Looking for Technical Indicators

[oddballstocks]

I know this question is akin to asking the church choir where the nearest liquor store is, but I'll ask anyways..

 

I'm looking for technical indicators that you know (have heard) are useful and any basic details on how to use them.  I need fairly simple strategies that I can calculate with a single security.  I have access to any/all fundamental and trading data that you can imagine.

 

Feel free to just list or dump them in here.  I'm EXTREMELY green on this topic, to the point where I just got here after running a search "simple technical indicators" and was looking at moving averages and such.

 

Please don't turn this into a debate into the worthiness of technical investing.  This is for a software product I'm designing and some users are traders.  I don't care how users make their money, I just want to provide very valuable tools to them.

 

Thanks!

[Gamecock-YT]

I used to do some technical trading, there's a good book called 'Pring on Price Patterns'. I mainly used what they call 'pin bars'. Using these in conjunction with some time of momentum indicators like MACD or RSI.

 

Just doing a google search this is pretty much the method:

 

http://www.thetradingtigers.com/wp-content/uploads/2013/11/NZDUSD-Daily-Chart-Nov-22-2013-Chart-1-of-1.png

 

[WideMoat]

Implied volatility, and better, implied volatility rank (i.e., current implied vol compared to historical).

[AtlCDore]

oddball,

 

Maybe more like asking the church choir where the nearest whorehouse is located.

 

As a former trader who could never find the value in technical analysis, friends swore by using the Relative Strength Indicator for stocks (http://www.investopedia.com/terms/r/rsi.asp).

 

John Murphy (http://www.amazon.com/Technical-Analysis-Financial-Markets-Comprehensive/dp/0735200661) is considered one of the masters behind TA.  This might be a good place to start.

 

A couple of friends liked point and figure by Tom Dorsey who was recently profiled in the WSJ. 

 

Best,

 

AtlCDore

 

I hope that helps.

[rykelsap]

Nate,

 

As a former TA practitioner and more recent value convert, I second the use of the relative strength indicator as well as Murphy's book. Technical Analysis of the Financial Markets is probably the most comprehensive overview of TA and most useful if you are simply looking for different indicators to add to a software package. Nothing in the book is novel but I have found simplicity to outperform complexity when it comes to TA, especially when used in conjunction with fundamentals. I may have an old copy of the book that I could send you; pm me if you are interested.

[Guest Schwab711]

I don't think the usefulness of technical analysis should be waived-off immediately. It might be helpful to think about what you are trying to determine by using technical analysis. From my understanding, the goal of technical analysis is to determine the supply/demand for a security and the depth of each to help determine future price moves.

 

I don't know much about the individual indicators but focusing on indicators that directly measure supply/demand would seem to make the most sense. Similar to value investing, you will probably need to incorporate some qualitative information such as 'the mood' of the stock (or general public opinion) at the time of the data you are looking at.

 

If you have past Level 2 data it would be interesting to see the depth of bid/ask over time to see if there is pent-up demand for a stock that a catalyst could unlock.

[muscleman]

I've spent a lot of time researching TA in the past. I don't think any of these indicators would work.

I found price pattern with volume analysis more interesting. Especially if you can get second level market data which shows you for any given day, for each transaction, whether each trade  is filled on bid or ask.

The theory is that if some smart guy decides to buy big, he would keep hitting the asking price to load up. That could be wrong though when some one places bids and patiently spend months to build a position.

[UNF2007]

There is a chapter in the CFA course volume 1, under quantitative methods. It goes through the basic patterns, and provides some historical context to where some of the methods came from. Possibly could be of use.

[MG2014]

You could try looking at what the google and yahoo finance charts offer for their technical indicators.

[jawn619]

TA is more about a framework for understanding the market rather than having specific rules/indicators. basic concepts of support/resistance i think is all you need but i recommend Richard Wycoff's tape reading.

 

[oddballstocks]

Really appreciate the input on this, it's been helpful.  I've put in relative strength, and working on implied volatility.

 

I don't trade stocks, but clearly this stuff works for some people.  I think it depends on how you trade and how much money you have for tools.  Any retail data source I've seen pales compared to what can be pulled back via the Bloomberg API.  I know there are people paying tens of thousands a month on the Bloomberg for trading indicators and data, you'd think if they constantly lost money or this didn't work out that they'd abandon it right?  If anything I think it shows the divide between retail and professional money, never trade against a professional.

 

I'm not looking for complicated strategies, we have a tool that hooks up to Bloomberg and uses their API.  We're overlaying our tools on their data to expose investments people might not have otherwise found.

 

 

[Mohammed Al Alwan]

I like the work of hagun and thaler and I found them useful. I recommend you read their paper for full understanding of their findings.

 

[peter1234]

I like the work of hagun and thaler and I found them useful. I recommend you read their paper for full understanding of their findings.

 

Could you please provide a link?

:)

[Mohammed Al Alwan]

I like the work of hagun and thaler and I found them useful. I recommend you read their paper for full understanding of their findings.

 

Could you please provide a link?

:)

 

here you go my friend

This is the paper by haugen and baker 1996.

http://homepage.univie.ac.at/youchang.wu/haugen_baker_1996.pdf

by the way haugen has authored a good book called new finance and is one of the book recommended by Joel Greenblatt as well.

 

the second paper by Thaler from university of Chicago a prominent behavioral finance scholar

 

http://efinance.org.cn/cn/fm/Does%20the%20Stock%20Market%20Overreact.pdf

 

I have programed these things in excel and I found them very useful tools in addition to my fundamental analysis.By,the way the beauty is that these financial anomalies are universal because I have tested these on frontier and emerging markets like the GCC markets and they work quite well.

 

 

 

 

 

[peter1234]

I like the work of hagun and thaler and I found them useful. I recommend you read their paper for full understanding of their findings.

 

Could you please provide a link?

:)

 

here you go my friend

This is the paper by haugen and baker 1996.

http://homepage.univie.ac.at/youchang.wu/haugen_baker_1996.pdf

by the way haugen has authored a good book called new finance and is one of the book recommended by Joel Greenblatt as well.

 

the second paper by Thaler from university of Chicago a prominent behavioral finance scholar

 

http://efinance.org.cn/cn/fm/Does%20the%20Stock%20Market%20Overreact.pdf

 

I have programed these things in excel and I found them very useful tools in addition to my fundamental analysis.By,the way the beauty is that these financial anomalies are universal because I have tested these on frontier and emerging markets like the GCC markets and they work quite well.

 

Thank you very much.

:)

[orthopa]

Bollinger bands, moving avgs, MACD, stoch's are the basis of what I have used when doing some "trading" or using technicals. I have found that the more "signals" that correlate the higher likelihood of being able to predict. For example if MACD turning, stochs turning and the stock just bounced off the lower bollilnger band and MAs then the trend will likely continue.

 

I have also found that trends are a very large part of trading technically, and for a trend to change a big event is need to reverse the momentum.

 

Im not a die hard technical guy but I do think it works to a certain degree with some stocks. Not as a product of its unique usefulness but due to the combined effect of those in the market that act on the "signals" or technicals.

[HWWProject]

Tom Demark's work on Trend Exhaustion is a favorite of mine.  TA goes against my value investing principles but I'd seen enough real-world calls that I got into it a few years ago.  Impressive how often markets turn on his Setup, Combo or Sequential indicators.  I turned this into an Excel product at:  http://www.healthywealthywiseproject.com/trend-exhaustion-excel-spreadsheet

 

I stay with his basic indicators.  It does require some study, its not typical moving average TA.  His work is useful for managing large sums of money, as you are with the Trend until the end, designed to sell into Strength and buy into weakness.  Recommend the book 'Demark Indicators' for an overview.