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A classification by Bill Wermine

There are truths in the market. There are indicators that do not lie and are ­base­d on fact rather than subjective opinion. They are the indicators which professional traders rely on.

These indicators include:

Price

Volume

Support and Resistance

Time

These are the first order indicators. Every other technical indicator is a derivation of these first order indicators.

First Order

Price

Volume

Support and Resistance

Time

Volatility

Second Order

Stochaistics

Moving Averages

MACD

ADX

Oscillators

Third Order

Astrology

Elliot Wave

Feng Shui

Palmistry

Fibonacci

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Advice by Bill Wermine, a Fund Manager Representative with Phillip Capital Mgt Sdn Bhd and handles portfolios for high net worth investors:

Be a professional, and focus only on first order indicators.


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Simplicity has a beauty all its own. The First Order indicators are sufficient if you know how to use and understand them well.

Hello,
True, first order is the most basic and important of all... however, they are also quite difficult to master... experience and frequent chart readings can help... :)

Indicators are made ­base­d on the balance between predictive and accuracy values... just like the balancing between specificity and sensitivity in lab tests... such balancing also determines which to use for different time ­frame­s... why?
because accuracy is increased by adding more history... and by doing tat, users need to have a longer time ­frame­ in order for it to work well... :) so pick your indicators well, ­base­d on your understanding of the indicators, balancing of predictive and accuracy values (­base­d on your risk level), and also your trading plan (your holding time)... Remember, time of holding can dilute your entry and exit accuracy... :)

hope i dont sound too confusing... hehe.. if anyone require further explaination, do feel free to request... or ask... :)

Regards & happy learning...

I would rather keep it as supply and demand, greed vs fear, bears vs bulls and amateur vs professional.

Price = concensus of the market participants

Volume = the emotion of the crowd

Support and Resistance = the memory

Time = the holding time

Others are just working on the probability....!

Practice makes perfect.......no deny on it.....!

haha... if you put it this way, everything tat involves the price will be supply Vs demand, greed Vs fear, bears vs bulls... :P

sometimes, it would also be good to have things theory vs practical too... hehe... :)

Regards...

Hi, just to share with you my trading strategy and hope that you guys can give some comments on my strategy...

Usually i'll use trendlines or EMA200 to identify the trend, and i also look into the weekly chart to get a better idea of the overall movement. So, as long as the price is trading above the EMA200, i'll go for long position during pullback. Sometimes i also use the combination of EMA10 and EMA50 to identify the trend as well.

So, i'll look for low volume pullbacks, and waiting to enter the position when the price is in the EMA10 and EMA50 area, or EMA200.

Normally i'll use an oscillator(either RSI or Slow stochastec, MACD Histogram and basic candlestick patterns to pinpoint the entry on daily chart. I'll use Upper Bollinger Band to project the immediate price target in order to determine the risk reward ratio.

After the entry i'll place a sell stop below the previous candle to trail my profit. Of course there are times i close my position too early or turn a trade into a losing trade because of my emotion

I hope that you guys can comment me on my strategy or ways to improve my strategy and my successful rate...

Rgds

Hi Jin,
does the system work well for you? anyway, it also depends on how long is your trading time ­frame­... and your aggressiveness... how long is your time ­frame­?

Regards...

Workable method.
One issue I have is the trailing stop ­base­d on low of previous candle. Why do you trail stop ­base­d on one candle's low? This trailing stop is bound to get hit and often you ll take profit too early :P

try trial stops using lowest low of the last 3 candles, see any improvements :)

Thx for the reply

RL: The system is working ok, but sometimes the price will go into a trading range after it hits the support. so, usually i'll hold my positions for weeks or may be 1 or 2 months.

Max and scw: Yea, sometimes the price do hit my sell stop and rally again, and i have to admit that i'm not good at taking profit and at times turn a wining tade into a losing trade...

Actually the main problem i'm facing is finding the right exit strategy and how to work out whether the market is going to trend or in a trading range...

According to Elder, identifying trends and trading ranges is oe of the hardest tasks in technical analysis. It is easy to find them in the middle of the chart, but the closer you get to the right edge, the harder it gets...

So, would like to learn from you guys on how to identify trends and tradig range. Of cos we cant forecast how the market will move, just hope to increase the probability of knowing whether it will likely to trend or stay in a trading range...

Thx and best regards