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How to properly use Technical Analysis 137 replies

What indicators do Hedge Funds use or do they even use one? 12 replies

Do you backtest your systems PROPERLY? 0 replies

Custom Indicator not Drawing Properly? 0 replies

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How to properly use indicators

Quoting Pipalicious
{quote} If i may add to this aswell. (i will delete if moderator does not consider it appropriate). - It visually simplifies and quantifies specific variables from price. - It produces both good and bad signals. - Signals are mechanical. There is a very obvious reason as to why they produce good and bad signals, and that comes down to market and price. Is price linear? NO! So how do you expect mechanical indicator signals to work when price is not linear? Price does not function like this, leading back to 50/50 or worse.
So, at the end of the day indicators are malicious (or at least neutral)? I just wonder since the same logic applies for markets. Example: Buy if the last candle was green, sell if it was red. I guess that the outcome is nearly the same. So is it always a 50/50 game to trade forex? I doubt ...
CrucialPoint: "I'm alpha". AntiCre: "I'm your Omega - the end."
Building an indicator based on CP's ideas is not going to make you a profitable scalper yet, as the journey to profitability is long and it requires a lot of personal research, am not there yet, but from my research, I have made some interesting discoveries. Any indicator can be a used properly but with some modification to its code.
Any indicator produces good and bad signal, studying and classifying the good and bad signal is in my opinion is the way to filter trades, hence not taking all signals which the indicator produce.
Note you dont need history to do this, if you know how your indicator repond to price change.
This classification of good and bad signal will help a trader, quantify flow of momentum.
Remeber that for every breakout there is a bounce and for every bounce there is a break out (Credit CP).
This classification of momentum must be done within your chosen boundary.
https://www.forexfactory.com/showthr...29#post8309529
  • Post #83
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  • Edited Nov 6, 2017 2:39pm Nov 5, 2017 4:39pm | Edited Nov 6, 2017 2:39pm
Quoting CrucialPoint
A objective truth about the market is that... ... there is a delay. Without this delay, no-one can ever make a profit or make a loss for someone else to profit. Not one "leading indicator" will ever (and for all eternity) make you into a profitable trader. For the fact that there will always be a delay; Whenever one market condition change into another market condition... Whenever momentum change from one direction into another... This "change" from one form into another (I call "The Shift dimension")... This is an objective...

My interpretation of "Shift Dimension" in the link below. Even Nature has this shift/delay that CP is referring to.

Its also found in nature.
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Staying in my lane...
Quoting VEEFX
M................ The last one looks like most of us who stare at charts for hours thinking WTF just happened LOL {image} {image} {image} {image} {image}
Very true!! LOL!!!
Trading is not much different from Life. For me, in trading, there is only NOW. There is only the LAST SIGNAL, which becomes a history, a second after it did happen. And NOW, waiting for the next signal...

CP is totally wrong about the indicators.

All my strategies are custom made indicators tradeable by a simple exit plan (the EA).

This is just an absurd statement.

I cant believe it!

Who is that clown (CP), I wonder?

Does anyone know?!?
Jonny Hatinga. IQ 69.
Lets start with the comment that price action is the most important factor, period. Where are the buyers/sellers applying pressure. If, as a trader you can't identify or you don't know what I'm talking about, generally, the indicator will put you into the trades late every time. In what I'm going to show in my example is momentum or lack of momentum.

Having said that. a simple way to use a set of indicators would be something like a MACD and a MA. The catch is that the moving average in the MACD should be the same as the moving average on the price chart. What you then receive visually is first, divergence at most of the bottoms and tops. Second, you will find that the price will cross the MA about the same time as the value line crosses zero on the MACD. So what you've done is made the zero line and your moving average about the same thing. Third, generally if the MACD is making new H's/L's (with the flow) and price is too, you can expect another new H/L from price sometime in the future. There's more but not here or now.

A good example of settings to look at would be a MACD of 2-44-6 and a moving average of 44, both with simple MA's.

When it comes to moving averages I like to think about them like this. I'm out walking my dog on one of those expandable leashes and the moving average is the sidewalk I'm walking on and price is the dog. The dog goes far away sometimes or from side to side ( momentum or range). Which is information that can be included in my total assessment of the price action, and what I want to do with it.

The picture is a 4 hour chart of the Eur/Usd. The concept will work on any time frame.
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I agree with you. But the title of the thread is, "How to properly use indicator." You'll take note of my first statement in my reply. I'll repeat it. If you don't know where the buyers/sellers are applying pressure. ie who is in control.

With that said, I also stated that what I was going to show was momentum or lack of momentum. Nothing more, nothing less.

The bottom line is that reading the price action first and foremost is 90% of trading. The indicator will NOT tell you where the next bar will end up.

With this particular set of tools it helps to measure the momentum of the prior moves, nothing more. In other words, how much energy are the controlling side having to expend to make it happen. To be honest you can put ANY reasonable number into your indicator you want. But to use a set of indicators one must know what your using the tool for. What it will and what it won't do, and when it's worthless. Too many people try to get the indicator to give them the trade and that is just wrong. My point is that indicators have severe limitations and that is then compounded by people when they attempt to create the holy grail out of them. I would say that they have a very limited use and then only when applied with a firm understanding of what the tool is capable of telling you.

(The dog-MA analogy would be applied with a deeper understanding of the ATR and average swing sizes just for a start. ie how long is the leash. Most people don't realize that the moving average should be behind price by half the setting, in this case 22 bars.)
(Reading price action requires much knowledge of structures, cycles, energy flow and lastly a tell or signal bar. Which is just plain a lot of work to learn and most people don't want to do the work.)

I will repeat myself by saying the title of the thread is "How to properly use indicators", and I think I have made it abundantly clear the limitation and the obvious abuse of them thru out all of trading. The tools and settings I showed gave you one thing and one thing only, a CLUE into the momentum of price
  • Post #88
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  • Edited at 3:57am Nov 6, 2017 3:41am | Edited at 3:57am
Quoting MoneyZilla
CP is totally wrong about the indicators.
As a scientist I can only proof statements wrong. I can never verify it. Maybe I'm not able to negate CP's statements because I don't know everything how he uses it. Maybe he is a scammer - who knows? But as long as I haven't seen a real proof that it's impossible to get an edge with indicators alone I have to accept that it is possible.

I know that your opinion on trading indicators is different. However, it's just your opinion and not a natural law.

However, I still doubted some of CPs statements. I've shown (with a simulation) that his first statement on successful playing roulette was wrong - later on he added some further rules that should increase the odds (but even then he would need a winning percentage of > 65%).
CrucialPoint: "I'm alpha". AntiCre: "I'm your Omega - the end."
Quoting AntiCre
{quote} As a scientist I can only proof statements wrong. I can never verify it. Maybe I'm not able to negate CP's statements because I don't know everything how he uses it. Maybe he is a scammer - who knows? But as long as I haven't seen a real proof that it's impossible to get an edge with indicators alone I have to accept that it is possible. I know that your opinion on trading indicators is different. However, it's just your opinion and not a natural law. However, I still doubted some of CPs statements. I've shown (with a simulation)...
There is a German pro trader here at FF. I have used to Skype few times a week. He once posted his profit factor. By memory, it was something schocking for me. Something huge. 5 to 10. Winning rate over 92%. Crazy stuff.

We have exchanged screenshots. I think his portfolio is like 25 mils. Never asked directly, but from our chats, I think I got that impression. Anyways. He traded using some custom indicators. CP is very much wrong about the indicators.

I do know you can have little trust about me, but this is something I have seen on the screenshots we have exchanged.

EDIT: This tells me CP is just a guy chatting around. Smells very fishy to me. In fact I think he knows almost nothing. A trading phylosopher. Maybe he can write a book or two? You know? You read 13 books and now you are a ready-to-go top trader! Something like that...

So, I do know how brutal and arrogant the German trader was and likely he still is. We stopped chatting, cause we got on a big fight about a broker. I was attacking the broker, he thought this is a respecful broker. I got pissed off and deleted the prick... I am sure, if he would have be around, what exactly his oppinion on CP's statements would be. You can be sure - nothing nice it would be. Just a hint...
Jonny Hatinga. IQ 69.
Quoting MoneyZilla
{quote} There is a German pro trader here at FF. I have used to Skype few times a week. He once posted his profit factor. By memory, it was something schocking for me. Something huge. 5 to 10. Winning rate over 92%. Crazy stuff. We have exchanged screenshots. I think his portfolio is like 25 mils. Never asked directly, but from our chats, I think I got that impression. Anyways. He traded using some custom indicators. CP is very much wrong about the indicators. I do know you can have little trust about me, but this is something I have seen on the...
That's cool. Would be great if that trader would contribute here ... Even after 5 pages I haven't seen any proof for either side - indicator trading gives an edge/indicator trading gives no edge.

Maybe I should visit that fellow countryman.
CrucialPoint: "I'm alpha". AntiCre: "I'm your Omega - the end."
Quoting AntiCre
{quote} That's cool. Would be great if that trader would contribute here ... Even after 5 pages I haven't seen any proof for either side - indicator trading gives an edge/indicator trading gives no edge. Maybe I should visit that fellow countryman.
Yep, he is here. But his posts are like a couple of words. We used to be FF friends...

Indicator trading works when there is a good exit plan. 90% of all indicators are really very good. They do the entry job perfectly. Traders have no exit plans. Taking a SL is their best idea. This gives a bad name to all indicators.

So, as a scientist, now you know. Indicators do not give you an edge. However, the exit plan gives you such.

A good exit plan can trade almost every indicator...
Jonny Hatinga. IQ 69.
Quoting MoneyZilla
However, the exit plan gives you such.
That would imply that the 92% win rate you mentioned in your previous post can be only achieved with the exit plan and MM. Thus, that guy seems to be really BIG and thus can sit on bad trades (accepting the DD) until prize reverses ...
CrucialPoint: "I'm alpha". AntiCre: "I'm your Omega - the end."
Quoting MoneyZilla
{quote} There is a German pro trader here at FF. I have used to Skype few times a week. He once posted his profit factor. By memory, it was something schocking for me. Something huge. 5 to 10. Winning rate over 92%. Crazy stuff. We have exchanged screenshots. I think his portfolio is like 25 mils. Never asked directly, but from our chats, I think I got that impression. Anyways. He traded using some custom indicators. CP is very much wrong about the indicators. I do know you can have little trust about me, but this is something I have seen on the...
who is he??
Still learning. Telegram @jtprabu
Quoting AntiCre
{quote} That would imply that the 92% win rate you mentioned in your previous post can be only achieved with the exit plan and MM. Thus, that guy seems to be really BIG and thus can sit on bad trades (accepting the DD) until prize reverses ...
I know for a certain that when a DD of 11% gets reached - the fund's system pulls him out automatically. So, the DDs cannot be that big really...

He confirmed he flipped sides. I never got interested how exactly he did the flips, cause I am happy with my own flipping system, thinking extremely highly about it ... and not really interested in how exactly others get rich. The road to riches is a lonely journey and I envy no one. It is every man for himself.

Quoting vijiragavan
{quote} who is he??
I cannot disclose this. His profile photo has a picture of his six pack. And he claims to be trading from Denmark. He lives in Germany, however. Very clever trader.
Jonny Hatinga. IQ 69.
One more question, @MoneyZilla: Do you know which indicators that guy uses and would you reveal it?
CrucialPoint: "I'm alpha". AntiCre: "I'm your Omega - the end."
Quoting AntiCre
One more question, @MoneyZilla: Do you know which indicators that guy uses and would you reveal it?
ATR was the base, used for his custom indicator. As I have already said, never asked any questions, cause I wanted he would never ask me any questions about mine and we both knew what to ask and what not to...
Jonny Hatinga. IQ 69.
  • Post #97
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  • Edited at 9:27am Nov 6, 2017 8:04am | Edited at 9:27am
Hey guys, read CP's stuff.

I think I have a bit of a grip on it. but sort of clicked after reading John1s thread on t2w.

Conclusion : Theres a way of trading without using TA, just price. My interpretation about their views on TA, is that
it does not represent the market clearly due to subjectivity, also it is a tool to be used against us by brokers and firms,
(he talks about thinking what the market makers objectives are etc, etc,).

So im assuming you apply some sort of risk management, and combine it with the 95% 5% movement rule.
Making a boundary anywhere removes the subjectivity, price either moves up or down from here.

When he talks about the 50:1 RRs, these are not set targets but dynamic , depending on how strong a run u catch?

Am I wrong in that the Line in the sand strategy has the same principles as CPs stuff.
Quoting MoneyZilla
{quote} A good exit plan can trade almost every indicator...

One can also think of a better entry than taking every indicator signal. A simple filter would be taking a sell signal only when it coincides with the price making a lower high.
(Exit for this example could be: Staying in trade as long as price continues to make lower highs and lower lows on the chosen timeframe/indicator period.)

Cheers,
k
Quoting kprsa
{quote} One can also think of a better entry than taking every indicator signal. A simple filter would be taking a sell signal only when it coincides with the price making a lower high. (Exit for this example could be: Staying in trade as long as price continues to make lower highs and lower lows on the chosen timeframe/indicator period.) Cheers, k
That's what I try to do. Thanks for going back to the original idea of that thread. Often when I enter on retracements they turn out as reversals. The question is, how to spot/quantify/identify the potential of a retracement going back to trend direction or reversing. I've described my inital thoughts here ... I believe that the distance between both indicator lines may give a hint if prize reverses or not - but I'm not totally certain. If we would be able to solve it we would have a measure to when to exit, too.
CrucialPoint: "I'm alpha". AntiCre: "I'm your Omega - the end."
P.S. If, in addition to this, one had a systematic way of adding to positive trades i.e. making a bigger bet when one is right than when one is wrong (see examples here or here, or just in my previous example adding to trade above every time there's a lower high+indicator cross and shifting the s/l so that risk reduces), I'd think it would be very difficult to lose.

All the best,
k
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