I have always hated indicators in forex trading, this is not a secret for people that have been reading my blog for a while. For me, indicators are quiet deceiving in that they are just a way of showing you something your already looking at : price action. No matter how elaborate an indicator is, it is just a conjunction of mathematical operations done over information already shown to you in a candlestick chart. Furthermore, indicators, more often than not, cause paralysis by analysis amongst new traders.
Nonetheless, after looking at a bunch of different indicators, I would have to say that the best of them are leading indicators (few of these indicators have good free expert advisors based on them, mainly because of exit strategies). These differ from lagging indicators in that they show their signals before market moves happen rather than after (as a moving average would). Leading indicators balance this by having a problem with false signals. The truth is that most of the time these indicators give signals for things that don't happen.
However, the stochastic oscillator, which is an indicator based in the notion of "overbought" and "oversold" gives some success in forex trading if adequate exit strategies are used to balance out it's tendency to give out false signals. One way in which the indicator is further refined is by taking signals when lines cross down from extremes instead of into them.
One ea that implements this quiet well and also introduces a Williams % R filter is found in the forex-tsd forum (here) . This free expert advisor shows good results throughout last year in backtesting (90% modelling quality) and could prove a valuable tool inside the forex market (it will be part of the newsletter from next week). This free expert advisor also has the quality of being a very selective trader, with trades showing up only once or twice per week (reminds me of God's Gift).
If you are interested in more free and exiting trading systems such as the God's Gift expert advisor please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !
Nonetheless, after looking at a bunch of different indicators, I would have to say that the best of them are leading indicators (few of these indicators have good free expert advisors based on them, mainly because of exit strategies). These differ from lagging indicators in that they show their signals before market moves happen rather than after (as a moving average would). Leading indicators balance this by having a problem with false signals. The truth is that most of the time these indicators give signals for things that don't happen.
However, the stochastic oscillator, which is an indicator based in the notion of "overbought" and "oversold" gives some success in forex trading if adequate exit strategies are used to balance out it's tendency to give out false signals. One way in which the indicator is further refined is by taking signals when lines cross down from extremes instead of into them.
One ea that implements this quiet well and also introduces a Williams % R filter is found in the forex-tsd forum (here) . This free expert advisor shows good results throughout last year in backtesting (90% modelling quality) and could prove a valuable tool inside the forex market (it will be part of the newsletter from next week). This free expert advisor also has the quality of being a very selective trader, with trades showing up only once or twice per week (reminds me of God's Gift).
If you are interested in more free and exiting trading systems such as the God's Gift expert advisor please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !
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