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Soultrader

K.I.S.S. Keep It Simple Stupid!

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It seems like each day there is another complicated trading system in development. I am quite surprised to see the trading population dig into more complex methods combining various indicators to profit from the financial markets. How many confirmations does one need? By the time all your indicators confirm a buy or sell signal, your entry point is towards the end of the price swing.

 

K.I.S.S. Keep it simple stupid! Simple methodologies have been proven to work in the financial markets. There are numerous traders who use a simple breakout strategy, pivot point strategy, or RSI and price divergence. Is there really a need to make trading so complicated when simple systems are proven to work?

 

I have noticed that academics, engineers, and programmers turned traders are often the ones involved in designing complicated systems. Perhaps they are underestimating the simplicity of trading? Trying to incorporate vast information and multiple indicator confirmation signals can lead to analysis paralysis. This can cause a trader to freeze in the moment of action and to hesitate in pulling the trigger. What happens if 4 of your indicators signal a buy and 4 other indicators signal a sell? As a discretionary trader, I try to keep things as simple as possible. What a trader really needs is to understand the language of the markets.

 

The market is like a speechless baby. It is impossible to understand exactly what he is saying but through observation, one can start to get a feel of expression. Still, trading is a game of probability. But with the proper training of market understanding and market internals, a trader can put those odds in his favor.

 

The majority of the trading population refuses to think on their own. Being mentally lazy is deadly in the financial markets. Perhaps this is the reason why people continuously seek for the Holy Grail through indicators and systems. They look in places where there are no answers. The only place they should be looking is in the mirror and in themselves.

 

Trading should be simple. But the simplicity of it comes through hours of hard work and training. Trying to catch the subway in Tokyo, Japan can be disastrous for the first timer. But after living in the city for some time, one should be able to get across with his eyes closed.

 

Good luck, best of trading.

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I completely agree with K.I.S.S. I have studied almost every indicator and have come to the conclusion that the best system is watching and understanding how price behaves with just a few support, resistance, and trend lines. After observing price failing to make a new high in an uptrend or failing to make a new low in a downtrend, I can watch for pullbacks or retracements and trade accordingly. I can see the market much better than using a bunch of lagging indicators.

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I completely agree with K.I.S.S. I have studied almost every indicator and have come to the conclusion that the best system is watching and understanding how price behaves with just a few support, resistance, and trend lines. After observing price failing to make a new high in an uptrend or failing to make a new low in a downtrend, I can watch for pullbacks or retracements and trade accordingly. I can see the market much better than using a bunch of lagging indicators.

 

 

The day my trading turned around was when I took all indicators off my charts. Now I trade with a candlestick chart only. No moving averages, no indicators, and no volume. I read volume through the tape and I use a market profile chart as well as market internals to trade.

 

Price action is king. But it takes hours and hours of staring at price to fully understand price action.

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No, KISS uses the %K Indicator of the Simple moving average Stochastic

 

The parameters should be varied with timeframe. Use 5x the signal parameters for an overall trend reading.

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No Tingull. That's what was said at the top of the thread. I think my answer was much more creative ... and remarkably similar to the system for TC2000!

 

No indicators or as little as possible is Niolap not Kiss.

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Ok, I was not aware of a system called KISS or Niolap. The whole point of the article was to emphasize that trading is best kept simple. I was not referring to a single trading system or a specific trading methodology. Alot of new traders get caught in the analysis paralysis trap.

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Soultrader, I also concentrate my efforts on trading price. I have tried 100's of indicators and never found one that was what I was looking for completely. I heard about a group called Tsunami Trading who only trade price. I liked that idea and went on this pursuit. It has helped turn my trading around. I have very few indicators now. I dont use them to look for a trade. I find my trades using trend lines I draw on price. I confirm the trade sometimes with indicators in 1 subgraph. I use the major portion of my charts for price. I like your idea about tape reading and I am going to see how that compliments what I am already doing. Thanks!

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The day my trading turned around was when I took all indicators off my charts. Now I trade with a candlestick chart only. No moving averages, no indicators, and no volume. I read volume through the tape and I use a market profile chart as well as market internals to trade.

 

Price action is king. But it takes hours and hours of staring at price to fully understand price action.

 

I was reading in Gary Smith's book this weekend that he didn't look at volume at all. That amazed me. What is it about volume that you consider a distraction, James?

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GCB... I started looking at volume now :) Its actually volume delta that plots the number of buying volume in green and number of selling volume in red. The greater of the two gets placed on top. Its a great visual tool to gauge supply vs demand at key turning points.

 

The only reason why I didnt plot volume previously was because I can see the volume off tape. I still read alot of tape but the volume delta makes the visual element alot easier now.

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Ah-ha. Is volume delta a TS indicator found somewhere on this forum? I've written a few volume indicators using TS histograms so I might already have something like it myself.

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Being reletively new to trading and absolutely new to TradeStation, I have been on a hunt for the past 2 months for the best trade indicators that suit my planned style of trading. That being said, I now have a huge collection of TS indicators of all types and fashions with all types of bells and whistles.

 

The point that I would like to make is that after seeing with my own eyes, all these indicators in action, I have come to the conclusion that while some are pretty good, it appears to me that it is easy to confuse yourself with indecision by using too many at a time. You have this one saying "Buy", this one saying "Wait" and another saying "Sell".

 

And to top it all off, none of the indicators I have seen to date are more accurate than the good old MA's. To show what I mean I have attached an image from yesterday. On this picture I have PaintBars, 3 MA's, Auto Channel Lines, Auto Pivots, and a Swing HiLo indicator. To me, this is all you need (maybe a little too much for some) to get a clear picture of what the market is doing and what I need to do to make a good trade.

 

The plan is when red crosses white, make the trade. Blue is there to show the trend and keep you in or out in the bumpy times.

ym022007.thumb.gif.36b4f6cd822dfd71e18b10219b103100.gif

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Hey Robert...intense chart :) Something to keep in mind with it all...those indicators are lagging ones. Price reigns supreme, and those are accounting for price after a certain amount of bars. For instance...my charts are set up relatively simple. All I really need at this point is chart attached. The pink lines are Market Profile levels, and the other lines are daily and weekly price pivots. My plan is strictly on Market Profile, so I don't need much else on there.

 

I went through the indicator craziness stuff once...and really, as you said...it confused me to no end. Simpler is much better...and I think when you start looking deeper into the market you'll see that it is much simpler than what you've got there. It's not easy...but it is simple.

ERChart.thumb.png.be9e8bd2f517c0d86f2b72357aba4636.png

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True, my chart is a little busy. hahaha... You should have seen it before! That is the whittled down version! Bare minimum! hahahaha

 

I know the MA's lag a little but I'm not as good as you yet. Once I get a little more comfortable I'm sure I will be able to remove more.

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MAs are lagging only if you need to see their cross to take action. Gray area before cross and after trend change is the tricky part.

 

OSC between MACD and DIF can help. KD cross with reset parameters at 30-45 can help as well. Most of my trades are made by all three. Chance to get wrong is very low.

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