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Post by Segwin on Jul 5, 2015 11:26:49 GMT -5
Why I use RSI as one of my indicators: Although it strays from the teachings of B.V. I find using the RSI indicator a valuable resource in trying to predict future movement of PA. In the attached pic you can see the divergence between PA and RSI. Although PA is showing higher highs and higher lows RSI is showing the opposite. Your alarm buzzer should be going off as a way to exit or a way to enter. As with any indicator be careful as anything can happen (and often does). Go over your past charts and see what you think.
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Post by traderAllen on Jul 5, 2015 17:02:02 GMT -5
You really don't expect me to have something nice to say about indicators do. Okay, first I will say one thing nice. The only way an indicator such as oscillators or anything else that is a derivative of price history should ever be used is for sorting purposes. Example if you are searching for a stock to buy and you may be able to sort out some of the weak stocks by using such an indicator in your scan. Other than that. If you're going to trade on a scalping timeframe they are worthless. Even in the example you show it tells you nothing. Why is this? First off because they repaint that issue can never be solved. They do not leave price they lacked price all of them know exclusions. Second, you would be making amateur mistake of trading the indicator and not the price chart, this is exactly what smart money and unscrupulous brokers want you to.
Third they cause you to take your eye off the chart and the price action which is what's important. And last but not least for for every signal you get that works there's probably 10 that don't work it's impossible to trade such low odds. Of course in hindsight they work very well because they repainted to show you just what you would expect to see. But in forward trading on the hard right edge they don't work to give you an edge.
Just like you said in your post go over the past charts and see how well it works. You'll be amazed it will work hundred percent of the time probably. Question do you really think trading would be that easy? If there were such an indicator that could lead price action I guarantee you we could never afford it, it would be worth millions. I know what you're thinking “ but Allen if all indicators are worthless why is there so many books written about? And why are they touted all over the web?” Well that my friend is a simple answer. It makes for great reading (suck money out of your wallet) they always look good, and romantic it doesn't matter that they fail brokers love them (suck money out of your account).
I always try to be careful when I say something negative about someone's post, it is very easy to make enemies. Segwin, always think about what the professionals use, how did a trade, how do they make money? Learn to copy what they do, no sense trying to reinvent the wheel. Clear your chart, adjust the colors so the chart looks clean, nothing fancy, use a chart color scheme that has only two colors like Bob Volmans chart. You will see things much clearer, scrunch up the chart marked the prior areas of support and resistance, spread the chart back out, watch the current price action look to see if it's making higher highs and higher lows, if it is expected to continue until it reaches a resistance level, opposite for shorts. Trading really must be that simple. You have only three possibilities ever in the market. Equilibrium where the bulls and bears agree. Buying pressure where the traders are willing to pay more because they think price will move higher. And selling pressure where traders think the market is worth less.
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Post by Segwin on Jul 6, 2015 7:01:01 GMT -5
Thanks Allen for taking the time to post that, I appreciate your thoughts on the matter. Also, don't worry about offending me, I have a hide like a Rino.
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