~ B3’s Preferred Indicators ~

Found here is a list of indicators of which I find good value.  

These indicators may not be used at all times in all situations.  I use them when the time is right much like a flat-head screwdriver in a tool box.  Some indicators have a wider application space than others.  One thing I keep in mind at all times, “You are trying to answer logical questions about the price chart.”  Don’t get caught up in what any indicator is telling you, nor should you get caught up in what a confluence of indicators tell you.

To elaborate, the question is generally, “Will price go up down or sideways?”  No one knows the answer to that, so don’t try to answer that question, ever, not even with an indicator!  The key is to ask better questions.  The Q’s should be, “What is the change in probability at any given price or range of prices that price will go in my chosen direction?”, “What is the plan should I profit (targets),” “What is the plan should I fail or stall (stops, trails & bails)?”  

Finally, a carpenter never asks the saw how to cut the board… don’t ask an indicator how to go long or short.  Get to know your tools, for a carpenter it’s: do they have handles? Do they twist?  Do they puncture, cut or saw?  Same for trading a chart.  Indicators are just tools… not strategies, and certainly not tactics.

Tools in my box by category (~ clickable if links are available ~):

Price-Level Indicators

{Indicators that point out important price levels; needs the levels to continue to be actionable; you’ll go crazy trying to trade them alone}
  • Level_Break  (Using Since 2009)
    • Simply finds the highest high and lowest low of any given period of bars.
    • I look for breaks to the up or down side at key support and resistance levels
    • Not every break is a key level, most are not!
    • Great for alerts, look elsewhere on whether to take the trade
  • Open_Range (Using Since 2010)
  • 2day_Levels (Using Since 2014)
    • Today’s HH, LL, HL2 
    • Yesterday’s HH, LL, HLC3
    • 2day HH, LL, HLC3
    • Traders look at these levels for daily directional information and bias

Time & Range Indicators

{Indicators that measure range and show an expected movement of price in any single time period or cycle of periods; needs price to continue to move in orderly fashion; when broken they must be ignored}
  • Variable_Dynamic_Range_MTF (Using Since 2014)
    • 7-15m, 7-1h, 5-4h, 5-day, 3-week, 3-month, 3-quarter, 3-year timeframes
    • HLC3
    • take 100% of range not including current period in figures 
    • Divide that by 2 and add to HLC3 for Hzone and subtract for Lzone, this gives you the inside lines of the zones.
    • Take absval(HLC3-HL2) and add the results to the zone inside lines to make the outside lines of the zones.
    • Used to cycle through timeframes and declare an expectation of range & bias
    • Tactical and strategic decisions are made on the adherence or extension of these ranges
    • HLC3 and zones often work as support and resistance
    • Above or below HLC3 declares a general bias
    • Elegant, extremely accurate, and powerful once mastered
    • Great to set chart alerts for touches of the HLC3’s and zones
  • Fibonacci_ABC_XYZ (Using Since 2012)
    • Take the most recent 3 sets of Fibonacci retracement drawings and look for the symmetry in them and the clustering of their values.  This gives you 2 sets in the current direction and the middle set is against the current direction.
    • It is interesting to see one set’s 50% line up with another’s levels, the more 50%’s are lining up with other values, the more probable the levels matter.
    • Also, it is valuable to see the extension values as well to show where a break out may find new trouble.
  • ~ MEASURED MOVES ~ (Using Since 2012)
    • Measure the last two moves in the current direction not counting the current.
    • Project them as a zone above or below the swing low or high respectively.
    • Crazy how this points to the appetite of the market and how far it is willing to allow a price move before A. profit taking or B. people coming in to fade the move.
  • Average_True_Range (ATR) (Using Since 2004)
    • The average bar range of a period of bars of your choosing.
    • I prefer length=7 on intraday charts and length =14 on daily charts
    • Used to find targets for daytrading a chart.  The time-frame interval of the chart’s ATR needs to match desired target within 2-3x ATR.   If you get only 1x ATR that is ok.  Getting less is silly unless you are saving a winner from being a loser. Trying for more will take more time and you should zoom out your risk reward model.
    • Used in Daily charts in percentage of price format.  I don’t want to trade anything that has a 14 day ATR of less than 2.5% and I prefer 5% or greater.  Though, it is important to know if news or events have temporarily bloated the readings, and if so that has to be calibrated into your figuring.
  • LRC_StdDev (Using Since 2012)
    • Linear Regression is used as a center line and 1.5 and 2.0 standard deviation depiction above and below in a channel
    • This is a great too to see if your reversal idea has more probability than other ideas you have had.  You can even put the LRC on indicators instead of price.  Look for the Std Dev’s to line up with support or resistance and price to reverse there.

Trend Indicators

{Indicators that cut you a large portion of trends; needs extended price movement to succeed; oscillation kills them}
  • ClearMethod  (Using Since 2016)
    • Looks to see if a price bar is fully above a recent bar.  If so it paints green candles, and then waits till a price bar is entirely below recent green candle, then starts painting them red.  Repeat.
    • K.I.S.S.  Simplest in the arsenal and used the most!!!  Simply the best tool in the box!!!
    • Change in color is a great chart alert!
  • HL2MA (Using Since 2014)
  • 2050_Mean (Using Since 2018)
  • Least Squares Regression (Using Since 2014)
  • Typical_Price  (Using Since 2016)
    • Typical Price refers to the HLC3 or (High + Low+Close) /3
    • Take the average of the last 10 bars’ typical prices
    • K.I.S.S.  Simpler than most moving averages.
    • I use it’s slope as an indicator
    • I find that entry price hunting is easier with this indicator. Entering long below typical price and entering short above typical price helps a trader follow the “buy low, sell high” principle.

Oscillator Indicators

{Indicators that locate up and down price movements; needs support and resistance to hold to succeed; trends kill them}
  • 3STOX & Stochastics in general (Using as Trio Since 2018 and as [%K,%D] since 2004)
    • The stochastic (stox = abbv) reading of a period can be thought of as taking the highest high and calling that 100 and the lowest low and calling that 0.  Then the rest of price movement in between is a sliding percentage scale. 
    • Since this reading would be fairly noisy, it is averaged using Wilder’s moving average (called %K), and then usually it is averaged a second time to make a signal line (called %D).  I have recently abandoned the %D line, only using %K lines.
    • The “3” refers to the fact that I am using 3 %K’s from the 12 bar length for the highs and then the lows.  Then, I am taking the 48 bar length stochastic of the [(o+h+l+c+c[1])/5] as a super slow reading. 
    • This gives me two fast stochastics.  If the high or low pokes out and whipsaws, it is ok because I only react if both the high and low stox lines are moving.
    • The slow simply shows me the overall trend on a larger scale without having to zoom out on the chart.  However, even as slow as it is, it still oscillates as well.
    • This indicator is overly complex and took a long time to find it’s usefulness.
  • Extended_Stochastics (Using Since 2009)
  • Directional_Trend_Index (Using Since 2012)
  • Average_Momentum (Using Since 2014)
    • Close of the second to last bar on chart – the close of 10 bars before that.
    • The main line is noisy and not averaged, then a signal line is made using Wilder’s MA set at 10. 
    • K.I.S.S.  Simply shows the ebbs and flows of the market via change-swaths of price.  Tends to point out chop by looking ugly, and tends to stick with trends longer than other oscillators.
  • FisherTransform_Daily (Using Since 2017)
    • “Converts prices into a Gaussian normal distribution. In this way, the indicator highlights when prices have moved to an extreme, based on recent prices. This may help in spotting turning points in the price of an asset.” – Investopedia
    • I simply use the hull moving average of the FT set at super low setting as a signal line.  Then it is used like a traditional oscillator.
    • I am currently testing the signals in live motion to see if the swing trading is as good as the backtesting has said it is.  The jury is still out.
    • This is the most derivative indicator I have in the group, however, it is promising in fact that I often look at it and say damn this signal is kicking arse!!!!  — Totally worth my hard work and effort to give it a shot.

Flow Indicators

{Indicators that use supply demand and volume traded; needs to be weighed relative to itself and its market}
  • Tick_Balance (Using Since 2019)
    • Requires raw tick data meaning the up ticks and the down ticks from which time & sales reports its data.
    • Like the $TICK on the NYSE, each instrument has its own tick or flow of up and down ticks. Take the running accumulation of them, starting at zero each day.
    • Tick balance shows at what price the upticks last equaled the downticks.
    • Futures are particularly easy to follow using the tick data.   I use this setup to know at what price was accepted as the movement center.  This disregards volume a bit and allows for an alternative to VWAP.
    • I find that this becomes a great mean from which to make an early bias for the day.  Then I watch it like the $TICK for my particular future.
    • For stocks I continue to watch the market internals for advances – declines and breadth.  For trading futures, this indicator replaced all those beta metrics.
  • RTH_ONLY_Volume_Profile (Using Since 2009)
  • Volume_Average (Using Since 2009) 
    • I use the 5d avg of Globex, Open Range and RTH for daytrading
    • I use the 60d avg for swings
    • Day-trading is more successful when you know when not to trade.  Indicators like these show when the market is too slow… or really hot and you should jump in.
    • Stocks trading above the 60 moving average often have the best options movement!  I rank all my stocks by what % over the 60d average they are trading today.
  • PL_Compare (Using Since 2009)
    • If you went long 1 contract or share, weigh the PL.. Many options for leveraged instruments and such.
    • Also contains a volume and range in last ‘n’ bars indicator.
    • Again, goes to the idea that you are more successful when you know when not to trade.  Indicators like these show when the market is too slow… or really hot and you should jump in.  Find the liquid markets!
~ B3 d^.^b

4 thoughts on “~ B3’s Preferred Indicators ~

Add yours

  1. Oh oh. It is a surprise, a big one in fact, that the b3 donchian clouds indicator is not part of your preferred indicators.
    To me, it’s a highly specialised and at the same time versatile indicator.

    Like a Swiss knife, it suits all the items in the classification you did in this article: price level, trend, oscillator, time-range and flow, all-in-one.

    But I guess each trader has his/her own way to resonate with the market.


    1. Wow, yeah, I had my time with anything you find of mine including the Donch. You are totally correct, resonance. Find it! I wanted to tell you though, that I am looking to work out some analysis on ALL of my prior indicators. I like to revisit ideas of the past, if not only to remember many systems have merit; it takes varied systems from everyone to make a good market. 🙂 By spring’s end I should have some good new analysis to share.


  2. 2 years later and my list is much different (some oldies snuck back in!)


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