Which is your favorite momentum indicator? Why?
Momentum, Rate of Change (Price), Smoothed Rate of Change, Relative Strength Index, TRIX Indicator, Closing Price relative to Range, Stochastic, Slow Stochastic, Williams %R or any others???
How many days indicator do you use?
Do you use different indicators for different markets (stocks, bonds, currency and commodities?)
Good Answers (6)
My popular trading signals are at least three indicatores confirming each other. In some cases, there are two sets of signals described (e.g., MACD – signal line crossovers & zero line crossovers).
In these cases, both are valid signals; however, suitability varies based on
different circumstances and trading objectives.
Indicator Signals
Av. Directional Mvmt Index (ADX)
Buy when ADX crosses up through 25
Sell when ADX crosses down through 20
Commodity channel index (CCI)
Buy when CCI has crossed below -100, formed a bottom below -110, and then crossed back up through -100.
Sell when CCI has crossed above +100, formed a peak above +110, and then crossed back down through +100.
Demand index
Buy when +DI crosses up through -DI
Sell when +DI crosses down through -DI
MACD Oscillator
Buy when MACD crosses up through Signal line
Sell when MACD crosses down through Signal line
Buy when MACD crosses up through Zero line
Sell when MACD crosses down through Zero line
Moving averages (MA, EMA)
Buy when 20 day MA crosses up through 100 day MA
Sell when 20 day MA crosses down through 100 day
MA
Buy when Price crosses up through 100 day MA
Sell when Price crosses down through 100 day MA
Parabolic indicator (SAR)
Buy when SAR switches from above Price to below
Sell when SAR switches from below Price to above
Price channel (Donchian’s)
Buy when the Price penetrates and closes above the upper channel line
Sell when the Price penetrates and closes below the bottom channel line
Juan Manuel D.
Vice President at Mora Wealth Management
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My phylosophy: " Technical and Fundamental Analysis Simple: Charting the Markets in Your Language".
As Albert Einstein used to say, “Keep things as simple as possible but not any simpler.”
I use Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) as momentum indicators for stocks, bonds, ETF's, currencies, indices, commodities and ETF's.
Then I add, Candlestick, Trendlines, Channels, Volume, Support and Resistance, Elliott Waves, Fibonacci, Moving Averages and some fundamentals as Market Capitalization, EBITDA, Price Earnings (P/E), Dividend Yield, 52 Week Range, Float and Short Ratio.
Regards.
Some entertaining answers so far, but probably not what you're looking for.
I use exponential moving averages, Bollinger bands, parabolic SAR, candlesticks, support & resistance, channels, MACD & MACD histogram, slow stochastics, RSI, CCI, ultimate oscillator, and volume & average volume. For timeframes, I use weekly, daily, and 60, 30, 10, 5, 3, and sometimes 2 minutes. They don't all have to tell me to buy or sell, but the more the merrier.
I am only trading equities now, but hope to expand into futures and forex eventually.
Eddie T.
Head of Foreign Exchange (FOREX) & Account Executive for Futures, Options, Stocks, Bonds, Commodities & CFD's
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18, 54, 99 & 198 simple MA's (derivations on Gann numbers). Dow & some Gann theory. Andrew's Pitchforks & Fibs as well. Unfortunately Spot FX does not have volume numbers.
Disagree with Ray above - old technical maxim - all the relevant data that moves a market is already exhibited in the price.
Kat S.
Revenue Growth Strategies | Market Development | Product Strategies | Branding | B2B | Marketing Strategy
RSI set at 9, MACD (12, 26, 9), full stoch (9, 3, 3), force index (13). I like them relatively on a tight reign. And that's just the indicators. I look at 10 minute, hourly, daily, weekly, and monthly charts. Various MAs are set on each timeline. Bollinger bands. Sometimes Wilder's DMI and CCI.
However, my main criteria to open & close a position are the combination of price, volume, resistance/support points, trendlines, and fibonacci retracements. These are my main leading data points. All the indicators I mentioned earlier are in support of these main criteria.
Chris M.
Independent Journalist & Writer
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Ali,
Gut, mainly.
I like to see how an equity (which is all I get involved in) is doing in its 30 and 90 day bands, and vs the index and sector its a member of. However these are more the frame for the picture than the picture itself.
I've always believed people who rely too much on indicators don't have real courage in their convictions and try to blame their own bad mistakes on "the indicators". As someone's already said, the markets are simply too complex to be boiled down to a set of statistics.
Make your decision, take responsibility for it, and dive right in. Never gamble money you cannot afford to lose ;-)
Take Care
Chris
PS. I'm currently losing weight. does this mean I can no longer trust my gut?
More Answers (11)
bollinger
Les D.
Software Quality Assurance Lead
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or is that 1/2 M* V*V and how many milliseconds it takes the crash to crumple.
Of course angular could be fun too.
While you are talking economics, the physics of a collision might also be informative.
Ray M.
Energy expert, educator, award winning sculptor
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I think too many people use indicators that measure in days.
I think it's folly. No one REALLY knows why the market did what it did yesterday. There are TOO MANY VARIABLES. The "reasons" givens for market changes yesterday are just interpretation, not fact. If they could really tell you why, then they could tell you what's going to happen today and tomorrow.
All of the daily indicators only drive volatility and I believe that is the only true objective of those in the market. More trading, more sales and more commission.
I think the right approach is to only look at long term trends, and by long term I mean maybe as short as quarterly, but every six months is fine too.
No one is investing for the profit today, only. Everyone in the market is really investing for a longer time horizon. Young people should be investing for very long range growth and NOT the more risky investments that are more volatile as many pundits recommend. Older peopel should be converting their long term investments from their youth into more liquid assets.
And that's the sane approach. Of course their isn't enough profit motive in that for people selling into the market so it will never happen.
Benny G.
Account Specialist at WHAG TV
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You know - My overall favorite momentum indicator(s) is/are the amount of orders in cue - messages on my machine - email and voice mail with more orders to process or jobs to approach so I can get more orders...
Paul S.
Consultant - COO Capacity
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My favorite momentum indicator is how successful we are via what it is we provide. Are we "booking" a great deal of sales, are we invoicing, do we have a backlog, let's face it momentum doesn'e mean much in the business world unless it generates revenue.
Paul
Jeffrey R. C.
Turning Concepts into Companies- Co-Founder Hyde Park Angels, Independent Angel Investor and Trader
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technical analysis is informative, and can help you pick points. but volume will tell you where the market is going. If you have huge volume that moves the market violently in one direction, the odds are good that you hit stops.
It probably will move the other way, unless conditions warrant continued movement in the same direction. You will be able to tell that from order flow too.
Shawn C.
Senior Financial Analyst at Blackhawk Network
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thickness of the WSJ. More news articles indicate higher uncertainty.
Asad R.
(CEO-CMKA) Open to Opportunity
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Hi Ali,
In simple terms, rapid change of price can be described, as Momentum. Interpretation of Momentum can be described in many ways. Some may say that it could be trend like MCAD or other may argue that it is based on RSI. I have a very different argument. During my association with one of the leading global bank, I had the opportunity to meet and discuss with leading currency Analyst/Chartist or known Guru’s. Honestly, most of them were in disagreement with me, as neither they would agree with my concept of trading nor I was willing to compromise with them. I still believe that they would not support way of trading. But let me share with you that I had a very successful 15 years of trading and I would like to share my strategy with the readers. My argument is that chart analysis is useful in a dead market, but is not effective in a Volatile market, when there are erratic moves on Economic data, statements by financial officials or due to major global factors that could influence the market. I believe in conventional charting, which is very simple. Combine Conventional Charting with the economic happening, which means learn effective use of line charting to determine the Support and Resistance levels. Simply work your lines on Short-Term, Medium Term and Long Term Charts and follow all the Economic happenings. Do not confuse yourself by reading and learning too many technical. In short you have to be a mini economist, a mini journalist, a mini chartist to dear a perfect line to know the Support & Resistance levels. Another important point I would like to share with the readers, a commentary is always based on position taken the commentator or his institution.
If are keen to know about my accuracy of forecast, please follow the link dated January 08 Outlook for 2007.
http://www.brecorder.com/index.php?id=515198&currPageNo=1&query=&search=&term=&supDate=
Cheers
Asad
Clarification added October 20, 2007:
Small correction, please read MACD ( Moving Average Convergence/Divergence) instead of MCAD.
Robert F.
Manager, X-Force Research at IBM
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Whichever the right tool for the job is. Also, limiting the number of indicators seems to help prevent overfitting.
