Traders Laboratory - View Single Post - Divergences: Indicators?
View Single Post
  #10 (permalink)  
Old 10-24-2006, 09:58 PM
Kiwi's Avatar
Kiwi Kiwi is offline
Kiwi is a dweller in stochastic darkness

Trader Specs
 
Join Date: Oct 2006
Location: Gold Coast, Oz
Posts: 188
Thanks: 26
Thanked 28 Times in 21 Posts
Re: Divergences: Indicators?

I wouldn't agree that indicators are worthless. I would agree that believing that your indicator is telling you the "whole truth" is a less than optimal strategy.

I use two indicators ... I have emas on my main entry chart and I have the same emas plus a cci mapped onto my short term exit and "fine tuned entry" chart.

The emas are selected because over a long period of time (several years now) they have been support in weakly and strongly trending markets. Watch the markets: if you can find emas that create support in a trend and help you too see when the trend has changed then they are useful.

For me they help me see that a retracement is "sufficient" and thus likely to end before the "trend" resumes. They also help me see when the retracement is probably reversal but there is a mix of ema and price behaviour required to convince me of this.

The CCI I use for one thing only. I count short term thrusts and when the third thrust or one that corresponds with prior highs or lows is divergent I look for a price action based exit. Thats all ... it works for me.



Edit: The use of indicators doesn't preclude the use of price action/support resistance to fine tune entries. Also the CCI will show divergence not visible in pure price action because the CCI's normalizing function takes into account the recent range - but like everything in discretionary trading you have to figure out what will work for you.


Last edited by Kiwi; 10-25-2006 at 12:53 AM.
Reply With Quote