How to trade with an oscillator

[timepass]

But markets change, volatility changes, so one can check whether the settings are catching the good number of trades or no harm in changing the settings but keep them constant for a reasonable period of 2-3 months or so.

Smart_trade

I was about to say that the market manipulators catch on you your strategies/setting and find a counter to them, so one needs to change (if necessary) the settings/ strategies

 

[rangarajan]

I was about to say that the market manipulators catch on you your strategies/setting and find a counter to them, so one needs to change (if necessary) the settings/ strategies

Dear Smart & timepass,

Do u mean to say that the setting recommended by the Original Inventors are irrelevant in today's market. Are they not time tested?

Why waste time in Reinventing the wheel? Should we question the Newton's Law instead of picking the Mangoes under a tree.

 

[timepass]

Dear Smart & timepass,

Do u mean to say that the setting recommended by the Original Inventors are irrelevant in today's market. Are they not time tested?

Why waste time in Reinventing the wheel? Should we question the Newton's Law instead of picking the Mangoes under a tree.

The only law here is the law of the jungle. I make money if you lose it. So, if you invent a strategy, I will sure as hell try to see that it fails some time, when you have become complacent and consider it as the holy grail.

Well, don't we all lock our homes, though there are always thefts ??

 

[rangarajan]

The only law here is the law of the jungle. I make money if you lose it. So, if you invent a strategy, I will sure as hell try to see that it fails some time, when you have become complacent and consider it as the holy grail.

Well, don't we all lock our homes, though there are always thefts ??

timepass,
You have taken lot of pains to make yr views complicated like so many indicators in the chart & i am at loss.

Why dont u make it simple like Smart's stoch methodology?

Whether originality has lost it sheen or not?

 

[murthyavr]

timepass,
You have taken lot of pains to make yr views complicated like so many indicators in the chart & i am at loss.

Why dont u make it simple like Smart's stoch methodology?

Whether originality has lost it sheen or not?

Rangarajan,

Timepass has not told you anything new.. He also reiterated the statement
of ST, who stated that the settings need a review once in 2-3 months because
of the changing nature of the cycles.

In any given situation, more than one set of settings will definitely be working.
Despite the fact that they are working alright, a personal preference gets
added to the set, depending on the risk/psychological profile of the trader.
It follows that ST is right now comfortable with 8-3-4, Paul with 5-5-5, me
with something else.

What are you comfortable with? Find it out and stick to it!

But.. keep reviewing it, whether it has been uniformly comfortable for you
over a period of time.

 

[timepass]

timepass,
You have taken lot of pains to make yr views complicated like so many indicators in the chart & i am at loss.

Why dont u make it simple like Smart's stoch methodology?

Whether originality has lost it sheen or not?

Simply put, the only sureshot strategy is the basic one - a) maintain your target and stoploss. b) your net profits should be more than your losses and strive to improve the profit-loss ratio.

That apart, nothing is really simple.

 

[Smart_trade]

Dear Smart & timepass,

Do u mean to say that the setting recommended by the Original Inventors are irrelevant in today's market. Are they not time tested?

Why waste time in Reinventing the wheel? Should we question the Newton's Law instead of picking the Mangoes under a tree.

Hmmm....there is a logic error here, Rangarajan, Newton's laws are exact science...where as in trading we are dealing with probabilities and not exact science. When the apple falls from the tree it will fall down because of gravity and the law holds good in any place whether it is India,US or anyother place. But trading is NOT an exact science. A pivot low broken is supposed to indicate that the downtrend has started but can it fail ? yes it can and it does and the downmove gets aborted abd the upmove starts.So in this case either we quickly get out of the short position and join the new trend and make money or curse the technique, our analysis, market, operators and get frustration and trading losses.....the choice is entirely ours.

One of the causes of failures in trading is because of trader's refusal to accept that trading is not an ecaxt science....and things can change anytime without any warning. That is why we have our stops in place. A trader who is rigid on his analysis and refusing to acknoledge the changed environment is not likely to succeed in the markets. It is not a phisics law that we can be certain about the outcome.

Talking about the settings recommended by original inventors, most of these techniques were invented 25-30 years ago and the markets in 1940 and markets today are vastly different in terms of the ease of trading, information dissimination, market participants, global nature, even the trends and their duration , aren't they ? Markets today are vastly different....so the the techniques, settings all need refinement and modifications. Never be rigid on anything in trading...be prepared to chane and change quickly....

Smart_trade

 

[ashwani chadha]

Yes Paul, I do agree with you that consistancy in setting of the oscillators is more important than the setting itself. Too frequent changes and be sure that you will have most of the loosers from various settings .....

I started trading more than a decade back with RSI ,MACD as my only tools ( and I thought I have discovered a holy grail...) and I used to optimise the RSI settings every week to get the best possible setting. But to my utter surprise, one setting which was the best this week, some other setting vastly different will be the best next week....and something else totally different the week after that. I came to the point of optimising every day and then I realised that it is a wasteful excercise I am doing. Then I started running optimisation in the range of parameters every 3 months and as long as my parameters are in above 50 % of the optimisation results, I find it ok.

But markets change, volatility changes, so one can check whether the settings are catching the good number of trades or no harm in changing the settings but keep them constant for a reasonable period of 2-3 months or so.

Smart_trade

dear smart trade ,i do have one query,my experience taught me,that you can not match signals given by macd and rsi,by using their default value.all the time both will be speaking their own language.
by the time macd will say go long,with the help of rsi we have covered half the long distance
by the next time macd will say go long ,rsi will say close your long and go short
how you manage to fit macd with rsi-both which will never speak same language.
what methodology you use to over come with these conflicting attitude of the two most popular indicator. and take one decision from them thanks in advance

 

[Smart_trade]

This thread is completing its 1000 posts. The thread was started when I saw someone making observations on OB/OS markets and interpreting the excessive OB/OS incorrectly . So started this thread and the thread rolled on.....

I am extremely thankful to all the participants who participated wholeheartedly, asked questions, discussed various issues and supported sharing/ learning. I too learnt a lot from this thread and it has been a wonderful journey all along....

Thanks everyone...you all made this thread so lively....

Smart_trade

 

[Smart_trade]

dear smart trade ,i do have one query,my experience taught me,that you can not match signals given by macd and rsi,by using their default value.all the time both will be speaking their own language.
by the time macd will say go long,with the help of rsi we have covered half the long distance
by the next time macd will say go long ,rsi will say close your long and go short
how you manage to fit macd with rsi-both which will never speak same language.
what methodology you use to over come with these conflicting attitude of the two most popular indicator. and take one decision from them thanks in advance

Ashwani,

This happens because MACD by its very nature of construction is a trending market indicator whereas Stochastics or RSI are oscillators meant for trading / sideways markets. So they are bound to be in disagreement at the market turns.

How I handle this is I use Stochastics or RSI as a set up indicator...so when they are in OS area for less than 5 bars or they are exhibiting positive divergence, I get on my pivot based trend indicators and make entry and keep stoplosses as per the charts....I dont use MACD as I find my price action methods give me more early and definite entry signals.....

Hope the above answers your question...

Smart_trade