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IDT - Index Day Trading
Using "Daily Market Outlook" as an additional indicator
You can use our outlook as an additional
trading indicator to our existing trading system in order
to reduce trading risk.
Most professional
traders will make use of at least three independent indicators to
come to a final trading decision.
How to work with several
indicators:
- You will not find a system that gives 100 percent correct
results, nor an analyst who could predict trends with 100
percent accuracy, just as you will not find a publisher of news
who will tell you 100 percent of the truth.
- If a trader uses only one indicator (advisor), he is usually
blinded by this indicator (advisor). This results in "tunnel
vision" and the trader will never see beyond what that single
indicator predicts.
- additional indicator can reduce trading risk and cut losses by
even a percent, it is definitely worth the price.
- It is difficult for one trader to use several totally different
techniques to analyze the market. This is why many of them use
the results from several different analysts.
- Every trading indicator has a certain level of accuracy.
Sometimes in order to define this level, a trader must watch
this indicator for several months.
- The best results arise from indicators that are based on
independent forms of analysis. For example, news, market
sentiment, and volume are three totally different indicators.
-
Analyze the results of your indicators determine the current
market stage, then make your trading decision accordingly.
- Each indicator that you use should be
assigned coefficient that is based on the strength of that
particular indicator. For example, if our "Daily Market Outlook"
states that there is a good chance the index will move lower in
the mid-term, you should assign something like a -7 to that
indicator. But if the news indicator is contrary and states with
a great deal of certainty that the market will move higher, then
you assign a +7 to that indicator.
Which indicator should you follow? Well, volume tends to be much
more truthful than the news, so you may want to weight these
indicators and give the volume indicator 0.6 and the news
indicator a 0.4 weighting. As a result of weighting, the volume
indicator (0.6*-7) is greater than the news indicator (0.4*+7),
but the difference between the two is not as large. In this
scenario, you may want to cautiously play down.
-
Be aware of any free trading advice that you find on the
internet; deconstruct where the advice comes from and who may
benefit from giving you trading advice.
Example of using several indicators.
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QQQQ
Signals
Past 6 Months |
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10%
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20%
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Compound |
Compound
Margin |
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As of 3/20/2010 |
Buy / Sell Trading signals.
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