the answer varies from a tome to one line "use whatever you are comfortable with". let me tread the middle path.
what do you mean by an indicator? if it is a tool that indicates something, then even P and V can be considered to be an indicator and so thats the end of the matter. whatever indicates what you require, use it.
if u believe that indicators are the tools that are DERIVED from P, V, T etc, then you can view it like this: indicators help you in seeing the snapshot. How?
It may be cutting through the noise;
or combining several elements that you cannot ordinarily "derive" by just looking at price volume etc. ;
comparing several elements OTHER than price and volume;
cutting out subjectivity from your PV interpretation etc.
So what snapshot do you want? This will very well answer your indicator requirement.
1. Overall market direction over the different time frames.
2. Quality of the market move.
3. What the big money is doing?
4. What is the speed of the move?
5. What is the market sentiment?
6. What is the strength of the market move?
7. What is the volatility persisting over the current period?
These are some of the questions that will need mathematical manipulation of price, volume, time and other factors over a certain period of time, which essentially we call as INDICATORS.
In case you dont need these and just want to see if in the last 1 hour what P,V is doing to take a position for the next 3 minutes, go ahead. thats your NEED. Nothing else is required for you.
Hope that answers to some extent.
To end, theres no answer as to whether it is lunar cycle or bicycle that works. neither is it the issue of whether it is a non stationary time series or just random numbers. it again depends on the way you look at the market and utilize your theory to interpret it.
whereas Ehler's Dominant Cycle Analysis depends on the presence of real cycles, Juriks JMA is a causal nonlinear adaptive filter that cleans non stationary time series data, while william blau balances smoothness and lag in momentum oscillators by using double smoothing.
what do you mean by an indicator? if it is a tool that indicates something, then even P and V can be considered to be an indicator and so thats the end of the matter. whatever indicates what you require, use it.
if u believe that indicators are the tools that are DERIVED from P, V, T etc, then you can view it like this: indicators help you in seeing the snapshot. How?
It may be cutting through the noise;
or combining several elements that you cannot ordinarily "derive" by just looking at price volume etc. ;
comparing several elements OTHER than price and volume;
cutting out subjectivity from your PV interpretation etc.
So what snapshot do you want? This will very well answer your indicator requirement.
1. Overall market direction over the different time frames.
2. Quality of the market move.
3. What the big money is doing?
4. What is the speed of the move?
5. What is the market sentiment?
6. What is the strength of the market move?
7. What is the volatility persisting over the current period?
These are some of the questions that will need mathematical manipulation of price, volume, time and other factors over a certain period of time, which essentially we call as INDICATORS.
In case you dont need these and just want to see if in the last 1 hour what P,V is doing to take a position for the next 3 minutes, go ahead. thats your NEED. Nothing else is required for you.
Hope that answers to some extent.
To end, theres no answer as to whether it is lunar cycle or bicycle that works. neither is it the issue of whether it is a non stationary time series or just random numbers. it again depends on the way you look at the market and utilize your theory to interpret it.
whereas Ehler's Dominant Cycle Analysis depends on the presence of real cycles, Juriks JMA is a causal nonlinear adaptive filter that cleans non stationary time series data, while william blau balances smoothness and lag in momentum oscillators by using double smoothing.
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now let me answer the second part of your question. If you can replicate the situation that led to the initial results, you will get the same outcome over and over again. however that is not possible in the market. so the results will not be the same. and as karthik said, this is where the RM becomes so important.
if yo study the construction of the indicator, you will immediately know where they will fail, and in situations like that, they wont be dependable since you did so much research on the Jurik MA, let us take MAs as an example. You know by looking at the construction whether they will lag more or overshoot more in different conditions. so during a rapid breakout, you know which one will be more dependable.
if yo study the construction of the indicator, you will immediately know where they will fail, and in situations like that, they wont be dependable since you did so much research on the Jurik MA, let us take MAs as an example. You know by looking at the construction whether they will lag more or overshoot more in different conditions. so during a rapid breakout, you know which one will be more dependable.
U
From the construction of an indicator how do i know it will fail,
a MA is Summing the value / by the period for simple & for exponential more front loaded for RSI it is 100 - ( 100 / (1 + ( Up avg / Dn Avg)) so on for others ,how from the construction i will know when it is going to fail.
Plz enlighten me how from the construction i will know.
a MA is Summing the value / by the period for simple & for exponential more front loaded for RSI it is 100 - ( 100 / (1 + ( Up avg / Dn Avg)) so on for others ,how from the construction i will know when it is going to fail.
Plz enlighten me how from the construction i will know.
You will precisely know where it will fail and not only how it will fail. For example the RSI will be in overbought levels for long time when the market is in strong uptrend. dont we all know this fact. why is it so? only because of the way it is constructed. will you take this overbought signal? how do you define overbought and oversold levels in the first place. These are some pointers that can get you there.
thats almost impossible to answer as it depends on your indicator. for example if you have an oscillator that looks at OB and OS during trading range, it will start failing in the timeframe where market has broken out of the trading range.
on the other hand if you use an indicator that identifies range bars with a level of volatility, it will never fail.
on the other hand if you use an indicator that identifies range bars with a level of volatility, it will never fail.
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