Are you having problems winning trades? Have you been reading all the "guru" newsletters and buying their products and still not performing? Ever wonder why gurus spend so much time discussing money management? LOL!! Yeah, that's right. When you lose alot you have to protect your account.
How would like some real advice? While I won't provide you my guarded indicator settings, I am not against setting you on a different path than the "traders" who seem too interested in selling you things. I studied Sales many years ago and in sales they are fond of saying that the definition of insanity is doing the same things over and over and expecting different results. Would you like to hear something completely new for once?
First of all, I am hereby proclaiming myself as an indicator technologist. Thomas Edison was the most famous technologist ever. I never knew him, obviously, but he is still a role model to me. I cannot count how many times I have seen products and ways to improve them. I spent quite a few years working with the military on improving how they did their various jobs and loved doing it. I used to think my dream job would be to work for Dow in their Think Tank:) I don't know if they still have that or not, but when I was younger I heard about it and saw the many products they produced and thought it would be a wonderful place to work. That never happened for me though, so I turned all that energy and thought to the markets. After analyzing hundreds of indicators and modifying quite a few too, I feel I am in a little bit of a qualified position to bestow some knowledge on you.
The majority of indicators are written with data derived from moving averages. Shocked? It is true. A few years ago I had a fancy EA made for me that allowed me to backtest moving average crossovers. In fact, if I wanted to, I could set parameters for two moving average crossovers, and I had a pip distance delay too. What is that? I could specify how many pips after the cross the trade would open to avoid flutter at intersection points and eat up spreads until price moved away from that point X number of pips. Fancy? I did backtests on hundreds of moving average crossovers, singles, and with using pairs of crossovers for filtering. The result? There is no consistently profitable moving average crossover. Don't throw in the towel just yet though:)
Why would that be? The answer is relatively simple actually. It is because the exit point of a trade is not determined by its vertical movement. It is determined by its horizontal support and resistance. Until you can train your eyes to see the horizontal levels that control price, you will never make any money trading. Okay you ask, why is that? Again, it is relatively simple. You will work yourself into a frenzy trying to find an indicator that will follow the market while it moves up and down. You will set your indicators to periods that are so low they will headfake you. You will try settings that are so high you will kick yourself for missed trades. You will try settings in between and barely break even. Why? Your indicators are based on moving averages and unless the market is literally moving up or down, they are worthless to you. As soon as the market goes sideways your moving averages and all the indicators written against them stop working.
Alot of gurus will tell you that moving averages are not good because they lag. Other marketing gurus state all indicators lag and so you need to use theirs:)))) LOL. Really? If data is required to predict the future and the data must be created first...then doesn't everything lag? Nice try:) Moving averages do not lag they way they want you to believe. They are repainting constantly with every tick of the market. How could they be lagging when they are constantly repainting? What lags are their ability to follow the candlestick pattern. The candlestick, or bar, takes off, but the moving averages are measuring previous price positions on the chart. If you are using a 10 period moving average, and price moved up for 9 candles and then suddenly fell, that move is 1/10 of the measured period, so there is the appearance of a lag. Of course, mathematically you can adjust the rate of the moving average by using exponential, weighted, simple, etc, but generally speaking it is not going to mimic a candlestick. If that is a real problem to you, then trade the candlestick:)
The vast majority of indicators are using moving averages or moving average arrays in their calculations. This means that the indicators are just showing you a distance that price has moved from whatever moving average period setting you input. Let's stick with a 10 SMA. Load a CCI and you will notice that when a 10 period CCI crosses the 0 line, the price crosses the 10 SMA. Load a stochastics and you will notice that when the 10 period stochastics crosses the 50 line, the price crosses the 10 SMA. Load a bulls/bears indicator, like a fisher, and you will notice that when the 10 period fisher crosses the 0 line, the price crosses the 10 SMA. Shall I continue? The only difference is the range the indicator uses to measure and expand the distance of price from the moving average line.
Since there is no magic moving average crossover that makes a profit, and nearly every indicator is written against a moving average, you cannot be profitable using indicators. Well, you can, but when someone tells you their system is rule based and you enter and exit according to specific rules...>RUN<. Indicators are great for determining entry points, but you should rely on discretionary exits.
You cannot use discretionary exits until you learn to trade horizontally. It is quite okay to enter vertically. I think it is a safe method. Once I establish an exit point, it does not mean I should enter the opposite direction right then. Some confirmation is a good thing and keeps the stress down:) Waiting for the confirmation entry is vertical trading. I am relying on my moving average-based indicators to predict the future and so I have to wait on them to tell me what that future is. However, once I enter the market I know is not going to continue that direction indefinitely. At some point it will turn again. This is how you exit using discretion and not a moving average indicator. That discretion is some form of support and resistance. Depending on what type of trader you are, the exit will be different for each of us.
If you are a scalper, you might consider intraday fibonacci levels. If you are an intraday trader, you might consider pivot points on smaller time frames. If you are a swing trader, you might consider both tools on a higher timeframe. If you are a position trader, I have no advice for you because that is not trading...it's investing. If you trade Renko bars, then the size of your box will help you determine which style trader you are.
The fibonacci levels will change on any turn of the market. It is up to you to decide which turn you want to use. If you use the highest high and lowest low, you will get common levels, but it is still a wild guess as to which one will hold price. In fact I have it on good authority that while bank traders use fibonacci levels, they do not use the same formula for calculating levels that the standard indicator you would use does. Welcome to yet another skummy portion of trading:)
Pivot points are actually quite good, but most are calculated daily, so if your trades last for more than a day, they might be useless to you. Personally I don't know why anyone would trade high timeframes, but I also don't preach money management:))
Too much reading? Sorry about that. There is much to know and it takes a bit of writing to even discuss it broadly. The bottom line tip is this: You need to learn to exit according to horizontal levels and not according to vertical movement. Enter the market on vertical movement. Exit on a horizontal level.
While I personally use pivot points to guide me to the future, I also use bollinger bands. I use my indicators to find entries and alert me to changes in momentum. I can then easily see where price is most likely to reverse according to nearby support and resistance and the deviation of the bollinger band(s). How I do that exactly is a secret, but it is worth your time to explore your own method. Start by looking for indicators other than CCI, RSI, Stochastics, Moving Average, QQE, etc. They all say the same thing, so how many do you need? Any of them can give you an entry signal. Concentrate on finding something that will show you exhaustion at a horizontal level. Then exit the market and WAIT until your moving average indicators say it is okay to enter again. This should turn your trades into profit:))
How would like some real advice? While I won't provide you my guarded indicator settings, I am not against setting you on a different path than the "traders" who seem too interested in selling you things. I studied Sales many years ago and in sales they are fond of saying that the definition of insanity is doing the same things over and over and expecting different results. Would you like to hear something completely new for once?
First of all, I am hereby proclaiming myself as an indicator technologist. Thomas Edison was the most famous technologist ever. I never knew him, obviously, but he is still a role model to me. I cannot count how many times I have seen products and ways to improve them. I spent quite a few years working with the military on improving how they did their various jobs and loved doing it. I used to think my dream job would be to work for Dow in their Think Tank:) I don't know if they still have that or not, but when I was younger I heard about it and saw the many products they produced and thought it would be a wonderful place to work. That never happened for me though, so I turned all that energy and thought to the markets. After analyzing hundreds of indicators and modifying quite a few too, I feel I am in a little bit of a qualified position to bestow some knowledge on you.
The majority of indicators are written with data derived from moving averages. Shocked? It is true. A few years ago I had a fancy EA made for me that allowed me to backtest moving average crossovers. In fact, if I wanted to, I could set parameters for two moving average crossovers, and I had a pip distance delay too. What is that? I could specify how many pips after the cross the trade would open to avoid flutter at intersection points and eat up spreads until price moved away from that point X number of pips. Fancy? I did backtests on hundreds of moving average crossovers, singles, and with using pairs of crossovers for filtering. The result? There is no consistently profitable moving average crossover. Don't throw in the towel just yet though:)
Why would that be? The answer is relatively simple actually. It is because the exit point of a trade is not determined by its vertical movement. It is determined by its horizontal support and resistance. Until you can train your eyes to see the horizontal levels that control price, you will never make any money trading. Okay you ask, why is that? Again, it is relatively simple. You will work yourself into a frenzy trying to find an indicator that will follow the market while it moves up and down. You will set your indicators to periods that are so low they will headfake you. You will try settings that are so high you will kick yourself for missed trades. You will try settings in between and barely break even. Why? Your indicators are based on moving averages and unless the market is literally moving up or down, they are worthless to you. As soon as the market goes sideways your moving averages and all the indicators written against them stop working.
Alot of gurus will tell you that moving averages are not good because they lag. Other marketing gurus state all indicators lag and so you need to use theirs:)))) LOL. Really? If data is required to predict the future and the data must be created first...then doesn't everything lag? Nice try:) Moving averages do not lag they way they want you to believe. They are repainting constantly with every tick of the market. How could they be lagging when they are constantly repainting? What lags are their ability to follow the candlestick pattern. The candlestick, or bar, takes off, but the moving averages are measuring previous price positions on the chart. If you are using a 10 period moving average, and price moved up for 9 candles and then suddenly fell, that move is 1/10 of the measured period, so there is the appearance of a lag. Of course, mathematically you can adjust the rate of the moving average by using exponential, weighted, simple, etc, but generally speaking it is not going to mimic a candlestick. If that is a real problem to you, then trade the candlestick:)
The vast majority of indicators are using moving averages or moving average arrays in their calculations. This means that the indicators are just showing you a distance that price has moved from whatever moving average period setting you input. Let's stick with a 10 SMA. Load a CCI and you will notice that when a 10 period CCI crosses the 0 line, the price crosses the 10 SMA. Load a stochastics and you will notice that when the 10 period stochastics crosses the 50 line, the price crosses the 10 SMA. Load a bulls/bears indicator, like a fisher, and you will notice that when the 10 period fisher crosses the 0 line, the price crosses the 10 SMA. Shall I continue? The only difference is the range the indicator uses to measure and expand the distance of price from the moving average line.
Since there is no magic moving average crossover that makes a profit, and nearly every indicator is written against a moving average, you cannot be profitable using indicators. Well, you can, but when someone tells you their system is rule based and you enter and exit according to specific rules...>RUN<. Indicators are great for determining entry points, but you should rely on discretionary exits.
You cannot use discretionary exits until you learn to trade horizontally. It is quite okay to enter vertically. I think it is a safe method. Once I establish an exit point, it does not mean I should enter the opposite direction right then. Some confirmation is a good thing and keeps the stress down:) Waiting for the confirmation entry is vertical trading. I am relying on my moving average-based indicators to predict the future and so I have to wait on them to tell me what that future is. However, once I enter the market I know is not going to continue that direction indefinitely. At some point it will turn again. This is how you exit using discretion and not a moving average indicator. That discretion is some form of support and resistance. Depending on what type of trader you are, the exit will be different for each of us.
If you are a scalper, you might consider intraday fibonacci levels. If you are an intraday trader, you might consider pivot points on smaller time frames. If you are a swing trader, you might consider both tools on a higher timeframe. If you are a position trader, I have no advice for you because that is not trading...it's investing. If you trade Renko bars, then the size of your box will help you determine which style trader you are.
The fibonacci levels will change on any turn of the market. It is up to you to decide which turn you want to use. If you use the highest high and lowest low, you will get common levels, but it is still a wild guess as to which one will hold price. In fact I have it on good authority that while bank traders use fibonacci levels, they do not use the same formula for calculating levels that the standard indicator you would use does. Welcome to yet another skummy portion of trading:)
Pivot points are actually quite good, but most are calculated daily, so if your trades last for more than a day, they might be useless to you. Personally I don't know why anyone would trade high timeframes, but I also don't preach money management:))
Too much reading? Sorry about that. There is much to know and it takes a bit of writing to even discuss it broadly. The bottom line tip is this: You need to learn to exit according to horizontal levels and not according to vertical movement. Enter the market on vertical movement. Exit on a horizontal level.
While I personally use pivot points to guide me to the future, I also use bollinger bands. I use my indicators to find entries and alert me to changes in momentum. I can then easily see where price is most likely to reverse according to nearby support and resistance and the deviation of the bollinger band(s). How I do that exactly is a secret, but it is worth your time to explore your own method. Start by looking for indicators other than CCI, RSI, Stochastics, Moving Average, QQE, etc. They all say the same thing, so how many do you need? Any of them can give you an entry signal. Concentrate on finding something that will show you exhaustion at a horizontal level. Then exit the market and WAIT until your moving average indicators say it is okay to enter again. This should turn your trades into profit:))
2 comments:
Thanks for the tips man! Hope you post more in 2014
This way my acquaintance Wesley Virgin's report begins in this SHOCKING AND CONTROVERSIAL VIDEO.
Wesley was in the military-and shortly after leaving-he unveiled hidden, "mind control" tactics that the CIA and others used to get everything they want.
THESE are the exact same secrets tons of celebrities (especially those who "come out of nowhere") and elite business people used to become rich and famous.
You've heard that you use less than 10% of your brain.
Mostly, that's because the majority of your brainpower is UNCONSCIOUS.
Perhaps that expression has even occurred INSIDE your own head... as it did in my good friend Wesley Virgin's head about seven years back, while driving an unregistered, beat-up bucket of a car without a license and with $3 on his banking card.
"I'm very fed up with going through life check to check! Why can't I turn myself successful?"
You took part in those conversations, isn't it so?
Your very own success story is going to start. You just have to take a leap of faith in YOURSELF.
Take Action Now!
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