Lagging Indicator Accuracy In ThinkOrSwim

[bobhobe]

I use moving average that identifies breakout points.
The accuracy of the breakout/breakdown points are not that good.
Any suggestions to improve accuracy would be appreciated.

 

[merryDay]

Why Moving Averages Can Trip Up DayTraders​

Short Moving averages (MAs) are popular tools; and serve as training wheels for new traders to learn to read charts. Therefore, perform an essential service.

But Moving Average Strategies are not a profitable option.
This is because they come with a built-in lag that quietly eats away at profits.
For daytraders trying to catch quick moves, this delay—plus the chaos of choppy markets—can make trading way harder than it needs to be.

Late Entries, Missed Opportunities
MAs are based on past prices, not what's happening right now. That means by the time an MA tells you to buy, the price has already taken off. You’re jumping in late—after the best part of the move is gone.

For example, if you're using a crossover strategy, such as 9ema crossing above 20ema, the “buy” signal often shows up after the surge. You end up buying late, which shrinks your profit potential right from the start.

Delayed Exits, Lost Gains
That same lag also messes with your exit. When a trend starts to fade, the MA doesn’t react fast enough. So while the price is already dropping, you're still holding on—waiting for the MA to catch up.

By the time it signals “sell,” you’ve given back a chunk of your gains. It’s like showing up late to a party and being stuck there even though the fun’s already over.

Whipsaws: The Choppy Market Trap
In sideways or range-bound markets, prices bounce around without a clear direction. This is where MAs can really mislead you.

The price keeps crossing above and below the MA, triggering a bunch of false signals. You might go long on a bullish cross, only to get stopped out when the price flips back down. Repeat that a few times, and you’re racking up small losses fast.


The Big Picture: Why MAs Can Hurt Day Traders
MAs work best in smooth, trending markets. But let’s be real—those aren’t guaranteed day to day.

• In trending markets, the lag means you miss the juiciest part of the move.
• In choppy markets, the lag creates fake signals that lead to losses and higher costs.

Put together, this combo makes it tough for day traders to consistently make money. You miss out when the market’s moving, and you bleed slowly when it’s not.


What New Day Traders Should Know
Moving averages are slow to react and can mislead you in messy markets.
Moving Averages (20, 50, 200) are great for spotting long-term trends, but for fast-paced day trading, they often cause late entries, early exits, and a pile of false signals. If you're relying on MAs alone, you're likely leaving profits on the table—and paying extra for the privilege.

Trending indicators are useful and integral when reviewing trend. Use of lagging indicators should be limited to confirming trend and never as entry.

What are the best indicators for day trading entry / exit:
https://usethinkscript.com/threads/what-are-the-best-indicators-in-thinkorswim.14498/#post-151586
https://usethinkscript.com/threads/using-oscillators-profitably-in-thinkorswim.11497/

 

[GiJoe1970]

this isn't bad but, it gives a delayed signal.
https://usethinkscript.com/threads/hma-arrow-on-price.13046/

After I tested it, I noticed I was giving a decent amount of money back especially if move is fast.
Question for you is, can you have the arrow present itself when the color of the Hull MA changes instead of relying on price change.

Thanks in advance.

 

[useThinkScript]

this isn't bad but, it gives a delayed signal.
https://usethinkscript.com/threads/hma-arrow-on-price.13046/

After I tested it, I noticed I was giving a decent amount of money back especially if move is fast.
Question for you is, can you have the arrow present itself when the color of the Hull MA changes instead of relying on price change.

Thanks in advance.

You are correct.

Moving averages supertrends, and other trending indicators are meant to track TREND!
They make poor entry/exit for several reasons.
read more: https://usethinkscript.com/threads/lagging-indicator-accuracy-in-thinkorswim.15624/

 

[GiJoe1970]

Out of all the Hull MA Arrow combination Indicators this one works the best.
https://usethinkscript.com/threads/...t-scan-for-thinkorswim.947/page-5#post-102164

It's not as delayed as the others. You end up being one bar behind where with the others it was a two or three bar lag.

 

[useThinkScript]

Out of all the Hull MA Arrow combination Indicators this one works the best.
https://usethinkscript.com/threads/...t-scan-for-thinkorswim.947/page-5#post-102164

It's not as delayed as the others. You end up being one bar behind where with the others it was a two or three bar lag.

No, you are being fooled by a repainting indicator.
This indicator has even more delay than all other moving averages.

It uses futures bars.
It waits until the future and then goes back and retroactively paints the signal that looks nice but didn't show up in real time.

 

[antwerks]

Awesome but it looks just to be following price action and it looks to have some lag. Do you think this is better than let's say the VIPMagicSupertrend or the AMM?

 

[merryDay]

Awesome but it looks just to be following price action and it looks to have some lag. Do you think this is better than let's say the VIPMagicSupertrend or the AMM?

This study, SuperTrends, and the AMM2 are lagging indicators.

The amount of lag in an indicator depends on how far back it looks for data:
Shorter lookback periods: Less lag, but potentially more noise and less clear ranges or trends.
Longer lookback periods: More lag, but often provide a clearer picture of overall trends or ranges.

These indicators are primarily used for:
Identifying trends
Determining trading ranges
They are used for broader market analysis, not for timing entries and exits.
The lag actually helps smooth out short-term price fluctuations, providing a clearer overall picture.

 

[antwerks]

This study, SuperTrends, and the AMM2 are lagging indicators.

The amount of lag in an indicator depends on how far back it looks for data:
Shorter lookback periods: Less lag, but potentially more noise and less clear ranges or trends.
Longer lookback periods: More lag, but often provide a clearer picture of overall trends or ranges.

These indicators are primarily used for:
Identifying trends
Determining trading ranges
They are used for broader market analysis, not for timing entries and exits.
The lag actually helps smooth out short-term price fluctuations, providing a clearer overall picture.

THANK YOU