Indicator for newbie

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Amopo

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Hi all, would like to ask whether which indicator is best for newbies? Though i know its personnel preference.
 
The easiest thing and most reliable as far as a single indicator goes would be a moving average. See the 3 ducks thread in Forex Strategies!

Setup a 60 sma and look at it from multiple time periods to find out where the trend bias is.

Alternately, set up two EMAs, 5 and 10 for instance, and wait for them to cross as an indicator of buy or sell.

Just ideas - but that's most reliable in my book
 
Amopo said:
Hi all, would like to ask whether which indicator is best for newbies? Though i know its personnel preference.
Click to expand...

Smart question, Amopo.

Here's the best advice I can give you on the subject of Traditional Technical Analysis: Don't actually use it to trade with, but use it to develop your own TA concepts. Here's a small example of what I mean:

MACD is simple. In fact, it is too simple.

Try the ROC (Rate of Change) Indicator. Look-up ROC Indicator for the functional formula, it is fairly easy. Two things: a) Just get familiar with the traditional ROC and how it works. Determine whether or not you like to see ROC in Percent or Ratio form. b) Study it, using any pair you like. Then alter it.

How?

Most TA traditionalists will only use ROC on Close. In other words, their functional formula will use the Close Price as the input. That would be a ROC Close. Do that too, but also create a ROC High and ROC Low. Now you have a 3-D ROC, or what I call, the 3rd ROC from the Sun.

Adjust the Periods for your ROC. Experiment with 12 and 21 Day, but also learn to code in your selected trading platform (chart package) so that you can create Multiple 3-D ROCs down below the standard Day. Also create a 3-D ROC for the Week and the Month.

Study the differentials in price behavior between the ROC Close, ROC High and ROC Low, patterns will start to emerge and you will begin to see why the concept of splitting Indicators across more than just the time-interval is so important to understanding price behavior. In this beginner example, you are talking a traditional indicator, splitting it across multiple time-frames AND across multiple dimensions of price for a single pair.

What does ROC show?

Essentially, ROC shows you potential points where standard Fibonacci Retracements have a higher probability for being initiated - bottom line. So, if you build it right, ROC can lead you to better Fibo entries and better Fibo exists. But, ROC Close, by itself, is NOT capable of doing this nearly as well. ROC also shows you Price Deltas and in effect, a form or Price Delta Patterns. That's why you need a multi-dimensional ROC, which I've just shown you how to create. There are other forms of ROC you can create as well, if you use your mind creatively as I've shown you with ROC High and ROC Low. More sophisticated and far more precise ROC ideas do exist, but you will need to find them on your own - just use your imagination, they are not that difficult to conceive and you will be using something that precious few conventional TA practitioners ever get around to building for themselves.

This next part won't make much sense to you at all, until you develop enough understanding to realize that Price is not a singular value and that Price has Structure - a more advanced concept. But, for now, just know that Price is not a fixed point in two (2) dimensions. Rather, real Price is smeared across a Structure that is always changing and that Structure is composed of the elements: Time, Direction, Magnitude and Probability - again, more advanced stuff.

ROC is one of the best places that a Newbie can start learning how to develop their own Technical Analysis. For now, create the basic ROC Close and study it against any pair. Then, create your own 3rd ROC from the Sun and observe how "Price" interacts within each region of so-called "oversold" and "overbought" per time-interval or par bar of data (ie, inside each chart for which you created a 3-D ROC).

Good question and "ROC" on!
 
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indicators "can" help confirm your pre existing thesis on the market and thats about it
 
Amopo said:
Hi all, would like to ask whether which indicator is best for newbies? Though i know its personnel preference.
Click to expand...

As for me I use moving average and stochastic oscilator for the beginning. These indicators are more easy to understand and I already have a little profit due to them
 
Amopo said:
Hi all, would like to ask whether which indicator is best for newbies? Though i know its personnel preference.
Click to expand...

Is an indicator, such as a moving average, an indication of price? If a fast moving MA crosses a slow moving MA on a short term time frame does that acceleration of movement suggest that *something* has just happened and is happening with regards to the price and its action? Well my 14 year old son certainly thinks so and he's done OK with his Mum's SB account over the past week and a half whilst on his Easter hols...;)

Many a good trader out there just uses 2 MAs, many use the MACD (singularly) and let's be straight on this, on the MACD if you just traded on the X and took profits at a sensible level and cut losses you'd more than B/E...one thing for sure your losses would/should always be v. small. Then there's the rsi, are folk seriously going to tell me that "it doesn't work", in as much as the 30 and 70 areas are not a top indicator of where price is and what may PROBABLY happen next? How about using your chart package to spit out; support, resistance and the daily pivot? Price will do something in relation to 1 if not all 3 over a trading session...

Probably...this game is about probabilities, self discipline and money management bud, if x+y+z happens on my charts then the probability is that the trade I take will go in my favour. 8 times out of ten I'm right on entry, beyond that I have no control other than to manage myself professionally, my position in the trade and the all important exit...
 
The best indicator is using price, I agree. Look up Inside bars and Pin bars, support/resistance/pivot points. Those tools and on daily charts would be where I would start if I had to do it all again...
 
lbranjord said:
The best indicator is using price, I agree. Look up Inside bars and Pin bars, support/resistance/pivot points. Those tools and on daily charts would be where I would start if I had to do it all again...
Click to expand...

Why save yourself 5 years of learning ;)
 
at least I was smart enough to stay demo a long time. that's the only credit I deserve for my follies
 
lbranjord said:
at least I was smart enough to stay demo a long time. that's the only credit I deserve for my follies
Click to expand...

snap...i went a full circle. simple....complicated, more complicated, complicated..simple. doh.. course still learning so always time to make it complicated again ;)
 
I might as well have my penneth worth.
I mainly use trendlines,does that count as an indicator?
The only other thing I have on my charts is RSI. I use this for divergence. Divergence can work whatever indicator you use.
However Id spend more time working on your head than I would indicators. :)
 
There is not such an answer as " this works for you , this works for me " .
The new traders have to see in the real trade the indicators action . They have to learn from YouTube clips and after that to practice practice practice etc . There is not a short f*n cut .
 
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