European Forex Professional Weekly 2009-11-05

[tadinda]

Use of Indicators

Hello Sive,

You know I read your analysis like the Bible and thank you once again for your help here. It is not normal to find a professional such as yourself to help us poor traders out.
I was also extremely happy to see that you will extend the pairs to include others besides EUR USD.
I am no pro. But if you need any help to collect data etc I will be more then happy to help as I will learn in the process.
MY only problem so far in following your thinking is how you are interpreting the indicators. As I said am not one of the smartest but I love learning. And this is the only feature which I have not grasped. Am sure a simple explanation from yourself would prove its weight in gold as your every word in these analysis.

Regards
Ernest

 

[Sive Morten]

Dear Ernest,
There is no shame that you are learning - vice versa, it's very good. I'm also try to learn all the time.
So, concerning indicators, it's a bit large theme to discuss in forum, but I try give you a compressed view that I hope will help a bit.
I use only 3 indicators - MACD, Slow Stochastic and Oscillator. We already discussed, how are they calculated. So
MACD - this is a trend indicator. When signal line is above slow line - trend is up, other way trend is down. But market has to have directional move (thrust is much better).

Stochastic - indicator of a weak players.

So, how I use them. Let's assume, that we have uptrend (based on MACD, remember?) of the market on 1 hour chart. When market reach resistance, Stoch begins to go south. Then, I use FIb support level on 5 min chart and watch, will market resume up move or not (5-min MACD should turn up and confirm in that way hourly trend). If it will, i check for MACD on hourly chart. If slow line holds signal - then trend is still in force, and I enter the market on buy side. (Example - is in my trade descriptions. The first one- is a pure trend trade, just look at indicators when I enter from Fib support).
Oscillator - is for Overbought oversold level estimation. It helps to enter or not in trades, it points where I should close position, it helps estimate levels or ranges where will be strong resistance or support. Also it helps in decision making about targets. For example, I have COP and OP, but assume that level 1.50 is overbought level and it between COP and OP. So i will close my position on COP, because I can catch a strong retracement before market will reach OP due to extreme overbought.

It's just general description. THis is not my idea to trade like that - this is Joe DiNapoli method. So, if you feel that It comfortable to you - the best way is to learn the book.
Otherway is to ask definite questions in trade descriptions topics. It much simplier to explain this using examples.

Hope it helps,
Sive.