Hello all,
Firstly, may I thank all those who wished me well by PM while I was confined to barracks. I have had some health issues but I am still alive, and ready to fight another day! A word of advice to all the young blades on this forum -- If you can possibly help it, don't get old. It's not all fun and free bus rides...
WHAT DO INDICATORS REALLY DO?
A number of folk (who are labouring under the misapprehension that I am a great trader) have asked me quite alot of questions about indicators.
As you may know from my posts, I am not a great fan of indicators. I gave them up many years ago around the same time I gave up smoking. Both are addictive and take a lot of effort and willpower to kick.
However, I am not dismissing indicators altogether. It is just that many folk, especially inexperienced traders, use them willy-nilly with no real understanding of what the indicator is - or more importantly, is not - telling them.
As a consequence, they get very mixed results. Sometimes the indy works great (usually during demo), other times (usually in a live trade) they get stung.
So I am starting this thread in the hope that we may shed some light on the behaviour of our favourite indicators. Knowing when they work, AND when they DON'T work, is vital if you want to minimise bad trades.
Generally, the market is so noisy that it is very difficult to see the underlying behaviour of an indicator on a real price chart.
So I am currently making some synthetic price series with different characteristics to help you see what is going on. You can put your favourite indicators on and see how they really behave.
My hope is that this will give you some real gut-feel and insight into how to best use indicators and get the most from them.
The History (.hst) files attached simply go in your MT4 ../history/xxxx folder where the data files for your broker are stored. Then you can simply open them as "offline" charts and do whatever you want.
I have attached the first two (in the Zip file at the end):
AAAAAAB is just a simple cycle, which is useful for looking at lag issues.
AAAAAAC is a composite waveform that is very revealing in Divergence studies, among other things.
I will add other types of price behaviour as we go along.
I have also attached some charts of the AAAAAAC waveform so you can see the performance of various automated divergence indicators that you can find on this forum.
On one of the charts, I have also shown the popular "Cycle Finder" indicator. This is one of the most beguiling indicators you will see because historically, it looks just about perfect. But it repaints horribly, so beware!!
Always be aware that if an indicator looks too good to be true, it almost certainly is!
I hope that this thread will help folk understand their trading a bit better and contribute to your success. I hope those wishing to learn won't be afraid to ask questions, and I also hope those with more experience will chip in and contribute.
I will try to answer as best I can - "my door is always open". I might not repond immediately as I generally check in around twice a week. "I'm a trader, not a poster", to paraphrase Meatloaf...
Good luck everyone,
Old Dog
.
Firstly, may I thank all those who wished me well by PM while I was confined to barracks. I have had some health issues but I am still alive, and ready to fight another day! A word of advice to all the young blades on this forum -- If you can possibly help it, don't get old. It's not all fun and free bus rides...
WHAT DO INDICATORS REALLY DO?
A number of folk (who are labouring under the misapprehension that I am a great trader) have asked me quite alot of questions about indicators.
As you may know from my posts, I am not a great fan of indicators. I gave them up many years ago around the same time I gave up smoking. Both are addictive and take a lot of effort and willpower to kick.
However, I am not dismissing indicators altogether. It is just that many folk, especially inexperienced traders, use them willy-nilly with no real understanding of what the indicator is - or more importantly, is not - telling them.
As a consequence, they get very mixed results. Sometimes the indy works great (usually during demo), other times (usually in a live trade) they get stung.
So I am starting this thread in the hope that we may shed some light on the behaviour of our favourite indicators. Knowing when they work, AND when they DON'T work, is vital if you want to minimise bad trades.
Generally, the market is so noisy that it is very difficult to see the underlying behaviour of an indicator on a real price chart.
So I am currently making some synthetic price series with different characteristics to help you see what is going on. You can put your favourite indicators on and see how they really behave.
My hope is that this will give you some real gut-feel and insight into how to best use indicators and get the most from them.
The History (.hst) files attached simply go in your MT4 ../history/xxxx folder where the data files for your broker are stored. Then you can simply open them as "offline" charts and do whatever you want.
I have attached the first two (in the Zip file at the end):
AAAAAAB is just a simple cycle, which is useful for looking at lag issues.
AAAAAAC is a composite waveform that is very revealing in Divergence studies, among other things.
I will add other types of price behaviour as we go along.
I have also attached some charts of the AAAAAAC waveform so you can see the performance of various automated divergence indicators that you can find on this forum.
On one of the charts, I have also shown the popular "Cycle Finder" indicator. This is one of the most beguiling indicators you will see because historically, it looks just about perfect. But it repaints horribly, so beware!!
Always be aware that if an indicator looks too good to be true, it almost certainly is!
I hope that this thread will help folk understand their trading a bit better and contribute to your success. I hope those wishing to learn won't be afraid to ask questions, and I also hope those with more experience will chip in and contribute.
I will try to answer as best I can - "my door is always open". I might not repond immediately as I generally check in around twice a week. "I'm a trader, not a poster", to paraphrase Meatloaf...
Good luck everyone,
Old Dog
.
Attached File(s)
AAAAAAB1440.zip
6 KB
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882 downloads
AAAAAAC1440.zip
10 KB
|
836 downloads