Square Waves and Other Indicators The Path To The Best trading Method
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Let's face it nothing new has really been invented in trading in the last 30 years. Computers are faster and more intelligent , but most of the trading strategies and indicators used by them were invented a long time ago. New systems come out everyday, but they are the result of young programmers experimenting and most do not endure the test of time.
One of the more promising systems to come out recently involves digitalizing frequencies and forming Square Waves using fisher transform on some common indicators such as the Stochastic Indicator. This makes for very sharp turning angles giving buy and sell signals. I have tried it , even made some EA s. It does work well on long term charts , but the results were disappointing on short term charts... so I went back to my trading method and the overbought and oversold zones and my special way of dealing with them included in my A Black Box EA.
So what are the best indicators and their pluses and minuses that I have used since 1986.
1 ) Renko is probably still the best way to trade ( it takes time , a random factor,out of the equation) . This combined with oversold and overbought zones that are brief in time as determined by an optimized standard deviation from the mean is probably the best method I have found to trade. This is what my A Black Box EA does.
Here is my latest video:
https://www.youtube.com/watch?v=Tbf87EFwAec
2) The Stochastic Indicator is probably the best indicator ever invented. The only drawback is that it can stay in an overbought or oversold zone a long time . i e holding a short for a long time can be stressful and financially hard to endure. You can be right , but broke because time caught up with you.
3) Divergences work well but have the same weakness as the Stochastic, you can be diverging a long time before any turn around, up or down.
4) Harmonic Patterns . Gartleys and Butterfly patterns were found in the 30 s .They are now owned by brokers, great points to get your stops ( believe you me , they will get them). However, Patterns such as Black Swans,White Swans , Dragons, Crabs and Sharks yield great results . They are rare and most of the Harmonic software does not detect them.. I also find this trading difficult, because it is contrarian trading and why deal with the stress. See my profile for a discussion on the Zup indicator, a genial and free software package only found on Mt4.
5) MACD a great indicator. Unfortunately overused, brokered,oversold, and now too slow for me.
On my profile is the best system I know available to all . I did not reinvent the wheel . I just had to find it and stick to it, hence an EA
More discussion here: https://www.mql5.com/en/users/on111
