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]

Moving averages supertrends, and other trending indicators are meant to track TREND!
They make poor entry/exit for several reasons:

1. Lagging indicator: trending indicators are based on past price data, which means they are lagging indicators. They reflect historical price trends and do not accurately capture the current market conditions. By the time a trend signal occurs, the price has already moved, resulting in suboptimal profits.
2. Whipsaw movement: trending indicators generate false signals during periods of volatility and / or market noise. In such cases, the price crosses above or below the indicator multiple times, leading to frequent buying or selling signals. This whipsaw effect combined with the lag results in multiple losses which eats into trader confidence.
3. Lack of adaptability: trending indicators use fixed lengths (e.g., 50-day or 200-day moving average) to calculate the average price. However, different securities and markets exhibit varying levels of volatility and trends. Fixed moving average periods are not suitable for all assets nor for all timeframes, leading to suboptimal results. Additionally, moving averages do not adjust dynamically to changing market conditions or emerging trends.
4. Insensitivity to market reversals: trending indicators tend to be slow in responding to market reversals. They are smoother indicators that provide a broader view of the price trend, which can cause delays in identifying trend reversals. As a result, traders using moving averages, enter or exit trades too late, missing out on potential profits or suffering larger losses.
5. Over-reliance on a single indicator: Relying solely on one type of indicator as a trading strategy is not recommended. The market is influenced by multiple factors, including fundamental news, economic data, geopolitical events, and investor sentiment. Ignoring these factors and relying solely on buy / sell signals overlooks critical information that significantly affects profits.

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

@bobhobe

 

[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