High quality indicators should have the highest signal to noise ratio without sacrificing fidelity. Great indicators will present the simplest and easiest to read signal that require the minimum time to process. Ideal formats for indicators would be simple case words such as [Trend, Range] or [Up, Down]. Some ideal indicator formats that are not in common use would be text with sound alerts, a numerical probability, or very simple graphs where all information is on screen and present.
Poor indicators will be redundant, overly complex, unclear, and excessive. Unfortunately, most indicators are poor and require expert level reading skills when the information is actually stupendously simple. Notorious are the indicators that display multiple lines that cross under or over because such signals are very easy to misinterpret and that would be especially true in high stress situations such as trading. Graphic indicators do have the advantage of displaying the past in a condensed form but trading is, also, about the present and the future and that is where indicator re-design could be very useful. I imagine indicator designers could get some inspiration from fighter jet heads-up-dispalys.
For great insight into indicators..
* Read Gary Smith's "How I Trade For A Living". He basically explains all the reasons popular indicators are useless or will become useless in the future.
* Steenbarger explains the value in simple trading screen
* Miller's take on indicators
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment