mblem22
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| Total Posts: 8 |
| Joined: Jun 2012 |
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| Let's say someone challenged you to predict whether a stock would go up or down. If you were limited to knowledge only of the technical indicators from that stock, which indicators would you ask for? Let's also say that you are limited to only five technical indicators of your choice. Which would you ask for and why? |
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I like the indicator called standard deviation. Other than that I often use the rate of change indicator. And sometimes moving averages and volume.
Seriously though, I think indicator is not a good concept. It implies some kind of fuzzy interpretation. So for example temperature and pressure might be good indicators for predicting the future weather, but there is nothing analogous in the financial markets. I think you are barking up the wrong tree. The usual technical analysis is all bogus in my mind, with very few exceptions.
I can imagine trading systems where the profitablity increases with some metric, but certainly not in every circumstance. For example stocks tend to follow trends on one timeframe and revert to the mean on others. It all depends. In my view technicals are only releveant in the short term. Longterm the fundamentals play out. The best longterm predictor of stocks over 5-10 years is some kind of weighted PE ratio. Shiller's pe is actually not that bad for predicting stock prices when valuations go to extremes, such as the early 80s and the last 90s. |
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YukaRedux
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| Now with added evil |
| Total Posts: 574 |
| Joined: Dec 2004 |
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| One month excess (or residual, if we're allowing that as a technical indicator) return, inverted. |
Back from the dead. And still not a girl. |
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mblem22
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| Total Posts: 8 |
| Joined: Jun 2012 |
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| I'm not proposing that you would ever actually make a decision based on only a few technical indicators. Just wondering what indicators people would choose to get the best prediction for future price movements. In other words, what indicators would you say are most powerful, without using a bunch of indicators that tell you roughly the same thing. I'm also very interested in why people would choose each one. |
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FDAXHunter
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| Founding Member |
| Total Posts: 8118 |
| Joined: Mar 2004 |
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| I'm with YukaRedux. One month excess return. If I had to choose one and one only, I think that be the one. |
Salman Pushdie |
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