A while ago I've studied many different indicators in order to understand what they calculate. This study revelaed that it is quite obvious why not every return from the so-called "overbought" or "oversold" indicator region is followed by a new trend. For instance, the stochastics oscillator with a given period %k just shows where the current prize is in relation to the lowest and highest prizes within the last %k candles. Thus, a revisit below 80 or above 20 just shows that prize retraces from an up/down move. However, it's just a retracement and you don't know if prize will extend that retracement to a new trend or will continue the previous trend.
From my research I've indeed seen that info on how to sufficiently use indicators is quite rare. Only a handful traders gave some deeper understanding and hints on it. One of these members is the high impact FF member CrucialPoint. In his earlier posts he wrote a lot about how to correctly use indicators. Here are some examples:
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[2]
[3]
Here I don't want to discuss how CrucialPoint's indicators work and how he exactly trades. I'm more interested in the foundation of indicator trading and just used his posts as mind-provoking statements. What are your opinions on the above points?
I think it's obvious to only use indicator readings in trending markets. But is that alone the market structure CP refers to?
Will post some of my interpretations soon.
From my research I've indeed seen that info on how to sufficiently use indicators is quite rare. Only a handful traders gave some deeper understanding and hints on it. One of these members is the high impact FF member CrucialPoint. In his earlier posts he wrote a lot about how to correctly use indicators. Here are some examples:
QuoteDislikedThis is an objective fact that ANY indicator, system, strategy...
WILL ALWAYS have a convergence/divergence nature/behavior in its every signal creation/formation. And if you can't identify these differences between any signals... then one will go round and round and round and round in circles.
QuoteDislikedMy indicators are not signals, they are "a language that defines the structure of the market."
QuoteDislikedThis is how amateur traders use indicators: enter/exit buy or sell. Professional traders use indicators as a decision making tool after assessing the market condition and then deciding when or where to enter/exit buy or sell.
Here I don't want to discuss how CrucialPoint's indicators work and how he exactly trades. I'm more interested in the foundation of indicator trading and just used his posts as mind-provoking statements. What are your opinions on the above points?
I think it's obvious to only use indicator readings in trending markets. But is that alone the market structure CP refers to?
Will post some of my interpretations soon.