The top 3 indicators worth verifying a buy entry signal which must be the price chart aka candlestick charts are not your common indicators everyone promotes.
What trading style are you using? Different Trading Styles require different indicators.
VWAP is not a good indicator to use as this is the popular indicator for smaller funds automated triggered orders. What happens is this indicator LAGS severely. You end up seeing a signal after an HFT has gapped or run a stock up and then the smaller funds VWAP triggers.
VWAP does NOT reveal Dark Pool quiet or hidden accumulation as many retail gurus promote. It can cause whipsaw trades for day traders and swing traders and losses can be significant.
MACD is very old and requires that price move UP before the entry. When it was written in the 1960’s orders took minutes to fill and a variant of price already moving was not a factor. However, nowadays professional traders are on the millisecond and on the penny spread or half penny. Waiting for price to move so that the MACD can cross and signal means you are getting in late. This can cost a lot of profit point potential and it is the most common whipsaw loss for retail traders.
You have to enter BEFORE price moves not afterward for day, swing, momentum, or velocity trading.
RSI is problematic right now because the High Frequency Trading Maker/Takers are using it as a technical strategy. They use the 14 day RSI and their orders trigger automatically. By the time you see the RSI cross signal the HFTs have gapped or run the stock already most of the time. That means you are chasing a fast moving run.
Fibonacci are favored by the retail traders who like math or lines. These are not popular with professional side traders for many reasons.
To be successful in today’s faster paced, penny spread, trading activity you need to have Dark Pool indicators that reveal their buy zones BEFORE price runs. Pro traders find the Buy Zone and accumulation patterns, setup specific patterns and then wait. The pros create enough activity to trigger the algos of the HFTs. Then the pro rides the runs up and sells ahead of the HFT selling. Meanwhile retail traders chase the runs and gaps, get fills by their broker at the highs and get whipsawed at a loss out of the trade.
You need to use indicators that define the quality of the price action that is tightly compressed. Quality Indicators are quantity and time indicators. Price and Time indicators lag too much in the millisecond penny spread trading activity.
You also need Hybrid Leading Indicators. These are indicators that lead price as they use all 3 data in formulas that are far more complex than the older indicators written decades ago. These are available in full service charting programs. If you are serious about learning to trade as pros do, then you need a complete charting program. This is not found in retail broker charts.
Thanks for Reading
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