Indicators usage explanation

This was a post I placed in the Tradestation forums on Nov 19th. It explains how I use some of my indicators.

Here is the 15 minute chart for soybeans today, beginning at the dotted line from 7:30 pm EST last night. Soybean futures are my favorite instrument to trade because it has more volatility than wheat or corn, but moves slowly enough for me to be able to get in an out with good executions, combined with strong liquidity (soybeans are the USA's second largest grain crop - corn is #1). I include this chart to show how nicely the 8 period EMA works as dynamic support and resistance. Don't ask me why, but it does. (In his Encyclopedia of indicators, Rober Colby says that EMAs tested better than any other indicator he has tested; he also mentions an interesting phenomenon of EMAs is that they change direction ONLY on the candle in which prices close on the opposite side of the EMA. Note this phenomemon occurs in the price graph of my chart, changing between red and blue in the 30 tick chart of my prior post. It makes it easy to see.)

Note also that the Klinger + ATR indicator tonight is suggesting a bullish reversal is very likely, especially since soybeans are in a long-term bullish trend since Oct 9. There appears to be strong buying activity, and I will wait until at least one of my MA's (Hull, Guassian, or EMA) before I buy. This leading signal is what makes Klinger so useful, I believe.

The pale yellow horizontal dashed line is the settlement price from the prior days' trading. With grains, there are daily lock limits, and I mark those with solid yellow lines. (Soybeans rarely reaches the lock limit price of 50 cents, but wheat and corn quite frequently hit their lock limits of 30 cents and 20 cents respectivly.) I mark them every day, however, so I don't take a trade right before lock limit is reached. I also change the color daily, so I don't mistake a prior days' line that was above or below my visible range on the chart for today's lock limits.

I also use MA's to help me gauge when the reversal of trend is occuring, and the MACD to confirm that one is under way (bottom subgraph). Klinger is a wonderful leading indicator of a change in accumulation/distribution, but I use the MA's to help me time when this is happening. The Hull MA is located in the 2nd subgraph (blue for UP, magenta for DOWN), and the Gaussian is located in the 3rd subgraph (green for UP, red for DOWN).

I also use the Bollinger Squeeze indicator to help me know when a loss of momentum is under way and continued add-ons or new trades would be inadvisable.

I have tried my hand at trying to program a strategy, but after spending months at it, I finally realized my programming skills were simply not up to the task. Still, this method is working well for me. Just don't ask if I have automated it; the answer is "no".

Anyway, this is my contribution thus far, in the spirit of sharing. Any suggestions or additional ideas (or questions) are welcome. However, since I am trading every day, I don't spend much time in these forums. Regards to all my fellow traders.

One last observation - quite important and interesting, too:
Note in the second and third subgraphs that when the MAs cross below the other indicators, this moment quite consistently represents the nadir/apex of the trade. It is usually the best point to exit. I like BOTH the Hull MA and Guassian to cross over the other indicators (Klinger in the 2nd subgraph, and slow stochastic in the 3rd subgraph) at nearly the same time, which they do almost perfectly in this example. They often cross on precisely the same candle. If they don't cross nearly simultaneously, I question the signal. You can see this phenomenon in both of the charts I've posted tonight (the 30 tick chart, and the 15 min. chart). I believe this occurs with such consistency, at least partly because stochastic and Klinger (with my settings) are very sensitive and leading in nature, while MAs are lagging by nature.