Thread: CatFx50
View Single Post
  #824 (permalink)  
Old 01-27-2006, 05:05 AM
fifthbeatle's Avatar
fifthbeatle fifthbeatle is offline
Junior Member
 
Join Date: Jan 2006
Posts: 11
fifthbeatle is on a distinguished road
At the risk of boring everyone, and exposing the level of my newness to forex (!), some observations:

1. Keeping it simple. It seems we should minimize the number of signals we use for each side of the trade (market entry/market exit). Is there a need to confirm the direction of the market before we submit our order? Absolutely! However, the more indicators we use to confirm the direction of the market, the lesser the opportunities to trade. Do we wait for a confirmation from 5 signals? (I use the number 5 here purely for the sake of this discussion.) By the time that occurs, it could be way too late to enter the market. Statistically, what are the chances all 5 indicators will point in the same direction, at the same time? In times of dramatic price movement, the chances are probably fairly high. However, those price spikes are few and far between, aren't they?. Again, statistically speaking, even the chances of perhaps 2 or 3 signals pointing in the same direction at the same time are somewhat small. There is also the problem of having too much information. If you wish to use 5 indicators to confirm a market direction, you can mentally/emotionally paralyze yourself -- the first 3 indicators look like the trade should be a "go," but, do I wait for the other 2 indicators to confirm the confirmation, which has already been confirmed......??? Or, do I go ahead and enter the market based on only 3 of my 5 indicators?! We all play mind games with ourselves. Now, I realize anyone can go back into time and post a screen shot where 5, 7, even 10 indicators all point in the same direction at the same time, but, is that really realistic? Or necessary we have that many indicators?

Personally, I would like to use just 3 signals on each side of the trade. Assuming a potential long position in a currency pair: (1) What I would call the market-direction/entry signal, which tells me prices are headed up, and
(2) and (3), which I would call the confirmation signals. 3 signals total is just my preference. In Nina's System, the bar crossing the 50EMA is the 1st signal, the Step MA Stoch (and the subsequent bar opening above the 50EMA ?) is the 2nd (and 3rd ?) signal(s). Again, statistically, I believe that should give you a good market-entry point, while, at the same time, filtering out some of the less-desirable trades.

Our problem, at present, is finding those signals/indicators to indicate our exit from the market.....
__________________
"All the world, is birthday cake, so take a piece, but not too much." - George Harrison
Reply With Quote