technical indicators

odd1

hi, i see that we have a few good technical analysists on these boards, and like everywhere a few that rubbish the whole thing as like trying to read tea leaves.
i like to keep my charts simple with indcators such as rsi atr bollinger bands volume and stollistics. simple but effective in my case, but i am just wondering is there any good books, tips for more advanced charting or is there any need.

fundaments are a first for me and i use charts for confirmation purposes, but some traders seem to just use technical analysists.

so is it worthwhile doing more advanced TA or leave well enough alone?

quirkster

Depends on what kind of trading your doing I suppose. I think TA can be very helpful for day trading or short term trades. It accounts for the stocks own recent momentum and individual statistics whereas FA can account for macro influences as well as the stocks basic fundamental stats.

collymcd

Technical Analysis of the Financial Markets by John Murphy is a really good book.

A very strong argument in favour of technical analysis is one surrounding the knowledge of the market. The market as a whole know the sum of all information possibly known on any given company. In this light, the price reflects the fundamentals & future fundamentals. Thinking you know more about the fundamentals of a company than the market or trying to predict changes can be a little dangerous. Chart analysis is not the analysis of the company but rather the analysis of market sentiment. I'd consider that analysing and predicting this population is more accurate than predicting how a company will perform.

fkt

odd1 wrote: »

hi, i see that we have a few good technical analysists on these boards, and like everywhere a few that rubbish the whole thing as like trying to read tea leaves.
i like to keep my charts simple with indcators such as rsi atr bollinger bands volume and stollistics. simple but effective in my case, but i am just wondering is there any good books, tips for more advanced charting or is there any need.

fundaments are a first for me and i use charts for confirmation purposes, but some traders seem to just use technical analysists.

so is it worthwhile doing more advanced TA or leave well enough alone?

There is no simple answer. You have to find out for yourself and form your own evaluations of technical analysis from your own experiences. Everyone is different - You haven't said what type of trading you engage in. If you're day trading then of course technicals are more useful than if you're George Soros.

delux

I'm convinced you can make money using TA alone based on what I've seen over the years. I suspect the reason it doesn't work for many people who try it is because they don't have a high enough reward/risk ratio. A high R/R ratio is the only way to make it work in my opinion because you need to cover the cost of commissions and the inevitable losses.

BrokenArrows

I'm of the opinion that the only reason it works is because people believe it works.

It's like a self fulfilling prophecy. If investors interpret the data the same way and invest based on that data then it will go in the way they expect it to.

odd1

hi all
just had a quick look at the gold charts, some pretty big moves this week. it looks to me like theres an inverse head and shoulders formed and the neckline has been broken.
what do you guys think? also based on the charts where do you think gold will go in the next week or so.

neil.p.b

What time frames are you using? No IH&S on daily.

And to your original question, indicators should be used for confirmation IMO. Price action tells all - indicators are just statistics based on previous prices so will never predict anything. When i look at a chart i will do so with no indicators and then add in 2-3 after. I also trade purely on TA, very rarely have much fundamental knowledge of the company, mainly just its sector and how that is performing.

odd1

neil.p.b wrote: »

What time frames are you using? No IH&S on daily.

And to your original question, indicators should be used for confirmation IMO. Price action tells all - indicators are just statistics based on previous prices so will never predict anything. When i look at a chart i will do so with no indicators and then add in 2-3 after. I also trade purely on TA, very rarely have much fundamental knowledge of the company, mainly just its sector and how that is performing.

Hi neil
I looked on the 10 min chart. I use the rule of four, 4 hour timeframe first then 1 hour and 15 min charts. I am playing with pivot points and support and resistance levels at the moment and I'm back testing across all time frames to see if and what could work for me. Not got around to chart patterns thats why I ask about the inverse ih&s.
Whats your 3 favorite tools?

neil.p.b

In terms of indicators? In order of preference

MACD - main point of reference from it is to check for divergence, mainly over a longer time frame

RSI - As above but the time frame for divergence would be shorter i.e. double top/bottom

Stochs - Divergence now and again but mainly to look for 'overbought' or 'oversold'. The problem here is that the terms overbought or oversold or incorrect as stochastics are momentum indicators and thus can remain 'overbought' or 'oversold' for sometime so you have to take this into account. For instance when a stock is in an established downtrend i can add more weight to stochs signalling a reversal when they are 'overbought' as apposed to 'oversold'.

Beginning to learn Elliot Wave in depth at the minute so fibs are now becoming essential also.

Start learning about patterns and channels before worrying too much about indicators, as i said before, price action tells all, indicators can help confirm.

odd1

neil.p.b wrote: »

In terms of indicators? In order of preference

MACD - main point of reference from it is to check for divergence, mainly over a longer time frame

RSI - As above but the time frame for divergence would be shorter i.e. double top/bottom

Stochs - Divergence now and again but mainly to look for 'overbought' or 'oversold'. The problem here is that the terms overbought or oversold or incorrect as stochastics are momentum indicators and thus can remain 'overbought' or 'oversold' for sometime so you have to take this into account. For instance when a stock is in an established downtrend i can add more weight to stochs signalling a reversal when they are 'overbought' as apposed to 'oversold'.

Beginning to learn Elliot Wave in depth at the minute so fibs are now becoming essential also.

Start learning about patterns and channels before worrying too much about indicators, as i said before, price action tells all, indicators can help confirm.

Volume is also very good for spottiing divergence, ie making highs on low volume. Good luck with the Elliott wave theory, skimmed over it last week, looks very interesting. More to test before I get to Elliot. Still only using t.a as confirmation. Any thoughts on the ih&s or is it a double top?

neil.p.b

Can you post the chart pls.

odd1

dont know how to post it :mad:

neil.p.b

Do you have it is a picture? If not just press ctrl+PrtSc, then go into paint and press ctrl+v and save the picture.

To add it to a post here just press the icon of the paper clip above your text window, browse and upload it and attach it (i think once you uploaded it you've got to again go to that picture of the paperclip and press the down arrow next to it to attach the picture).

crackcrack30

Hi guys, just getting interested in the forex, new year resloution to cut back on TV:cool:, have narrowed down my focus to us/euro & Gp/dollar for stability,

I love the moving avgs of 22 & 55, & RSI 70/30, and MACD on seperate window, and cutting back on t/p to 35-50 with s/l of 20-30 depending on volotility & strenght expected indicated trend.

I notice that the oversold and overbought correction don't always follow with price reversals , would this be a fair comment????? and if not what other (closest) indicator should be used in conjuction with the RSI on re-entry to further indicate a reversal of price??? MA's?

Any one know whers i can get a free (advanced) Multi colour coded MACD indicator that has incorperated changing colour shaded areas that are used to buy or sell as the colours change at trend crossover points, red/white I think......... i seen it on utube.....

Second Last Question ......have to get a desktop pc.....what do i need to more than operate a mtl platform ???? Do i need a i5/i3 processor? Do i need graphics/dedicated graphics cards?? dont want to be caught short with inadequate tools (pc) if/when live trading....... an bear in mind that i know some of the pc lingo but not what it may mean....
What do ye use?...in..laptops? or desktops?

Last Question.....should i upgrade fron bog standard eircom 1mb broadband for purchase /sell uploads if scalping ect.....

cheers for all/any help or replys....

crackcrack30

@neil.p.b

"RSI - As above but the time frame for divergence would be shorter i.e. double top/bottom"

what time fram do you find optimal for RSI usage & what do you mean by double top/ bottom......is it setting levels????

cheers.

neil.p.b

crackcrack30 wrote: »

Hi guys, just getting interested in the forex, new year resloution to cut back on TV:cool:, have narrowed down my focus to us/euro & Gp/dollar for stability,

I love the moving avgs of 22 & 55, & RSI 70/30, and MACD on seperate window, and cutting back on t/p to 35-50 with s/l of 20-30 depending on volotility & strenght expected indicated trend.

I notice that the oversold and overbought correction don't always follow with price reversals , would this be a fair comment????? and if not what other (closest) indicator should be used in conjuction with the RSI on re-entry to further indicate a reversal of price??? MA's?

Any one know whers i can get a free (advanced) Multi colour coded MACD indicator that has incorperated changing colour shaded areas that are used to buy or sell as the colours change at trend crossover points, red/white I think......... i seen it on utube.....

Second Last Question ......have to get a desktop pc.....what do i need to more than operate a mtl platform ???? Do i need a i5/i3 processor? Do i need graphics/dedicated graphics cards?? dont want to be caught short with inadequate tools (pc) if/when live trading....... an bear in mind that i know some of the pc lingo but not what it may mean....
What do ye use?...in..laptops? or desktops?

Last Question.....should i upgrade fron bog standard eircom 1mb broadband for purchase /sell uploads if scalping ect.....

cheers for all/any help or replys....

YES. Explained below.

You seem to be far enough off trading properly, so be patient. Also be careful of scalping. Most beginners turn to it because they have no patience and are looking for an adrenaline rush. You are not in this for entertainment but to make money. I wouldn't recommend anything under 5mins for a beginner and probably even higher.

Forex is difficult, if you haven traded before then maybe start with FTSE/DJI/S&P, a little less volatile. A lot of forex traders use Elliot wave theory so i'd read up on that. Using just MAs and RSI is caveman stuff. all indicators are just there to back up your assumption as they are all lagging, look to price action first and foremost.

Any decent computer thats new enough will suffice, PC or laptop, though it is nice having a big screen. Also, regardless of trading, UPC > Eircom!

crackcrack30 wrote: »

@neil.p.b

"RSI - As above but the time frame for divergence would be shorter i.e. double top/bottom"

what time fram do you find optimal for RSI usage & what do you mean by double top/ bottom......is it setting levels????

cheers.

Every indicator carries more weight when used in conjuction with longer time frames. RSI being 'overbought' on a 1 min is pretty irrelevant whereas on a daily it can be a good indication that the market may be about to turn.

I say this a lot, but people need to remember that the RSI along with many other indicators aren't 'overbought' or 'oversold' indicators but momentum indicators. When these indicators reach certain levels they become to be know as 'overbought' or 'oversold' because the market, a lot of the time, turn. But when prices go on strong runs they will remain at these levels (as the MOMENTUM is extremely strong) and people get burnt because of it.

Double top: http://stockcharts.com/help/doku.php?id=chart_school:chart_analysis:chart_patterns:double_top_reversal

Double bottom: http://stockcharts.com/help/doku.php?id=chart_school:chart_analysis:chart_patterns:double_bottom_revers

So when prices make a double top or bottom, you look at your RSI. On the second price peak (double top/bottom) you look to your RSI to see if it has managed to reach its previous top/bottom. If not then we have divergence, which is a good signal that there is something wrong with the underlying trend.

Divergence: http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:relative_strength_index_rsi#divergences

crackcrack30

tanx for prompt reply.....just starting and have heard that only 5% succeed.....dont be suprised if you hear from me again with probably another list of Q's..........any idea on that advanced MACD?

neil.p.b

Yep, about that, and in the first few months. Mainly because of poor money management. The aim is to stay in the game. General rule of thumb is never risk more than 1-2% per trade. Don't get greedy. Don't over-trade.

Pro real time has that feature. It's free for anything bigger than > EOD (end of day) timeframes but for anything smaller you have to pay for it. I think IG Index advanced charts do too which are free, but you obviously have to be a client first.

crackcrack30

I'll put that on the backburner so... ya just demoing at the moment but having good sucess even with mistakes......started reading that elliott wave theory , very interesting but heavy to get thru... will keep at it.

Think i was expecting too many pips per trade which cost me some , going to try possibly 35pips a couple of times per sitting using 5-15 minute charts ang possibly 1 trade per day looking at the 1-4 hour aiming for 50-75pips...

Could you tell me if i have to check that my mtl4 platform is running on the right clock/timeframe...& does this have to be changed/checked during the day, season or year and how this is done......i'll leave u alone now

cheers, cc30

neil.p.b

crackcrack30 wrote: »

I'll put that on the backburner so... ya just demoing at the moment but having good sucess even with mistakes......started reading that elliott wave theory , very interesting but heavy to get thru... will keep at it.

Think i was expecting too many pips per trade which cost me some , going to try possibly 35pips a couple of times per sitting using 5-15 minute charts ang possibly 1 trade per day looking at the 1-4 hour aiming for 50-75pips...

Could you tell me if i have to check that my mtl4 platform is running on the right clock/timeframe...& does this have to be changed/checked during the day, season or year and how this is done......i'll leave u alone now

cheers, cc30

35 pips twice a day.... good luck! You'd be doing well!!! Whats your trading strategy/style? And when you enter a trade do you have targets yeah, or is it just to get 35 pips????

You mean MT4 yeah? Do you mean if it's in 5min, 10, 1 hour, etc? Should be a tab at the top with all your timeframe options, and you don't have to change it, once you're on one it'll stay that way until you chance to another, not that that's important?? You'll be switching through timeframes throughout the day....

crackcrack30

can that be checked on mt4 to ensure im running at the correct time in GMT ect or does the platform know where you are and do that for you?

Back to babypips for me..........:p

freeze4real

odd1 wrote: »

hi all
just had a quick look at the gold charts, some pretty big moves this week. it looks to me like theres an inverse head and shoulders formed and the neckline has been broken.
what do you guys think? also based on the charts where do you think gold will go in the next week or so.

Gold is difficult to trade, and reading the charts does not tell the full picture as always.


Looking at the chart of gold from a 15min time frame, shows that gold is in an uptrend. But on the 4hr 120/240days time frame its showing a downtrend with resistance of 1790ish, 1750 and would be resistance of 1695 - 1700.

IMHO if it doesn't break this resistance of 194 - 1700, its another fall downwards towards the 1660 or even below.

Looking at the 15min 4hr chart, the RSI and stochastic has hit the resistance of 50 and on the 4hr chart its at the overbought position. Ceteris Paribus meaning all things being equal. In this case the 15min time frame and 4hr might signify that a drop is soon to occur.



I'm not sure if this is even an analysis but its just the opinion of a noob.





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freeze4real

POG currently at 1670.

forex2806

Have a look at my charts attached. Where ever you see an arrow I get an email alert sent to me. I use this system on 15min, 30 min, 1H and 4 Hour.
I do not place a trade until I get confirmation on the 4H.

I was using this system manually but got it programed to email me the alerts.
I used http://www.mql5.com to do this.