Interesting Study of Indicators

This month's Currency Trader Magazine has a very interesting study of MACD, Stochastics, RSI, MA crosses and Parabolic.

It shows on which pairs using these indicators produce gains and which produce losses and the best parameters to use.

The results are surprising.

I hope this isn't interpreted as spam. Currency Trader is free. I've subscribed for years and have paid nothing. I thought this article was interesting.

I won't link to it but it's easy to find with a search.

IMO, one of the most interesting concepts with indicators like MACD is that any divergence-target always gets filled. I'll have a look, but must admit I would be very surprised to find any other big usage of any of those indicators.

hey aediaz...... if you have the time, what are you refering to by any divergence-target always gets filled ....

//----
//----

hey bill..... currency trader has been a favorite of mine for years also..... along with several others of that caliber......

i admire traders that can exist without indicators, but for me, the more the merrier......h

With much interest, I read the article and the research.

I think the research was a big failure . I hope Daniel Fernandez is profitable in his own trading.

I understand the objective of the research in regards particularly on entries. But it amazes me to see in this research, traders (like Fernandez) still don't fully understand how indicators work. The simple fact that any indicator will behave differently on different market conditions is a clue whether the researcher knew what he was trying to research or not.

The research should have been a selected type of market condition and then the performance of the indicator's entry according to those market condition. Thus, what are the edge % when it is in an ranging condition? what are the edge % when it is a trending condition?

Basically not taking into account the different market conditions, the results/data he has gathered simply canceled each other out. If the past 10 years of data have been more on trending condition, and then suddenly, the next 10 years of market condition contains more ranging conditions... His test results of the previous 10 years would be null, useless and total crap.

Anyone trying to create a system around this data results has the same probability even if this research was never conducted in the first place.
I give this research a big F

When a correctly spotted divergence is present, price will always go to the i.e lowest (if bearish divergence) valley during the period, usually in a relative short time-period. With the same example, if you have a divergence, which is made up from to points on the indicator diverging from price, the target would be the lowest price between those two points. Here is an example on gbp/usd;

hey aediaz..... thanks..... the When a correctly spotted clears it up.....

for some reason terms like 'always' , always make me wonder ...... and given that you had taken the extra time to bold it had me wondering all the more.....

monthly charts is a sign of someone with a firm grip............

//---
//---

hey supreme c..... thanks for the pm...... being inspired by hendrick's success from long ago, i wrote quite a few ea's along the divergence theme line....


many despise the use of indicators or ea's and look down on others that use them..... they will just have to look down on me......

i will look at that thread you mentioned..... thanks again.....h

And thats why only a few of us know how to read it this way.)))

If you trade long enough and understand price action through looking and studying thousands of charts, you won't need indicators to spot divergences...I can easily spot divergences without using any indicator....Not a merit for myself by any mean...

Always remember that divergences represent a weakness in the trend momentum given a time frame...Changing the indicator parameters can completely destroy the divergence.....For example, if you spot a divergence in RSI(14) versus the price, if you use RSI(20), the divergence might completely disappear...

Oh and yes, divergences are not successful all the time...Because the indicator parameter is designed to follow momentum for a specific set of periods, it always misses the bigger picture, so in many cases, you might see an MACD divergence, yet the price will completely disregard it and continue on it's way...It's true that when this happens, it usually points out to internal weakness that the market overcame temporarily, but it still means that the divergence failed.


Regards,

Nader

You know on a MACD, on the very far right... those numbers on the far right...
I bet you (aediaz1) don't make any use of them

<pondering...>

I did some manual testing on the eur/usd for 2010 using psar....and guess what? It was a loser. It lost around -700 pips for the year. The ranging markets is what killed the profits. There were some really good trades but it only happened when the pair was trending for a long time. During the big trends it made 700 to 900 pips but it just had too many 200 to 300 pip losers to make it a winner for the year.