I am wondering if using adaptive indicators will decrease the fake out rates.
Here is a short summary for those of you not familiar with adaptive indicators.
Talking specifically about adaptive MACD:
How smooth or jagged the MACD looks depends on what your look back periods are ... ie 9 bars before, 13 bars before etc. When the market is fast moving and you have a larger lookback period MACD will hardly change. If your MACD's look back is too short, it will be way too jagged. Most adaptive indicators, as the name suggests, adapt to the market based on VOLUME. If volume has been high, the indicator picks a shorter look back period, if the volume is low, the lookback period is decreased. The end result is less fakeouts.
Let me know what you think. Has anyone tried this?
Here is a short summary for those of you not familiar with adaptive indicators.
Talking specifically about adaptive MACD:
How smooth or jagged the MACD looks depends on what your look back periods are ... ie 9 bars before, 13 bars before etc. When the market is fast moving and you have a larger lookback period MACD will hardly change. If your MACD's look back is too short, it will be way too jagged. Most adaptive indicators, as the name suggests, adapt to the market based on VOLUME. If volume has been high, the indicator picks a shorter look back period, if the volume is low, the lookback period is decreased. The end result is less fakeouts.
Let me know what you think. Has anyone tried this?