I have found the Holy Grail indicator for the Dow Jones - 100% right so far

[Rufus_Leakey]

My "Holy Grail" Money Flow indicator is still reading 100% in the green but it did come off of that level briefly earlier this afternoon but is now reading 100% again. I suspect the "bullish" Money Flow is weakening. A "sell" signal is triggered when the indicator drops from the 100% level. It could do that in the next few days I think. Basically this indicator tracks the flow of money which is what the stock market is made up of.

Money flow indicators show some promise. For example,

MFI Vs RSI - Which One Makes More Money?

We tested 10,000 stocks and found that the Money Flow Index (MFI) performs better than the RSI indicator for short-term swing trading on stocks.

decodingmarkets.com

Backtrader: Chaikin Money Flow Indicator - Backtest Rookies

The Chaikin Money Flow (CMF) is a popular volume based indicator. It was developed by Marc Chaikin who has been an analyst, trader and entrepreneur in the industry since 1965. Further, he has been developing trading indicators since the 1980’s during which time he worked on some well-known...

backtest-rookies.com

 

[batsonar]

The problem with taking a short trade as you have done is that you have instantly broken the rules which you have created.
What happens if the index does on fact fall? Does that mean you need to go back to the drawing board?

It not really a case of "going back to the drawing board" but more like "trial and error" with the system I have developed. I don't have a problem with making mistakes because that is where to you learn and improve from your mistakes. That is why I am using a Trading212 practice account because I can "blow up" as many accounts as I want testing my system in different ways until I perfect it. I would advise anyone NOT to use a real money trading account until you have tested out your system and made sure you can make "pretend money" in your practice account. You need to build confidence in your system before using real money.

 

[batsonar]

Money flow indicators show some promise. For example,

MFI Vs RSI - Which One Makes More Money?

We tested 10,000 stocks and found that the Money Flow Index (MFI) performs better than the RSI indicator for short-term swing trading on stocks.

decodingmarkets.com

Backtrader: Chaikin Money Flow Indicator - Backtest Rookies

The Chaikin Money Flow (CMF) is a popular volume based indicator. It was developed by Marc Chaikin who has been an analyst, trader and entrepreneur in the industry since 1965. Further, he has been developing trading indicators since the 1980’s during which time he worked on some well-known...

backtest-rookies.com

The Money Flow indicator I use is unique and similar to the MFI (Money Flow Index), CMF (Chaikin Money Flow) but its a different design and protected by patent technologies and was invented and developed by a certain company. There is nothing like it on the internet. The Money Flow indicator I use doesn't have the choppiness or lag of other Money Flow indicators. The settings and parameters I have set it to on the charts are not the default settings. Its been trial and error setting it up. It has taken a long time to finally get it to work properly. I thought I had it working the other day but had to adjust certain things to get it just right. It a very good indicator though and shows promise.

 

[batsonar]

The Money Flow and the Momentum AD Volume Ratio indicators I have been describing in my recent posts is a system designed to predict the move on the Dow Jones over a few days. The chart below shows a 3 month (1day bar) and the settings and parameters have been set to predict a coming up trend or downtrend. As you can see both indicators are still well in the green and you don't really want to be going "Short" on the Dow Jones until both indicators have crossed the zero line into the red. It looks like the indicators are showing the Dow could stay elevated for some time. I don't think it is going to give up these record highs very easily to be honest.

 

[batsonar]

The problem with taking a short trade as you have done is that you have instantly broken the rules which you have created.
What happens if the index does on fact fall? Does that mean you need to go back to the drawing board?

Yep you were right. I broke my own rules and paid the price Ha Ha lol. Over £6,000 down on my Trading212 practice account. I think I have got to use the Money Flow indicator as my main signal generator because it has very little lag and then use the Momentum AD Volume Ratio indicator as a secondary confirmation of the Money Flow indicator. Shall not make that mistake again. Anyway I have reset my practice account back to £50,000 and I will try not to break my own rules again. Its certainly a learning curb. I find it all good fun. Trading passes the time.

 

[trendie]

hi batsonar,
are your indicators specifically tuned to the DJ?
can the underlying principle be applied to other indices? eg, FTSE, DAX?
just wondering if you could smooth out any account blips by aggregating.

by allowing yourself the benefit of trading across multiple indices, maybe you wont beat yourself up if you make the occasional error on one index, if the other 2 or more come through for you.

If the error appears across all indices, then its the indicator that's the problem, not your rules.

really good thread. I like your honesty in your path in trading.

 

[batsonar]

hi batsonar,
are your indicators specifically tuned to the DJ?
can the underlying principle be applied to other indices? eg, FTSE, DAX?
just wondering if you could smooth out any account blips by aggregating.

by allowing yourself the benefit of trading across multiple indices, maybe you wont beat yourself up if you make the occasional error on one index, if the other 2 or more come through for you.

If the error appears across all indices, then its the indicator that's the problem, not your rules.

really good thread. I like your honesty in your path in trading.

No not the FTSE or DAX. This is what I have live data for: Dow Jones - NASDAQ 100 - NASDAQ Composite - Russell 2000 - Russell 1000 - NYSE Composite - Emini Indexes - Commodity Indexes - Semiconductors - FANG.......If I can get these signals to be consistent then I want all the T2W community to benefit. They are end of day signals. Personally I hate day trading. My system you don't have to worry too much about the daily moves on the Dow Jones. Mistakes are part of the "learning curve" and I will keep improving as time goes on. I need to develop a "mechanical" kind of system with a set of logical rules. I am not a person that lies to anyone which I hate. I will always be honest on this forum and tell you of my successes and failures in trading. I just hope the charts I post here help you make good trading decisions.

 

[batsonar]

This is what varchev.com says, Many retail traders are wondering what are the magic indicators of the traders in the big banks and market makers is? What is the great secret that gives them such a huge advantage? In fact, the answer will be quite trivial and surprising for someone, but actually bankers use only simple systems and usually only one indicator in making a trade decision. The first and probably the most favorite indicator of bank traders is Bollinger Bands. The second most popular preferred indicator on Wall Street and of London is the moving average. The list of top bankers' indicators also include MACD.

I had to smile when I found out the big bankers and Wall Street used the above indicators. I don't use any of them in my trading system. My indicators and system are on a totally different level with a completely different approach to trading. Quite a few of my indicators are unique and track Money Flow and volume which of course is what the stock market is made up of. A few of the indicators were invented, developed and implemented by a certain company and are protected by patent technologies.

 

[batsonar]

As far as I can see from my indicators the Dow Jones in the short-term to mid-term has a neutral to bullish sentiment.

 

[batsonar]

The Dow Jones closed today at 31,060 -8.22 (-0.03%) on the 13th January 3021. My money Flow indicator is still reading 100% in the green. That would have to come off that level for a "Sell" (Short) signal. If you look again at the chart and indicator on post number 917 you will see the Momentum AD Volume Ratio indicator had hit the zero line giving a "Sell" signal, however at the end of today's trading day the indicator has moved back up into the green and gives me the impression that the Dow Jones could make move to the upside over the next few days. Also the ROC indicator has done the same thing, that is, it has come off the zero line and moved back into the green. These indicators are on a 3 month (1 day bar) time frame.

 

[batsonar]

On my 3 Month (1 day bar) chart there is a "pivot point" resistance level on the Dow Jones at 31,198 so the upside moves could well be limited in the short term.

 

[batsonar]

To my fellow traders. I am not claiming my indicators and Batsonar trading system are perfect but it is as near to perfection as you are ever going to get. They tell me when a likely change of direction is coming on the Dow Jones. Batsonar is a very early warning system based on Money flow and volume (buying and selling). What my system can't do is predict the amount of points the Dow Jones will move over the next day or next few days. If my signals appear to fail I don't blame the indicators because that has to do more with the market conditions. My indicators don't work well in a flat or neutral market. They can get confused. What my Batsonar system is very good at doing is catching the big moves (or swings) over a few days. I have back tested the system and its hard to fault it. I am now using 4 indicators to confirm a possible change of direction in the market. Since about the 25th November 2020 the Dow Jones has been "hugging" the flat line than other periods in the past. As far as I can see my "Holy Grail" indicators have coped quite well in these conditions. They come into their own when there are some nice swings in the Market. As I have said in post number 928 the big bank traders only use simple trading systems using 1 indicator like Bollinger Bands, moving average and MACD. I personally can't see much value in these indicators because of the "lag" factor in them. My "Holy Grail" indicators don't have any "lag" as far as I can see in back testing. If you are going to trade using my signals then please make sure you use a practice account not real money. If these signals turn out to be right more times than being wrong then I hope in the future that I can work as a trader in one of the big banks or set up a "Trading Academy". You never know who is reading this thread.

 

[batsonar]

The Dow Jones closed at 30,991.52 -68.95 (-0.22%) on Thursday the 14th January 2021. My Money Flow indicator has not yet dropped off from the 100% level so no "sell" (Short) signal there. 1 out of my 4 other indicators has crossed the zero line into the red but I would not call a "Sell" (Short) signal on the Dow Jones as of the end of today's trading day.

 

[batsonar]

US Indexes and Exchange Quotes
Stochastics and PVO (Percentage Volume Oscillator) Quotes.

A Stochastic reading of over 80% is considered overbought. As you can see below at the end of the trading day the DJI (Dow Jones Industrial) has a Stochastic reading of round the 90% mark which means the Dow Jones in overbought territory.

 

[batsonar]

US Indexes and Exchange Quotes
RSI (Relative Strength Index) and PVO (Percentage Volume Oscillator) Quotes.

As you can see below the RSI reading on the DJI (Dow Jones Industrial) has a reading of 70.56. Anything over the 70 mark is considered overbought territory.

 

[batsonar]

On my 3 Month (1 day bar) chart there is a "pivot point" resistance level on the Dow Jones at 31,198 so the upside moves could well be limited in the short term.

As I thought, the Dow Jones went up to the "pivot point" resistance level of 31,198 but failed to close above this level. It may attempt it again in the short term or it might just give up and fall back down. I'm watching carefully for a "Sell" (Short) signal from my "Holy Grail" indicators. I will keep you all updated.

 

[batsonar]

The Dow Jones closed at 30,814.26 -177.26 (-0.57%) on Friday the 15th January 2021. I am using 7 indicators now on a 3 month (1 day bar) chart. The Money Flow indicator has come of the 100% level giving a "Sell" (Short) signal. The ROC, MADV R, MADV PO, MADV Osc, FI and AO indicators have all crossed the zero line into the "RED" which is a "Sell"(Short) signal as far as I am concerned. This would indicate more downward pressure on the Dow Jones next week. However the downtrend may be limited because there is a "pivot point" resistance level at 30,721. If the Dow closes below this level then expect the selling to accelerate. I am still learning to use my system and "ironing" out the flaws. I am not trading any of my signals at the moment but will observe over the next few months trying to establish what works best. There is a "pivot point" resistance level at 31,198 and a support level at 30,721. I would expect the Dow Jones to bounce between these 2 levels over the short to mid term.

 

[batsonar]

 

[batsonar]

I first posted this chart on Tuesday 12th January 2021 at 8:53am (see post 912). This is my perfect "Swing High" and "Swing Low" indicator. It looks like it has correctly called the top of the market as it so often does.

 

[batsonar]

How is everyone doing today? I hope my fellow traders are doing well.