Thanks for the views expressed by Mr. Chockalingam and Mr. Vin. Very much note worthy.
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Indicators (or Back to basics).
The best technical indicators are firstly trend lines/support/resistance/volume. After that would come the versatility of the MACD. It can be left on the chart at all times. Use only buy signals in the uptrend and sell signals in the downtrend. Use both signals in a range.
In Trends use 2-3 of the following maximum:
1. Trend lines
2. Moving Averages
3. MACD (buys in uptrend or sells in downtrend)
4. ADX (above 30)
5. PSAR (for stops in strong trends) OR
6. ATR levels for stops
In Ranges, use 2-3 of the following maximum:
1. Support/Resistance
2. MACD – both buy and sell signals
3. Bollinger Bands
4. RSI
5. Slow Stochastics
6. ADX below 30
7. ATR levels for stops
MACD
BB
Slow stochastics
Source: http://www.istockanalyst.com/help/MainIndicator.aspx
Best regards,
Jayakrishnan.
I am just reproducing what I have understood from earlier posts of people like Prashant, GV, Etc. Oscillators work well when the up or down move has matured and about to reverse . Trend strength is to be confirmed by ADX etc. MAs do not work well and whipsaw a lot at this phase of market.
On the other hand, when there is a clear trend, oscillators may remain oversold/overbought for extended periods of time and taking any contra trade will be dangerous unless there is clear confirmation of trend reversal from other methods. During such periods dip in oscillaltor value can be used as buying opportunity if the market trend is up and vice versa.
Oscillators are likely to work well in intraday trading, as moves are very rarely one sided during the day. Whatever said above applies to intraday trading also. But, with judicial use of MAs/MACD alongwith oscillators one can always identify profitable trades
Chockalingam
From: vin st <vinst1@yahoo. com>
Subject: Re: [Technical-Investor ] The indicator that foreseen the sudden upsurge
To: Technical-Investor@ yahoogroups. com
Date: Thursday, November 19, 2009, 3:59 PM
Whatever be the name, each oscillator has very similar failings. UO also fails often and at that time, some other may give forewarning.
vin
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