Technology Insights - Indicators

Collective Clarity's Unique Machine Learning

Financial Indicators, do they matter?

Using financial indicators to predict price movements? Market Modelling influences results dramatically.
Masses of Information
Thousands of Settings
Seasonality

What to do about financial Indicators?

The only absolute points that can be made about indicators are:

1. They are all lagging

2. Some work some of the time

All indicators produce a value(s) derived from generic price activity in a stock or asset. We are talking about MACD, Bollinger Bands, Stochastics, ADX, Average True Range and the myriad of others.

We also include exponential moving averages (EMA's), price patterns and candle formations.

From the hundreds of financial indicators there are available, further refinement of the calculated value can be made using variable time settings or similar type changes. Moving Averages are the same and may be adjusted to suit your preference, i.e. value, calculation formula, price crosses etc.

We have observed two clear factors:

1. Comparing the calculated value across multiple different time frames tends to increase win rates while decreasing the volume of trades.

2. Longer time frames tend to be more accurate that shorter ones.

The key is to understand what drives the indicator (or other signal) to follow through to a successful trade. That’s where Artificial Intelligence can help.

Cross referencing tens of thousands of indicator settings, moving averages and patterns occurring when Market Modelling also indicates a same direction move dramatically increases the number of winning trades. Patience is a virtue.

So too is timing. Time of year and time of day also play a considerable part in trading success.