I was just wondering what types of technical analysis indicators most OTCBB/Pinksheet traders use the most to make trading decisions. Over the last few months of reading bulletin boards it seems a lot of people use the following most often:
RSI - buy when it approaches 30, sell when it approaches 90
MACD - buy when it starts turning up and crosses to positive side
Golden Cross - buy when golden cross has occurred
Are there any others you use religiously? Let's take a poll.
Posted by T e x on :
TA & indicators not as reliable on pennies as on larger, more liquid issues (the big boards); not saying they don't work, though, simply that pennies much more sensitive to manipulation from MMs, groups, etc...
RSI almost useless on a runner...ie, one is running and hits RSI, then gets good news...or a group gropes a low-floater
MACD: some swear by it, others say overrated
Golden Cross in and of itself not so strong as imagined; "supported" by other indicators, sure, but has always volume is critical...
To me, ADX & Aroon are overlooked, underutilized...
What I have found is two-fold: 1) some stocks are more "sensitive" to certain indicators than they are to others (could be my interpretation) 2) different peeps have a "knack" for certain indicators; ie, find which work for *you* ... eg, as a "visual aid," MACD perhaps is immediately clear to you; yet, say Slo Stoch is perpetually a puzzle...
There's no substitute for experience with a given stock. Keep records...
Posted by Relentless Despot on :
Stochastics when combined with the RSI and MACD are invaluable for finding reversals and false reversals... I find that with stocks you might want to alter the paramaters a little.. go with 20,3 instead of 14...
Posted by T e x on :
now *that* I would like to see...a robust discussion on custom parameters vs stock
Posted by Relentless Despot on :
Yep, backtesting and playing around with variables is the only way to get a real good grasp for what you're looking at with any indicator.. I noticed with stocks that most indicators are a bit too choppy with the shorter time frames we most all use as our default.. alot of times the stochastics or RSI will look overbought or oversold with a shorter time frame and cause a false signal... With forex I generally stick with the shorter timeframes and haven't really seen near the false signals... But one thing is very important.. For a strong reversal to be signaled, all three of the mentioned indicators must be oversold or overbought. If the stochs are at, say, 89 and the RSI is only at 65 or so, then a reversal is not about to happen.. infact this is usually a pretty good sign that the security or currency pair is going to continue.
Posted by Relentless Despot on :
Oh.. and trendlines... Trendlines are huge in charting.. and very much overlooked...
Posted by The Bigfoot on :
Yep, I use RSI and MACD all the time. Less familiar ADX and Arron but will give them more attention. Tex knows his stuff.
IMO I don't pay attention to golden crosses. They are flashy but I've found they aren't reliable as a true indicator.
I also am increasing my knowledge of candlesticks. Some of the more complicated signals are a little iffy but if you stick with the basics they help to confirm other TA.
So you guys don't like default time frames? I've never trusted my own time frames as much as what I see through the defaults. Maybe that's just a confidence thing.
Bigfoot
Posted by T e x on :
RD better than I am...
Posted by Relentless Despot on :
Bigfoot, it all comes down to playing around with the time frames to get more reliable signals. Something I do is to try and get a real good read on the overall trend(daily or weekly chart) and modify my indicator timeframes accordingly... meaning in a strong bullish trend or a strong bearish trend I will lengthen the time frame on both the RSI and the stochastics because often the shorter timeframes give false signals... I'm compensating for the added strength.. meaning it takes more for the security or currency pair to reach an oversold or overbought state. Now in a sideways trend I will use the default or even a little shorter timeframe because there is no real energy and the swings are quicker.
Posted by Relentless Despot on :
I should clarify a little by saying when I am using the daily chart to get a read on on the trend it is because I am a very short term trader... I usually hold trades for about five or ten minutes.. rarely more than an hour. I trade primarily currencies at the moment and generally trade off a five minute chart with an eye on the hourly chart.. For stocks I would be using a weekly or monthly chart to figure the trend.
Posted by The Bigfoot on :
OK that makes sense to me.
If there is a lot of pressure on the stock lengthen your time frame to get a better idea of when the stock will truly be reaching its critical levels.
If there isn't a lot of pressure shorten your time frames because the trend won't have as much juice behind it and could falter quickly.
Am I paraphrasing you correctly?
BF
Posted by Relentless Despot on :
absolutely correct
Posted by T e x on :
I LOVE THIS BOARD!
lol, true...
Big, another thing I got articulated only tonight...
some indicators "work" better for you than others. Knew that..,
some stocks "react" better to certain indicators. Knew that...
For backtesting? Pick a chart that interests you; pick an indicator; now, use same indicator in as many fields as you can; tweak parameters until indicator is "revealing."
repeat as needed...
Posted by Relentless Despot on :
yep... all depends on who's playing the stock or currency... Certain groups might religiously watch and trade the MACD.. or moving average.. or whatever.. And the main stocks they play will react better to the signals that particular indicator gives.. I'm not real big on prophecies.. But I do believe in self fullfulling prophecies.. Learn how the big boys trade and trade like them and trade what they trade.
Posted by The Bigfoot on :
Thanks guys!
I appreciate the tips. Never too old to try and learn something.
Posted by beechwood on :
-MACD -RSI -CCI -ROC -Slow Schstcs. -Parobolic SAR
These seem to work best for me. Sometimes MFI also helps to see just where the money is going.
Posted by The Bigfoot on :
Tex...
Lets talk about Aroon a little.
So the basics
There are two lines: the up and the down. The value of each line lies somewhere between 0 and 100. You take the up and subtact it from the down and that is your magic number.
If the number is above 50 it is a strong bullish trend indicator
If the number is between 0 and 50 it is a weak bull.
between 0 and -50 is a week bear and below -50 is a strong bear.
Correct?
Do you use the default 25 day reading or should I refer to what we were talking about earlier (i.e. apply multiple frames until it "reveals" itself)?
Do you use Aroon to pick or to help find your exit point?
I can see how it is useful to confirm your choice a day or two after you pick but don't see it as a predictor.
What is your take?
The Bigfoot
Posted by Machiavelli on :
RSI OBV VOLUME (the most important one in my opinion that no one seems to mention) MA (I use 20,40,60 Day) Candlesticks
I've just read most peeps list of indicators and IMO they are doing overkill on them... and more complicated ones doesn't necessarily mean better.. sometime's the basic ones do the job just as good as the complicated ones... sort of like counting cards in Black Jack... the Omega II system is a good system but it is complicated and is too much thinking for the average joe to keep track of the high and low cards... with two different counts etc. while the Knockout system is a simplified system that does the job with just one count... simple but effective...
Posted by T e x on :
quote:Originally posted by The Bigfoot: Tex...
Lets talk about Aroon a little.
So the basics
There are two lines: the up and the down. The value of each line lies somewhere between 0 and 100. You take the up and subtact it from the down and that is your magic number.
If the number is above 50 it is a strong bullish trend indicator
If the number is between 0 and 50 it is a weak bull.
between 0 and -50 is a week bear and below -50 is a strong bear.
Correct?
Do you use the default 25 day reading or should I refer to what we were talking about earlier (i.e. apply multiple frames until it "reveals" itself)?
Do you use Aroon to pick or to help find your exit point?
I can see how it is useful to confirm your choice a day or two after you pick but don't see it as a predictor.
What is your take?
The Bigfoot
I look for "agreement" among indicators... not necessarily "buy signals" as defined...
That being said, a green cross over red with ADX, confirmed with green over red Aroon at 50-ish level is ideal. Similar cross (Aroon) much higher, say at 80, tells me more short-lived movement.
Just me...
You may notice Mach's post, preceding...agree with him re "simpicity".
But to answer your question re mine: I want Aroon to "talk" to ADX... out of synch? then I'm less interested... would take more "stuff" to keep my interest
Posted by beechwood on :
MA vs. EMA Which is better for short and long plays?