Top 3 Indicators for Trading Futures

If you could only use one indicator, which one would you choose?

Let’s assume you have a trade ladder and standard price chart and have the option of adding one indicator to your screen (I use the term indicator loosely as this can range from market breadth ratio, to a moving average, to a stochastic).

My favorite indicators are…

  • A Heikin Ashi Candlestick Chart
  • The NYSE Tick
  • A 20-period EMA

There are countless indicators to choose from…

What indicator would you choose?

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About Tim Racette

Tim is a full-time trader in the futures and stock markets and founder of EminiMind.com. He is also a Chicago-land native, competitive mountain biker, adventurer, and ASU Sun Devil.

35 Responses to “Top 3 Indicators for Trading Futures”

  1. Hi Tim,

    I find useful the volume based MACD (not price based as usual).

    Greetings from Spain.

  2. Most definitely the The NYSE Tick in my case.

  3. Hey Tim,
    Ive read Steve Nison’s book on Candlestick charting and understand the advantages to that kind of analysis but what is the difference between a regular candlestick chart and a Heikin Ashi Candlestick Chart. I think I’ve heard you mention this in one of your videos.

    Thanks

    • Hi Bryan,

      The Heikin Ashi charting method takes the average of the open, high, low, and close of the prior candle. If you look at a Heikin Ashi compared to a regular candle chart the color of the bars indicating a trend change become much clearer. I like using Heikin Ashi on a 512 tick chart for the ES and a 233 tick chart for the 6E.

  4. Awesome, thanks Tim.

  5. vwap and either rsi or slow stoch for divergences

  6. Tim,

    I watch the ES on the 512 tick chart and have looked at the Heikin Ashi Candlesticks. What period have you found to work the best for you with that indicator?

    • I really like using the Heikin Ashi study on the 512tick chart and then a regular candlestick study on the 15-min chart. When you pair that with the NYSE tick I’ve found my entry’s to be extremely precise.

  7. I use four now, on 5m candles:

    ZB
    DX
    $TRIN
    ($UVOL-$DVOL)

    If I had to choose one, I would take the ZB.

    • can i ask?? how do u use ZB as an indicator????

      • I use ZB as a confirming indicator.

        Money rarely flows into both the Bond Market and the Equities Market in large quantities at the same time.

        Normally, if stocks are rising, the bonds are dropping and vice versa.

        So, I watch the 5m candles of the ZB along with my 5m ES and several other internals.

        Here’s a typical situation:

        The ES will break out of a long consolidation period to the upside and look fairly convincing (this time). However it can and does often produce false breakouts (as we are all well aware)..

        During this alleged-breakout, I look at the ZB and if it’s rolling over convincingly, this gives me the needed confidence that the ES may really be breaking consolidation this time.

        If ZB is flat or still rising, this ES breakout may not be real.

        I can also use this on reversals and any other entry methods I’m using that day.

        That kinda thing…

        Check it out.

  8. hmmmm, nyse tick is gold, then i use keltnerchannels when sideways, also like advanced adx

    • Kjetil,

      I’m will respond to the ZB question right after I make this post.

      But would you mind explaining to me how the $TICK is “gold” for you?

      I found it quite erratic and difficult to trade off of. The minimum time frame I use to trade ES is 5m.

      In a 5m bar the tick may go from +700 to -700 and everywhere in between.

      Also, I have tried looking at it’s general trend direction on 1m and 5m charts and though it sometimes looks interesting, I can’t trade from it.

      Just curious!

      Thanks!

      • Thanks for your response about ZB Rob. I also use the NYSE $TICK, but on a 1-min time frame, only concerned with the most recent print. I use it as a confirming signal for entry’s, getting long in low ticks, and short in high ticks. I don’t pay any attention to the candle formations on the ticks.

      • sorry rob 4 being late, try to use NYSE tick tgtr w keltner channels set to 7 on a 15min chart it works during sideways markets, if u have an email i can send u a chart of how i use nyse tick on a 1min chart

  9. i use 3 emas 8,21,34
    8 to enter 21 to stop out and 34 for trend

  10. Hello Tim,

    I like these unique and non-correlating indicators from http://www.thinkscripter.com/indicators/

    Tape Momentum
    Extreme NYSE TICK Dots
    $TICK Range
    Market Breadth
    Sine Wave Cycles (based on work from Barry Taylor)
    Previous Day High/Low/Close
    Globex Range (Overnight High/Low)

    Take a close look at Heikin Ash in TOS and you will see that it *changes the shape of the candles*. To get the benefit of the trend-color while keeping the original candle shape/wick/shadow, I use the TTM_Trend with a solid fill on the down candles.

    Tape Momentum is my favorite because when paired with volume, I find that it often precedes an intraday top or bottom.

  11. I use 15 minute candlesticks with fibonaccis updated, and a market breadth indicator which takes the NYSE ups and NYSE downs and graphs them as a histogram. This creates a very reliable scalp signal in the ES. I also use range bar charts as secondary indicators. Be curious to compare the Heikin Ashis with range bars.

  12. This is very interesting. I am fresh in this trading business. can you please explain to me what is meant by NYSE.

  13. Hi Tim,

    Great website. I, like yourself, have gone through a lot of indicators and trimmed many. Being a programmer and a Tradestation user, I’ve also programmed many. Most of them were not that useful.

    It’s important for people to know that indicators don’t present any new information. They just present the information that is already in the price chart in a different manner. This is sometimes helpful, but it also can be just as misleading. All indicators bring certain aspects of price into focus, and in so doing distort other aspects. There’s really know way around that as far as I can tell.

    I now use a lone 21-period moving average on the candlestick price chart itself. (This gives me a feel where price is in relation to the mean. It gives me something to relate price to.)

    I also use a histogram under the price chart that is basically a double-MACD (8, 21, 55 ma) without the lines. It shows me the trend and the strength of the trend, but is mostly for confirmation because I’m really looking at…

    Trendlines. Support and resistance are the foundation of all price movement, and resistance is either a horizontal line or a diagonal line (trendline). Breaks of trendlines are important events for me. I look closely at other support and resistance, including daily pivot levels for index futures.

    Fibonacci for measuring pullbacks for entry. You helped encourage me to focus more on this rather than pullbacks to moving averages, which I was finding inconsistent, so thanks!

    Gary

  14. 20-period EMA

    Rate of Change (2)

    MACD (3/10/16, SMA)

    if you ain’t got “MO” on
    your side, you ain’t going
    to make it . . .

  15. 1. Trend lines
    2. EMAs – 8 , 21; MA’s: 50, 100, 200
    3. Keltner channels: 2 and 3 atr

    added bonus: Fibs + EW

  16. I use MACD mainly. I’ve noticed its very clear. Shows you trend, I also mainly use moving averages on the MACD. Seems to work just fine for me, I know there are a lot of people who don’t like it. Superdrive, and rsi. I also use moving averages. 4 wma , 9 sma, 22 ema, 50 ema and I’m testing now a 50 hma. What do you think?

  17. Open Interest and Volume……..they are the only ones, for me, that truly matter.

  18. I second the open interest and volume. Everything else will blow out your account eventually.

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