Facts about technical indicators

Dear all:
something to share here about technical indicators.
Price is the main variable input in all the equations calculating technical indicators.
Let me give you a scenario.The price goes up,and because of that,the value of the indicator turns postive into a buy signal.Does this mean that the price should continue to move up because of the indicator?
If that is the case,then it becomes a cyle.Indicator give buy signal nad the price moves up.Price moves up and indicator value increase further.Indicator value increases,thus price continue to move higher.Then when will it turn?In this scenario,it can never turn because the indicator is supposed to lead the price.
Indicators cannot lead the price.Only the price can lead the indicator.It is not a two way relationship.Thus price is the detemining factor of the value of the indicator.The indicator may tell you it is a sell signal,but this will change when price change.
But when indicator change,will price change?Not necessary.
But when price change,indicator will definitely change.

I'm thinking about coming up with an indicator or 2 that don't have just price as an input. My initial thoughts on this are based on doing overlays of things like crude oil prices on USD/CAD. Maybe an indicator that overlays or mathematically considers several intervening fundamental factors like crude, gold, certain agricultural futures, etc. on commodity currencies, or industrial indicators on an industrial pair like USD/JPY. Any thoughts?

On a side note, some indicators use volume as an input. You might possibly want to take that into consideration perhaps. I was almost convinced that all indicators are useless, until I remembered about volume.

Where are you finding volume stats in forex?

My charting software. I can get a read-out of the current volume for a particular bar. Some indicators also use this information.

Maybe someone can chime in and tell us what volume is, and how it is usefull or not.

Which charting software is that? I've never seen volume made available in forex. I was always taught that volume is non-trackable information because this is an OTC market. I'd like to have that info because I could apply several volume-based equity trading systems to this market...

xtick.com

A couple of things about Volume on Forex which may or may not prove valuable/usefull to you.

1) Any FX Brkr that provides Volume is only providing the Volume through Their Desk and certainly not the Entire FX Volume for the Pair.

2) The volume that they do provide is a Count of Trades. Not a Count of Lots Traded. This makes my 5 lot trade every bit as important as a Major Banks 500 lot Trade. {If a Major Bank is trading through the Same Brkr as me, which I doubt.}


hth

That's what I thought. A broker can provide in-house volume, but nobody knows what the real total volume in the market is. That is a figure that is impossible to determine...

Also, it's the figure you would need to factor volume into a trading method.

Dear all:


The objective of my post is rely less on so many indicators that are available or so called perfect trading system.Try to focus abit more on fundamental news or sentiments in the market.It will be more profitable in the long run.
eg.to analyse economic news and think what is the effect on the dollar.
That is better than staring at charts all day and trying to decipher the market.

If that's what you want to do, man, then more power to you. That's the way to go, IMHO. I've been using longer-term charts, like daily charts, and using fundamental news to determine what kind of trades I intend to make, then using technicals only to determine when to enter, not what direction to enter, etc. I'm using technicals only to decide, for example, on a long trade, what is the (relative) lowest price I can get in.

If you have to have an open trade all the time, psychologically, or if you can't stand a trade moving 50 pips against you before it finally profits, this is not for you, however.