probably like many of you still much to learn. This board looks like a fantastic place to do it.
Hey Turning Point, I love your alias. That pretty much sums up how I trade and sounds like that's how you trade too.
I've debated starting a thread on trading using cycles and the ehlers sine wave. But lately I've been very busy and I don't think I can do it by myself. If you're interested maybe we could do it together? I'm sure I could learn a lot from you.
Welcome to the forums, I'm happy that your first post was here.
The following user says Thank You to cunparis for this post:
I'll start working out some ideas. It's much more complicated than the volume patterns so it'll take me some time. Maybe in a week or two. Plus I'm testing out a cycle indicator for Ninjatrader, I've been using Better Sine Wave for the past 6 months..
I use better sine wave for over 6 months now. But lately I play with some new volume indicators for Ninjatrader (Volume Spike & Volume Stop). I don't take trades on them alone but when they signal in addition to sine + HVC then I get excited. So for Ninjatrader the Better Sine Wave doesn't work very well for me and the free one isn't good either so I've been using the Phase Shift Oscillator SR (my mod is the SR version which draws SR dots like the better sine wave). I posted a zip with the indicators a few pages ago and the template if you want to check it out.
That would be great if you want to start the thread. I'd love for someone else to be in charge of it and me be a contributor. I only have 3 hours/day for trading so I have very little time. Basically my time is limited to periods of news, chop, and in-between setups.
I think the important thing to stress for the sine wave is the fractal nature of cycles in the market. That totally changed how I view the markets.
do you trade it on ES? On tick charts? I recently went to 5min charts and I'm doing much better than I did with tick charts. I'm tempted to throw a tick chart up as well just to give me more setups but I want to be consistent with 5min first.
Here's 2 CL trades from today. +50 ticks. and I attach my TS chart too. I also attach a Euro chart which had one failed trade and I re-entered and got a winner but I cut my winner short cause the market was stalling so i finished slightly negative for Euro today. This is why I like to do CL & Euro together. Spreads out the risks.