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Old 10-25-2006, 12:35 AM
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Re: Divergences: Indicators?

It all comes back to price action and chart reading. Many cannot differentiate between a trend, strong trend, weak trend, or trendless ranges. Understand these differences requires chart reading skills. So if they can't identify the differences, there lies the problems for indicators. Indicators works but only when the market is optimal for them.

I've tested many trading systems based on indicators alone or combined, the results are not decent enough to even take it to the next level, no matter how much optimization is tested (changing the indicator parameters), win/loss ratio is between 20-40% (40% is considered good if the avg win is at least 2x the avg loss). These work best in daily or higher but practically everything works better in daily or higher timeframes. Incorporate price recognition logic increases the percentage because the entry and exit execution is more precise.

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