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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: TA2K who wrote (17874)	10/4/1998 5:22:00 AM
From: Johnny Canuck	Respond to of 70846

Nicholas, Jim is right, different stocks work best with different combinations of indicators. You have to back test to see what works best and over which time frame for a specific stock. The total amount of money made over a large number of trades is the most important thing. Keep in mind that for most mechanical systems 50 percent of your trades will be loser. One important thing to keep in mind though is that all the indicators are based on some variation of the price and the volume information . A lot of the indicators are based on similar principles and there are only so many ways you can use that information. The variations are due to people trying to improved their entry and exits. A lot of the information is redundant. Once you understand the indicators, you should be able to use fewer of them and still have a stable system. For example, in the MACD the first two numbers indicate the difference between 2 EMA's. So this is essentially similar to a system using the cross of two averages to generate a buy or sell signal. To improve the system someone decided to use a average of the difference as their trigger line to generate the signals as the actual crossing of the 2 EMA is often late in generating the signal. The point is you have two different systems but the information is redundant. You can use the same indicators of the MACD as an oscillator by using the difference between the 2 EMA's. For a 12-26-9 MACD if the 12 day EMA is statistically well below the 26 day then you are under sold. This is a variation of the same information as the RSI. Understanding your indicators and realizing that most stocks have a cycle will help you take some of the guess work out of your setting for the indicators. Harry