The Parabolic Sar is misleading because it doesn't report the "No Trend" Market... Or does it? - page 2

 
adenauer692 #: Thanks Fernando, this thread is getting more and more interesting! Are you telling me that any of the following indicators have undergone changes compared to their original version? *The MACD is also listed, although it looks smaller. Please, tell us the example that in your opinion is the most "scandalous" and what are we tarders "missing" when trading with this more modern but "significantly different" indicator? That is, what negative consequences does it have for traders to use that modified indicator compared to the original one.

Yes, they have undergone changes (some more, some less), but the MACD was invented by Gerald Appel, not by John Welles Wilder Jr.

There is nothing "scandalous" about the changes. They just reflect different views. Here are some of the differences.

For example both the ATR and RSI was originally done with a form of exponential moving average (EMA) using a alpha weight calculated from the period as (1/period), which is also known as Wilder's moving average but more commonly known as modified moving average (MMA), running moving average (RMA), or smoothed moving average (SMMA) which is what it is called on MetaTrader.

However, currently both the ATR and RSI are commonly calculated using a simple moving average (SMA) instead of the original method. There are both advantages and disadvantages to using the Simple Moving Average, however, most importantly is the fact that the two methods results in very different values compared to each other.

 
Fernando Carreiro #:

Yes, they have undergone changes (some more, some less), but the MACD was invented by Gerald Appel, not by John Welles Wilder Jr.

There is nothing "scandalous" about the changes. They just reflect different views. Here are some of the differences.

For example both the ATR and RSI was originally done with a form exponential moving average (EMA) using a alpha weight calculated from the period as (1/period), which is also known as Wilder's moving average but more commonly known as modified moving average (MMA), running moving average (RMA), or smoothed moving average (SMMA) which is what it is called on MetaTrader.

However, currently both the ATR and RSI are commonly calculated using a simple moving average (SMA) instead of the original method. There are both advantages and disadvantages to using the Simple Moving Average, however, most importantly is the fact that the two methods results in very different values compared to each other.

Are those differences that you mention important enough to unequivocally conclude that the Original indicator allows you to obtain (based on it) better trading results?

 
adenauer692 #: Are those differences that you mention important enough to unequivocally conclude that the Original indicator allows you to obtain (based on it) better trading results?

Unknowable, until you implement both (with the rest of the strategy) in a EA and run the optimizer.

 
adenauer692 #: Are those differences that you mention important enough to unequivocally conclude that the Original indicator allows you to obtain (based on it) better trading results?

I did not state that! I stated that there are both Advantages and Disadvantages for each method! It us up to you as the trader and analyst to see which method best fits your requirements. To do that, however, you have to know and understand both methods, including the maths, so that you are able to choose the "right tool for the job".

For example, when I need fast calculations for processing tick data, I use the EMA/SMMA method, because it is incremental and CPU/RAM efficient, so I don't need to store arrays of data to calculate it. In contrast, on rare occasions, on long-term time-frames, if I don't want to load or process a lot of historical data during run-time then I opt for the SMA instead because the EMA/SMMA requires 3.45/6.9 times more historical data respectively than an SMA.

In general, I prefer to use the EMA method because it is more efficient and responds quickly to the more recent data. However, I know this because I took the time and made the effort to study both methods properly so that I could decide which method works best for my requirements.

 
William Roeder #:

Unknowable, until you implement both (with the rest of the strategy) in a EA and run the optimizer.

Yes, William, I already imagined an answer similar to the one you have given me: there is no strategy that is better than another and everything will depend on your personal research and your trading style.

In the end it turns out that you have so many options available (Indicator in A mode, in B mode, in c mode,..., in J mode,...) that several Earth lives are needed to test all these options...

With the danger that so many dilemmas leave you paralyzed. A few days ago I saw a graphic joke that expressed it very well:

Analisis_Tecnico_perfecto

Please, in the previous exhaustive technical analysis, indicate me the entry points to start trading...

 
Fernando Carreiro #:

I did not state that! I stated that there are both Advantages and Disadvantages for each method! It us up to you as the trader and analyst to see which method best fits your requirements. To do that, however, you have to know and understand both methods, including the maths, so that you are able to choose the "right tool for the job".

For example, when I need fast calculations for processing tick data, I use the EMA/SMMA method, because it is incremental and CPU/RAM efficient, so I don't need to store arrays of data to calculate it. In contrast, on rare occasions, on long-term time-frames, if I don't want to load or process a lot of historical data during run-time then I opt for the SMA instead because the EMA/SMMA requires 3.45/6.9 times more historical data respectively than an SMA.

In general, I prefer to use the EMA method because it is more efficient and responds quickly to the more recent data. However, I know this because I took the time and made the effort to study both methods properly so that I could decide which method works best for my requirements.

jajajajaj don't get mad at me Fernando, I know you didn't say that. I just asked if you could go a step further and say that these differences could unequivocally lead to better business results...

Of course, I appreciate you taking the time to get to the bottom of those indicators...

Please, Fernando, you, which collection of "winning" indicators do you trust your trade?

 
adenauer692 #: jajajajaj don't get mad at me Fernando, I know you didn't say that. I just asked if you could go a step further and say that these differences could unequivocally lead to better business results... Of course, I appreciate you taking the time to get to the bottom of those indicators... Please, Fernando, you, which collection of "winning" indicators do you trust your trade?

If you need more knowledge, then may I please suggest that you do some research of your own.

I unfortunately no longer provide any customer services such as mentoring, coding or whatever.

 
Fernando Carreiro #:

If you need more knowledge, then may I please suggest that you do some research of your own.

I unfortunately no longer provide any customer services such as mentoring, coding or whatever.

No, no Fernando, I did not ask you for professional advice (if I wanted to, perhaps I would have done it privately).

Simply, within our relaxed and pleasant chat, it seemed natural to follow the thread of the conversation what your favorite indicators were.

What would seem to me a very accredited collection, given your great knowledge in it.

 
adenauer692 #: No, no Fernando, I did not ask you for professional advice (if I wanted to, perhaps I would have done it privately). Simply, within our relaxed and pleasant chat, it seemed natural to follow the thread of the conversation what your favorite indicators were. What would seem to me a very accredited collection, given your great knowledge in it.

I don't have favourite indicators. They are tools, like a hammer, or a screwdriver, or a paint-brush. I select a "tool" (the maths behind an indicator) based on what kind of information I need for the strategy I am developing, and I develop the strategy based on the market conditions on which I want to capitalise.

What I will say, is that I tend to prefer not using indicators at all, but when I do, I choose them based on the maths that is clean, simple and efficient.

 
Fernando Carreiro #:

I don't have favourite indicators. They are tools, like a hammer, or a screwdriver, or a paint-brush. I select a "tool" (the maths behind an indicator) based on what kind of information I need for the strategy I am developing, and I develop the strategy based on the market conditions on which I want to capitalise.

What I will say, is that I tend to prefer not using indicators at all, but when I do, I choose them based on the maths that is clean, simple and efficient.

Thank you very much Fernando. You answered the question that started this thread quickly and accurately. Perhaps, later we have dispersed a bit... But, the truth is that since you are so good they made me want to spread out. For my part, I consider it SOLVED.