PRICE INDICATORS

The momentum trends are about the same in all three indicators. While it is a little
difficult to see this in the black-and-white screen shots, the momentum reversals for
each indicator where the fast line crosses the slow line are all within a bar or two of each other.

What’s the point of this comparison? Most price-based indicators represent about
the same thing, that momentum cycles act and react about the same time. The settings for any indicator, including the lookback period can be tweaked for different markets and different time frames for the most reliable signals. But, as you can see from Figure 2.1, even without tweaking the settings for each indicator they each still represented the momentum cycles about equally well. Later in this chapter you will learn how to choose the best settings for any indicator for any market and time frame.
Figure 2.2 is another screen shot with just two indicators, Stoch and DTosc, with less data so you can see the momentum cycles more clearly. I’ve drawn thick vertical lines in the indicator window at each bullish and bearish momentum reversal where the fast line crosses the slow line.

The momentum reversals in both indicators were made plus or minus one bar of
each other. Either the Stoch or DTosc would be equally helpful to identify momentum
reversals for this data. Don’t let anyone sell you on some magical, mystical indicator for momentum trading! All momentum indicators represent the same momentum cycles, and When make reversals about the same time. The black-box system scammers will claim they have a secret, foolproof indicator, but more than likely it is one you already have in your charting program.

There are only so many ways to crunch the open-high-low-close of price bars. Most
variations come up with about the same result and can be equally useful.