Simple Trading Methods using TA

[rajakrsnan]

Hi All Seniors,

Can anybody help me with these:

1) Instead of reading too many indicators and not able to act on any, which are the best ones to stick with?
2) Recently I met a person who said he uses "Smoothened RSI". But he was not able to explain it. What are the advantages of this over the normal RSI?
3) Indicators to be watched in a trending market and a sideways market?

I generally take delivery and wait for a meaningful rise and then sell once my target is reached. sometimes i sell too early eventhough i stick to my targets and the market moves much ahead of my targets.

So how to stay in course with the trend and take advantage of the trend. Also i dont mind getting in and out of trades as and when market conditions required.

Can any of the Seniors help me with your valuable suggestions?

Regards,

Raja Krsnan

 

[kazaan]

Hi Rk,

I dont know if I am 'senior" enough - but here are my two-bits. You will trade the best when you discover for yourself, what works and what doesnt. What anyone else (incl. I) tells you should only act as pointers, and never deciders. To my mind, trading is the most honest and the most brutal path to self discovery. If you are a consistently good trader, then you are trully aware.

Ok, philosophy aside 1. I have come a full cirlce. I started out with just the ubiquitious RSI, and then added every indicator i could plot. Every additional indicator did not add to descision i could take with just the first. Worse, they often contradicted the first, leading to a situation of analysis paralysis. Now I am back to using just the RSI, and nothing else.

2. If you want to stay on a trend till its very end, while managing risk all along (very difficult to do, but very very profitable) then you would do well to ignore indicators and use price overlays-like MA. I reccomend you Wikki - Trend following - and prepare to be overwhelmed.

3. If you want to trade targets, then any indicator works as well as the next - some slower (like the "smoothened RSI, which i presume is a RSI of a smothened close, or an lag of an simple RSI) or some faster. A 'slower or smoothend' indicator will generate fewer entry/exit signals-but might have you taking larger open losses between signals. So its a tradeoff. Brokerages dont like to smoothen anything.

4. In strong trending markets, you will find your indicators staying over-bot or over sold for extended periods of time - so if you are trading the indicator, you run the risk of either being against the trend or out of market. Be warned.

trade well. trade wise.
Kazaan

 

[saurabh_kurichh]

hello friend,
I am saurabh.I want to tell u something. different indicators are like different people in the world.There may be one indicator that works well for me and another one that works best for u.It is like saying that u understand a particular person better than me.So, my sugestion to u would be that u try to study a few indicators and then try to back test the system before u put ur money into it.
About modified RSI, it is nothing but a minor change in the actual formula of RSI.if u want its formula i can provide it to u .There are modified versions of practically every indicator.
Friend before an indicator becomes ur friend, it will take the patience out of ur heart.u will have to be patient to understand it.
from my experience i find out that RSI is only used as a confirmation.I use fibonacci. moving averages and trend lines.

 

[rajakrsnan]

Thanx Kazaan & Saurabh for the valuable suggestions.

I believe in keeping all that i do very simple. all that i am looking here is how others assess the market. i also use certain indicators. sometimes i also tend to go on the wrong side. sometimes i key in the wrong parameters. so interacting with others give me new ideas to experiment with.

Thank you both once again for your suggestions.

 

[pakatil]

I don't know much about TA. My Preference would be to chase the stock rather than fixing any Targets. Sell when it retraces 5% and buy again when it crosses previous top. Atleast the feeling of left out will not be threre. Market is always the Boss, no point in predicting Targets.

Cheers
PAKatil

 

[rajakrsnan]

I don't know much about TA. My Preference would be to chase the stock rather than fixing any Targets. Sell when it retraces 5% and buy again when it crosses previous top. Atleast the feeling of left out will not be threre. Market is always the Boss, no point in predicting Targets.

Cheers
PAKatil

Hi,
I agree that market is the only boss here. Well, TA is not about predicting prices. Its about how plan your trade and minimise loss and maximise the returns by staying on the right side of the stock movement. As the two other friends here suggested, every method has its pros and cons. best way is to choose the right method that one can understand, follow and stick with the game plan. where loss has to be booked, it has to be booked at the earliest rather than turning it into a major loss. TA has to be like a guiding light, and not a target predicting tool.

 

[pakatil]

Hi rajakrsnan,

I never meant TA is a Target Predicting Tool. TA is surely a guiding light.

You had said ;

I generally take delivery and wait for a meaningful rise and then sell once my target is reached. sometimes i sell too early eventhough i stick to my targets and the market moves much ahead of my targe

I was only suggesting one of the ways to overcome your predicament.

Cheers
PAKatil

 

[kgsirasangi]

Hi Rk,


2. If you want to stay on a trend till its very end, while managing risk all along (very difficult to do, but very very profitable) then you would do well to ignore indicators and use price overlays-like MA. I reccomend you Wikki - Trend following - and prepare to be overwhelmed.


trade well. trade wise.
Kazaan

Please explain what is Wikki- Trend following?
Thanks

 

[kazaan]

Please explain what is Wikki- Trend following?
Thanks

Apologies for the late response. Wikkipedia, is an online encyclopedia whose contents are generated and maintained by users themselves, on a completely voluntary basis. It is the most outstanding example of how all people of the world, irrespective of nationality or bias, can collaborate to creat a stunning product, if given the right platform.

On a smaller level - Traderji itself is an example of selfless sharing in a cruelly competitive and profit-driven industry such as trading. I applaud the spirit that drives each and every one of us to come here to give, and not just take.

here is the link to trend following - http://en.wikipedia.org/wiki/Trend_following

best,
Kazaan

 

[kazaan]

And when you have all the information, done all the analysis, built the perfect system that you believe you can retire on, but wonder why is it that actual performance deviates so hugely from the well researched optimal solution - go here - http://www.seykota.com/ - to realise that trading succesfully is not about what you do outside, but how you are inside. If you think this is a lot of crap, bookmark this page and come back after a couple of years and read it again.

Sometimes I wonder if we have bitten off more than we can chew, chosing trading as a profession. Surely, selling something (like cars or ship engines) for a living will be a lot easier. Or even selling advice on how to trade!LOL

best,
Kazaan