A Complementary Approach To Trading Technical Indicators

About the Author Jeff Swanson

Jeff is the founder of System Trader Success - a website and mission to empowering the retail trader with the proper knowledge and tools to become a profitable trader the world of quantitative/automated trading.

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  • pete soukir says:

    Hi Jeff,
    I read Jeff Augen and another author who suggest that moving averages and other conventional indicators like ADX,rsi, etc are useless nowdays due to high frequency trading led by hedge funds and other institutions. As a result the market becomes a field of volatility and the problem is that most conventional indicators including Bollinger Bands can, t fit or help much an individual investor in this kind of market.
    What do u think? Is there any volatility indicator u think, is capable of helping…. I would like to read your research or objective
    opinion on that matter.
    THANKS
    PETE

    • Ilya says:

      Pete,

      Do you know what HFTs do? Because it isn’t betting on indicators at all. The time frames, signals, and dynamics they operate on are as different as night and day from traditional indicators on daily bars.

      Medium frequency may be another thing, but high frequency? Different ballgame.

    • Pete, I don’t think conventional indicators are useless. I can tell you that there are systems that use conventional indicators that are profitable. You will find several ideas on this website that can lead to profitable trading systems.

  • Riccardo Ronco says:

    the only issue with this particular example is that you can have a regime transition without the stochastic signal. So you are short, the trend changes to bullish but you do not get a reading below 20. You are stuck in your short without a hope to get out.

    I would allow shorts in a bear and short covering on a cross above 20 and viceversa in bullish phases and, yet, this would leave the door open to the above problem anyway.

    A kind of “fail-safe” model would require that during a transition from bear to bull, a stochastic reading > 80 would trigger a short covering and a reversal to long.

    My 2 cents.

  • Marco says:

    Another key point is not to mix an indicator with a trend following set of rules with one used in a mean reverting style. Most indicators can be used in both modes, and it often happens to me.
    https://nightlypatterns.wordpress.com

  • Mark says:

    Reprint…

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