i have studied and closely experienced many indicators and techniques of stock trading.
all are good.
but each thrills to kill
each flatters to deceive
if not, then it is too difficult to interpret accurately and timely
i love my indicators like my pets
so, i never had the heart to tell them that they were good but not ultimate.
but, hearts of hearts, i was looking for
a simple
and effective
and universal
and almost foolproof
trading method!
finally, i have one
that was always around but always ignored
that was too simple and therefore mistrusted
that is not perfect but much better than all others.
it's shortcomings?
it demands some blood during valleys and plateaus of ranges
---
it's benefits?
well! there are so many!!!
operators fear it like ghosts fear the cross!
---
and here it is:
"simple moving average"
how to use it?
when priceline cuts sma34/30min line on 1month chart from above = sell
when it cuts it from below = buy
ALWAYS be in the trade, whether long or short
even when there is blood in your hand
if you need to switch sides more than thrice in quick succession
stay away for some time
you may be passing thru range-bound turbulence
---
why have i chosen 34/30min?
whipsaws are minimum in this setting.
(this setting is allowed, rather automatic in google finance. many other software or charts allow sma 34 but not with 30min tick interval)
if you can follow the above method ruthlessly long enough
and if the brokerage is not high
then the pain of ranges will be fantastically offset by the gains of rallies!
---
Showing posts with label SAR. Show all posts
Showing posts with label SAR. Show all posts
Tuesday, December 14, 2010
Sunday, August 22, 2010
When to square-off and reverse?
When to square-off and reverse?
A. If the rsi-run from lower to higher extreme or that from higher to lower extreme is stepped and not straight, it has been a rally and not a sell-off or buy-in.
B. If the rsi-run from lower to higher extreme or that from higher to lower is NOT stepped but straight, it has been a sell-off or buy-in and NOT a rally (unless it is coming out of a ranging/consolidation period, in which case it can be a rally)
square-off and take reverse positon
at the first lower high (in case of long unwinding)
at the first higher low (in case of short covering)
But in case A
do this after the divergence between rsi and priceline
and in case B
divergence is not likely to happen, so no need to wait for it.
Pl note: 1) Play with strict stoploss. You can always retake position.
2) When the market or stock is ranging/consolidating, you can square-off even before lower high or higher low, at the time of rsi touching extreme.
3) Only those graphs should be used which give high resolution tickers. The above mentioned observations have been derived using Google Finance charts. 1month chart with 30 min ticker and 3-6 month chart using 1 day ticker. I have seen that many other chart sources use much biger ticker and hence low sentivity.
A. If the rsi-run from lower to higher extreme or that from higher to lower extreme is stepped and not straight, it has been a rally and not a sell-off or buy-in.
B. If the rsi-run from lower to higher extreme or that from higher to lower is NOT stepped but straight, it has been a sell-off or buy-in and NOT a rally (unless it is coming out of a ranging/consolidation period, in which case it can be a rally)
square-off and take reverse positon
at the first lower high (in case of long unwinding)
at the first higher low (in case of short covering)
But in case A
do this after the divergence between rsi and priceline
and in case B
divergence is not likely to happen, so no need to wait for it.
Pl note: 1) Play with strict stoploss. You can always retake position.
2) When the market or stock is ranging/consolidating, you can square-off even before lower high or higher low, at the time of rsi touching extreme.
3) Only those graphs should be used which give high resolution tickers. The above mentioned observations have been derived using Google Finance charts. 1month chart with 30 min ticker and 3-6 month chart using 1 day ticker. I have seen that many other chart sources use much biger ticker and hence low sentivity.
Saturday, May 8, 2010
The Toy Indicator!
Here is one of my most favourite technical indicator.
I call it a toy indicator because when i am using it I feel as if I am playing with a toy!
Full of fun, thrill, happiness, suspense and challenge !
It is as simple as playing with a toy!
Absolutely no more thinking required than playing with a toy!!
It's called
"Parabolic SAR"
SAR stands for : Stop and Reverse
This indicaotr is the younger brother of RSI
because the father to both was J. Welles Wilder, Jr
So, what is this "toy" indicator?
Just look at the followng graph
Basic Rules:-
If Parabolic dots are below the price line - Buy.
If Parabolic dots are above price - Sell.
the changeover occurs when the dotline touches priceline.
Advance Rules:-
If the price is moving in the direction of the Parabolic dots, the price reversal will take place when both touch!
If the price is moving opposite to the direction of the Parabolic dots, the price reversal is NOT likely to take place!
The Parabolic SAR works well in trending markets, but generates a lot of whipsaws in ranging markets.
When this happens look at bigger-period chart and stick to that trend!
Also, once in a while, whenever in doubt, take help from another indicator.
The main idea behind SAR is that the longer the trend, the more chance it will stop.
Price like a rocket constantly needs fuel to continue to rise. With time every trend will become weak and ultimately reverse.
The Parabolic SAR is also commonly used as a Trailing Stop Loss better than the constant stop loss that does not take into account the length of the trend and the volatility of the market. This way you will never hold onto a trade that goes against you because it will tell you when to exit.
The child in every trader never grows up!
And SAR is the ultimate toy for that lovely child craving for coins!!!
I call it a toy indicator because when i am using it I feel as if I am playing with a toy!
Full of fun, thrill, happiness, suspense and challenge !
It is as simple as playing with a toy!
Absolutely no more thinking required than playing with a toy!!
It's called
"Parabolic SAR"
SAR stands for : Stop and Reverse
This indicaotr is the younger brother of RSI
because the father to both was J. Welles Wilder, Jr
So, what is this "toy" indicator?
Just look at the followng graph
Basic Rules:-
If Parabolic dots are below the price line - Buy.
If Parabolic dots are above price - Sell.
the changeover occurs when the dotline touches priceline.
Advance Rules:-
If the price is moving in the direction of the Parabolic dots, the price reversal will take place when both touch!
If the price is moving opposite to the direction of the Parabolic dots, the price reversal is NOT likely to take place!
The Parabolic SAR works well in trending markets, but generates a lot of whipsaws in ranging markets.
When this happens look at bigger-period chart and stick to that trend!
Also, once in a while, whenever in doubt, take help from another indicator.
The main idea behind SAR is that the longer the trend, the more chance it will stop.
Price like a rocket constantly needs fuel to continue to rise. With time every trend will become weak and ultimately reverse.
The Parabolic SAR is also commonly used as a Trailing Stop Loss better than the constant stop loss that does not take into account the length of the trend and the volatility of the market. This way you will never hold onto a trade that goes against you because it will tell you when to exit.
The child in every trader never grows up!
And SAR is the ultimate toy for that lovely child craving for coins!!!
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