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Why do traders use so many indicators?

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  • Are technical indicators necessary to achieve profitability?
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  • #1
  • First Post: Feb 11, 2020 7:51am Feb 11, 2020 7:51am
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WHY?......oh why......

I have been trading for a few years now, and I have tested 100's of indicators, made multiple systems etc etc, you get the point. Now I only trade naked charts most of the time. Occasionally I may go back and look at a moving average, or Stochastic, or maybe RSI for confluence, but honestly they are really unnecessary....And I always trade better without any indicators at all.

I understand if you want to use 1 or 2 indicators, but every time I see someone post their convoluted chart on here with 20 different indicators, I cringe. There is no way that helps more than hurts you.

Honestly why why why WHY don't traders learn the basics before looking at indicators at all? Indicators are TOOLS. If you don't know how to build a shelf a hammer isn't going to help you man. There is no holy grail, there is no combination of magical indicators that can make a system that will make more than you can trading on your own without them.

I welcome anyone to try and prove me wrong though, post your indicators/system in here and I will show you how your same "winning" signal could have been generated using a naked chart with less of a head ache and more clarity.
  • #2
  • Feb 11, 2020 4:11pm Feb 11, 2020 4:11pm
I think it depends on what the Indicators indicate and whether or not they work for the Trader. It also might help to streamline visuals a bit:

Attached Image (click to enlarge)
Click to Enlarge Name: Streamlined Visuals.png Size: 80 KB


Everyone trades a Pattern of some kind. Some people think that because they don't use indicators they are not trading a Pattern. Of course, this makes no sense - but they strongly believe it anyway. They will tell you that because they use "Price Action" that they are not using a "Pattern." This is quite amusing logic, for Price Action is a Pattern. A trading decision is being made based solely on the visual nature of a Price Chart. That visual construct in the Price Chart is in fact a "Pattern" in the market. We know it is a Pattern in the Market, else the Trader would not be using it to make a decision as to their entry or exit.

So, even at the most rudimentary level of so-called "Price Action" we find people using "Patterns" without knowing the definition of the word "Pattern" as it applies to Trading. An "Indicator" takes "Price Action" and converts it into a derivative. You can Order the Derivative anyway you wish. You can have a 1st Order Derivative of Price Action, 2nd Order Derivative, 3rd Order, etc.. The higher the Derivative (Order) the further away from Price Action and thus, the greater the lag in most cases.

Here's why Indicators are so incredibly misunderstood: They "Indicate" that which has already happened.

For this reason, Gurus tell you that you can't use that which as already happened to trade the here and now. At the very same time, those same Gurus are using Price Action, which by definition assumes "continuance" - which itself is a Market Pattern. So, trying to escape Market Patterns is futile. Its like the Borg. It is useless to resist trying to trade outside of a Market Patterns. Else, you are literally guessing. One might as well toss a coin into the air before entering a position, as that would be equal to (or mathematically speaking slightly better than) a cold guess.

If the Indicator is constructed of good material (good observations of Price Action), then it will "indicate" accurate market behavior at the moment it was printed. If the Indicator is constructed of poor quality material (less than good observations of Price Action), then it will "indicate" inaccurate market behavior at the moment it was printed.

Therefore, the "Indicator" can be used in a Systematic approach to decision making while providing a foundation for differential analysis of the exact same Market Behavior that Price Action alone cannot provide in the raw. This is the why behind the "Indicator" that so many people misunderstand. It is not the "Indicator" itself that's important. It is the research that went into the construction of the Indicator that makes all the difference in the world and the way in which that Indicator is then applied and used in the market.

This gets to the question of whether the market is totally random - itself a highly misunderstood question predicated on a false premise. The false premise is that randomness excludes Structure. This would be like going out into the forest or your garden in your backyard, seeing plants, flowers, shrubs and trees - then proclaiming that their existence and growth is purely random. This would be fundamentally flawed because prior to the existence of that which you see (plants, flowers, shrubs and trees) had already existed a functional and structural reality that brought forth the visual reality you experienced in your garden or the forest.

Likewise, when you see a Price Chart and you visually experience Price Action, you do so precisely because a fundamental and functional reality existed prior to that experience within the raw Data of the Market (OHLC). Those four (4) data points are arrayed within segments (bars) and linearly connected along the X-axis of Time. All Price Action exists within this linear progression of data points produced by the Market. Those data points are the seeds from which all Price Action can be observed. No seed. No Price Action. No Market. No Market Behavior to detect.

The Indicator is important. It helps the astute Trader to see into the Seed of Market Behavior and to better understand Price Action as a direct result.

Thus, what many don't figure out is that Price Action itself is the true 1'st Order, while the four (4) Data Points (OHLC) are the true Zero'th Order (0th Order).
  • #3
  • Feb 11, 2020 4:51pm Feb 11, 2020 4:51pm
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Everyone trades a Pattern of some kind. Some people think that because they don't use indicators they are not trading a Pattern. Of course, this makes no sense - but they strongly believe it anyway. They will tell you that because they use "Price Action" that they are not using a "Pattern." This is quite amusing logic, for Price Action is a Pattern. A trading decision is being made based solely on the visual nature of a Price Chart. That visual construct in the Price Chart is in fact a "Pattern" in the market. We know it is a Pattern in the Market,...

I have to agree with you here. Trading price action alone is just as useless as trading with an indicator system by itself. Indicators and price action alone are not going to give you an edge, these visual patterns or indicators are good for only triggering a trade, but will not guarantee any long term success...

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The higher the Derivative (Order) the further away from Price Action and thus, the greater the lag in most cases.
Exactly. Indicators lag and so does price action. Unless you understand WHY price is moving you simply will not have an edge both for your entries and your exits.

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Gurus tell you that you can't use that which as already happened to trade the here and now. At the very same time, those same Gurus are using Price Action, which by definition assumes "continuance" - which itself is a Market Pattern. So, trying to escape Market Patterns is futile. Its like the Borg. It is useless to resist trying to trade outside of a Market Patterns. Else, you are literally guessing. One might as well toss a coin into the air before entering a position, as that would be equal to (or mathematically speaking slightly better than)...

Once again, I agree. Price action is only useful for triggering a trade. Supply and demand zones, overbought and oversold levels, trends etc. All of it is useless unless you understand what is moving that particular market and why. As far as tossing a coin goes, if you do not have any market bias or directional understanding, you essentially are tossing a coin no matter how many indicators or "patterns" you use.

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If the Indicator is constructed of good material (good observations of Price Action), then it will "indicate" accurate market behavior at the moment it was printed. If the Indicator is constructed of poor quality material (less than good observations of Price Action), then it will "indicate" inaccurate market behavior at the moment it was printed.

This is where I have to humbly disagree with you. If using indicators work for you in your trading then that is fine and I have no problem with it. My original post was simply meant to explain that there is no combination of indicators that will show me something that simple naked price action does not already. That being said there are some useful indicators that may help you to identify areas of potential supply and demand, trends, or ranges, if that's what you choose to do. The ADR is a useful tool for example that does not cloud your judgement or charts too much.

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Therefore, the "Indicator" can be used in a Systematic approach to decision making while providing a foundation for differential analysis of the exact same Market Behavior that Price Action alone cannot provide in the raw. This is the why behind the "Indicator" that so many people misunderstand. It is not the "Indicator" itself that's important. It is the research that went into the construction of the Indicator that makes all the difference in the world and the way in which that Indicator is then applied and used in the market.

If you want to believe that then that is fine. I'm sure you have your reasons for using whatever system you use. I do have to disagree however that there is any combination of indicators or an indicator based system that you can show me that I cannot already see on the chart simply by looking at the price with my own eyes. I welcome you to try and prove me wrong though, post a chart with an entry that was based on an indicator and I guarantee I can give you the same entry using analysis of the naked chart.

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Likewise, when you see a Price Chart and you visually experience Price Action, you do so precisely because a fundamental and functional reality existed prior to that experience within the raw Data of the Market (OHLC). Those four (4) data points are arrayed within segments (bars) and linearly connected along the X-axis of Time. All Price Action exists within this linear progression of data points produced by the Market. Those data points are the seeds from which all Price Action can be observed. No seed. No Price Action. No Market. No Market Behavior...

I believe we are on two sides of the same coin here. I honestly just feel that indicators over complicate trading for me personally, and that's why I do not like to use them. At the end of the day all any indicator is doing is translating what's already on the chart and explaining it to me in it's own way. I will choose to do the thinking for myself.

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The Indicator is important. It helps the astute Trader to see into the Seed of Market Behavior and to better understand Price Action as a direct result.

Like I said, indicators are only tools. The problem becomes when traders, especially new ones rely on indicators alone for their trading and waste so much time trying to find a holy grail that does not exist. For an "astute trader" as you put it, to use an indicator or not is simply up to personal preference. To a good trader using an indicator or not is like a tradesman who chooses to wear gloves or not, it's simply a choice and does not get the job done any better imho.

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Thus, what many don't figure out is that Price Action itself is the true 1'st Order, while the four (4) Data Points (OHLC) are the true Zero'th Order (0th Order).
That data is already on the chart for me, I don't need an indicator to explain it to me.

I appreciate and respect your reply. Also, I am in no way saying that indicators are bad, I'm simply saying that they aren't necessary to trade and make money. My issue is when people post systems with a bunch of indicators on a chart and claim they have some secret sauce. Then when a new trader uses the system they always lose because they do not understand what they are even doing. Basically, indicators and indicator systems are a distraction to new traders who should really be learning how to study more important things such as, volume, volatility, market structure, supply and demand, the value of a currency, who moves the market and why, etc etc.

JetTrader if you are a successful trader, It is not because of the indicators you use, you must have a proper understanding of how to trade first before using them, and by that time you may realize as I did, that you don't need them.

Cheers
  • #4
  • Feb 11, 2020 5:18pm Feb 11, 2020 5:18pm
Being more familiar with the price everyday makes the indicators less distracting.
Count Of Antwerp
  • #5
  • Feb 11, 2020 6:02pm Feb 11, 2020 6:02pm
Quoting viptrading
This is where I have to humbly disagree with you.
Disagreement on ideals can be part of the process of expanding and growing as a Trader. One actually receives merit when their disagreement is predicated upon facts and one receives distinction when opposing facts demonstrated proof the claim being made. So, disagreement can be a very good thing in this business.


Quoting viptrading
My original post was simply meant to explain that there is no combination of indicators that will show me something that simple naked price action does not already.
And, that was the gist of my original reply.

If the Indicator is predicated on incorrect or inadequate observations of Price Action, then true. If the Indicator is predicated on accurate observations of Price Action, then it must "indicate" as such. The real question is: Can that Indicator be Predictive or not. That's the part that confuses many. The believe that all Indicators are Predictive and this is factually not the case. An Indicator can only be Predictive when its Historicity demonstrates that it Predicts future Price Action. Then and only then can it possibly be Predictive in its nature. Else, the Indicator is (by definition) an Indicator of some other aspect, quality or trait of the underlying Market.

However, one must be careful with the word "Predictive" as "Continuance" is predictive just as well as a market "Pivot" or change in market direction. People, tend to think of Predictive as always being linked to detection of a market pivot into a different direction. However, the Prediction is really nothing more than a statement about future market behavior. That behavior can continue in the same direction or it can pivot into a new direction. The Prediction is merely a statement about which will occur (this could also include the continuance of a horizontal or flat market just as well).



Quoting viptrading
I honestly just feel that indicators over complicate trading for me personally, and that's why I do not like to use them.
There are many ways to trade successfully. People were trading without i7 or i9 microprocessors running Indicator based calculations for them on their computer for eons before today. Many of those Traders did very well for themselves. However, some of the largest and most successful Hedge Funds are purely Algo based in their decision making. And, this gets to my second point.

Market Data provides a near endless supply of directions one could take for exploring it. So, there can be a myriad number of ways to trade using Indicators that were developed using methods that approach Market Data in ways that were not used before. If I have not discovered a unique method for approaching market data analysis then all that means is that I've not discovered it - however - someone else might have. And, what they have discovered might show something that Price Action alone simply cannot.

The other problem here is that you must first define the word: Trade.

This is also overlooked and very confusing to those trying to figure out whether something actually works or not. A "Trade" can have different meanings to different people depending on the Trader's event horizon for actualizing profits. So, trades can never be comparable unless and until you match the Expectation. If one expects 5 pips from a trade, that is much different than one who expect 50 pips from a trade. Those two trades are not co-equals.

So, when we say that Indicators can't show more than Price Action, the trade itself must be structurally defined. Oh, here's one. Gong Long:

Attached Image (click to enlarge)
Click to Enlarge Name: A Long Trade.png Size: 94 KB


I estimate about 15-36 pips on this one.
  • #6
  • Feb 11, 2020 6:38pm Feb 11, 2020 6:38pm
If candlestick/bar/line chart plus price action alone can show,

1. Direction,
2, Momentum,
3. Levels,
4. Magnitude, and
5. Time

There is indeed no need for additional tools.

For those pure price action traders, pls demonstrate how this can be done without the use of tools.
Know what you trade
  • #7
  • Feb 11, 2020 6:39pm Feb 11, 2020 6:39pm
Sorry, I was rudely interrupted by a trade there. Back to your reply:

At the end of the day all any indicator is doing is translating what's already on the chart and explaining it to me in it's own way.[/quote]

And, that's the point. It depends on what inputs were used to construct that Indicator, as to precisely what it is showing you in real terms. Another point is the fact, that markets can and do change. Ergo, the Indicator's old indication will also change. This is why trying to trade with just one Indicator might present some problems for people. Its like having a one trick pony.

This is also why I always tell people that if you are going to use Indicators for Trading, then you might want to consider having Indicators that cover all the bases in Trading which are Timing, Direction, Magnitude and Probability. Any "trade" whether for 5 pips or 500 pips, unless you stumbled into it by accident, will have been successful upon fairly accurate measuring of Timing, Direction, Magnitude and Probability. Moreover, the more secure trades, those that have the highest potential for reaching a specified target will always benefit from Timing, Direction, Magnitude and Probability.

So, an Indicator should "indicate" something about one or more of these factors. When you have Indicators that are supportive of these four (4) key factors, you get a lower risk trade entry by definition. This has long term payback in the form of being able to grow capital as opposed to "just trading." The real goal, of course, is to grow capital. Anyone can "trade" - click a mouse button from home. No problem. However, the real Craft here is learning how to consistently Grow Capital and build wealth.

Having said that, there are some Traders at the Retail level who are comfortable with just paying bills and there is absolutely nothing wrong with that approach. It all depends on the individual. That's one of the things I love so much about this Industry. You can use it to just pay bills, all the way up to building your own financial empire. It just depends on how deep you want to go and how much work you are willing to put into the process. The rest is skill, knowledge and expertise acquired along the journey.



Quoting viptrading
I will choose to do the thinking for myself.
It sounds laudable and it is factual. However, it is predicated upon a misunderstanding about what an Indicator actually does. For those of us who have actually researched, developed, engineered and designed bespoke Indicators (those that do not exist in the public domain) and those that are different than typically average based Indicators, we know that you actually design your "thoughts" into an Indicator. So, if done right, you end up with a more efficient "thought process" as the Indicator will always perform the same function, whereas the human mind will be subject to real-time distractions and increased margins of error as a direct result.

When you intelligently integrate and combine Indicators that contain your "thoughts" about Timing, Direction, Magnitude and Probability, you are literally augmenting your brain. You are leveraging your brain in ways that are simply impossible without the aid of the microprocessor. For example, in the Panel shown above, you see six (6) Indicators running inside their own System Module. There is an Indicator for each Time Frame and each indicator has its own unique variable output. So, you are looking at a level of functionality with a total of 6*9 + 8*9 + 15*9 + 12*9 + 11*9 + 8*9 outputs. Or, 540 independent outputs based on individual calculations and logic driven functions.

I can't do that in my mind. No matter how hard I try, I will not be able to run that many calculations in real-time while trying to make a trading decision. So, in my case, the System is a supportive tool in that it does the thinking I would normally do on my own but can't do as a strict matter of lack of brain power. I just don't have the ability to run 540 independent calculations in real-time. If I carefully place my "thoughts" into each individual calculation and carefully insert my logic into the system, I can leverage my brain with that same system. This is why Computers exist. They are there to help us leverage what we are already thinking and would like to do, but cannot run in parallel within our own brains.

So, when done right, the Indicator should be a helper not a hindrance to making good trade decisions. (when done right).


Quoting viptrading
JetTrader if you are a successful trader, It is not because of the indicators you use, you must have a proper understanding of how to trade first before using them, and by that time you may realize as I did, that you don't need them. Cheers
I agree. Yes, you can reach a point (after 17 years for me personally) where you literally can take a simple Line Chart and nothing else to make money. No question about that. However, I think a well designed System can help you see what's developing in the market and within market data not seen inside Price Action alone (if that System is built for that express purpose).

Cheers and all the best with your trading.
  • #8
  • Feb 11, 2020 6:46pm Feb 11, 2020 6:46pm
Quote
Disagreement on ideals can be part of the process of expanding and growing as a Trader. One actually receives merit when their disagreement is predicated upon facts and one receives distinction when opposing facts demonstrated proof the claim being made. So, disagreement can be a very good thing in this business.

Yes, disagreement is a good thing. If everyone thought the same way nobody would profit from trading. Keep in mind that I never said you cannot make a profit using an indicator based system. I only said that I can find the same trades without using them and I believe in simplicity, this is also especially important for new traders who are only just learning the basics.

Quote
So, when we say that Indicators can't show more than Price Action, the trade itself must be structurally defined. Oh, here's one. Gong Long:

Oh cool, I'm also long GBPCHF. I'm sure my reasons for taking it were different from yours though Care to explain to me why exactly you took this one? I'm interested to know what exactly your strategy indicated to you for you to buy.

Attached Image (click to enlarge)
Click to Enlarge Name: GBPCHF.png Size: 18 KB
  • #9
  • Edited 7:14pm Feb 11, 2020 6:54pm | Edited 7:14pm
Quoting JetTrader
......we know that you actually design your "thoughts" into an Indicator. So, if done right, you end up with a more efficient "thought process" as the Indicator will always perform the same function, whereas the human mind will be subject to real-time distractions and increased margins of error as a direct result. When you intelligently integrate and combine Indicators that contain your "thoughts" about Timing, Direction, Magnitude and Probability, you are literally augmenting your brain. You are leveraging your brain in ways that are simply impossible...
The best written to clearly explain the purpose of indicators.

The computer today allows for complex calculations to take over our thoughts that's not previously possible in real live market that changes rapidly. These thoughts calculations can be represented in visual format as indicators for quick reference.

The thoughts is the strategic center of trading. The indicators are mere tools that automated the thoughts as real time aid.

The thoughts process comprise of 5 aspects,
1. Direction,
2, Momentum,
3. Levels,
4. Magnitude, and
5. Time

Trading based on candlestick/bar/line chart alone means to manually execute continuously and consistently in real time live market your thoughts and calculations without aid, eg square root of 200 plus 150 square.
Know what you trade
  • #10
  • Feb 11, 2020 6:58pm Feb 11, 2020 6:58pm
Quoting BWilliam
If candlestick/bar/line chart plus price action alone can show, 1. Direction, 2, Momentum, 3. Levels, 4. Magnitude, and 5. Time There is indeed no need for additional tools.

1.2654 1.2738 1.2601 1.2609
1.2601 1.2689 1.2599 1.2654

These OHLC Data Points represent two candlesticks. As simply seen on a chart, these candlesticks only show rising price. Here's on a fraction of what these candlesticks don's show you:

TCD-Long = 139 pips
TCD-Short = 88 pips
DV-Leading-Long (1) = 88 pips
DV-Leading-Long (2) = 84 pips
DV-Leading-Short (1) = 2 pips
DV-Leading-Short (2) = 53 pips
DV-Trailing-Long (1) = 8 pips
DV-Trailing-Long (2) = 55 pips
DV-Trailing-Short (1) = 129 pips
DV-Trailing-Short (2) = 35 pips

And, this is just two (2) bars of Market Data. That means there were 10 relevant data points between these OHLC values that cannot be seen outside of these extremely simple calculations. This is the Metadata being thrown off the markets original OHLC and it does not lag. It is 0th Order Metadata. That means you are getting insight into a market trait (behavior) that simply cannot be seen, detected, measured or accounted for outside of this calculation.

These are called Trajectories. When you use them together you get Vectors. And, there are no prices that exist outside of these Trajectories and Vectors. All market activity is fully contained within these two simple concepts. This is what I call the basis for Delta Indicator Concepts and Delta Trading. Candlesticks along can't show this.

Delta Concepts open up a new avenue for Market Data Analysis because it produces 0th Order data. In other words, Delta Concepts show you the Space between Spaces within the Market, before the Market gets there. Again, that was just two bars of data!
  • #11
  • Feb 11, 2020 7:12pm Feb 11, 2020 7:12pm
Quoting viptrading
Yes, disagreement is a good thing. If everyone thought the same way nobody would profit from trading. Keep in mind that I never said you cannot make a profit using an indicator based system. I only said that I can find the same trades without using them and I believe in simplicity, this is also especially important for new traders who are only just learning the basics.
Nice trade so far. What time did you enter it GMT?



Quoting viptrading
Oh cool, I'm also long GBPCHF. I'm sure my reasons for taking it were different from yours though Care to explain to me why exactly you took this one? I'm interested to know what exactly your strategy indicated to you for you to buy.
Explaining that would mean explaining the entirety of the System, which is not possible given its size and technical scope.

However, I can say that it was a relatively generic Panel based momentum trade as I define it using this particular configuration of the Panel, which is a bit slower than the configuration I normally use. I use a different System configuration depending on the Magnitude of the pair being traded. Right now, this pair is bleeding Magnitude, so I've slowed the System down using a more forgiving configuration. I can make it as flexible as I need for the occasion.

Its also a real-time System. So, its general direction could change at some point and I have to be willing to change with it. When I go with the flow of the Panel, it eventually leads to the day's primary move. So, I can basically grab any pair at any time and enter the flow depending on what the Panel is showing me without any analysis. I just click the mouse button and allow the System to do its job.
  • #12
  • Feb 11, 2020 7:29pm Feb 11, 2020 7:29pm
Quoting BWilliam
{quote} The best written to clearly explain the purpose of indicators.
Yes, that part typically gets left out of the discussion and the Indicator is thought to have somehow created itself which is not the case. You place your ideas into it and those ideas are then expressed in the output of the Indicator. I think the OP is right, however. New Traders tend to impute a different purpose and function to the Indicator - primarily because someone else designed it.

It is my hope that New Traders learn to take Excel, raw market data (OHLC) and learn how to design Indicators themselves. They would be bespoke, unique, one-off and highly understood by the Trader. That way, they would know what they are getting themselves into when using Indicators for trading. Or, at least take the time to do the research into the original designer's mathematics and logic for the Indicator they use. For example, no one should be using Stochastics (as just one example of many) without understanding the math behind it. I could never do that. I have to go look at the math to understand what the original designer had in mind. It just seems like common sense to me.


Quoting BWilliam
The computer today allows for complex calculations to take over our thoughts that's not possible in real live market that changes rapidly.
Of course, this is true. We just can't keep up with a microprocessor and we can't store and organize real-time information in our brain as effectively. Of course, the computer is there to help us and to boost our natural abilities. Same idea with the Indicator. It should be there to aid and assist.


Quoting BWilliam
...Time Trading based on candlestick/bar/line chart alone means to manually execute continuously and consistently in real time live market your thoughts and calculations without aid, eg square root of 200 plus 150 square.
And, don't forget all that rich Metadata that gets derived from bespoke Indicators just as well. There is often a treasure chest hiding in that unseen data.
  • #13
  • Feb 11, 2020 7:59pm Feb 11, 2020 7:59pm
Quote
So, I can basically grab any pair at any time and enter the flow depending on what the Panel is showing me without any analysis. I just click the mouse button and allow the System to do its job.

That sounds pretty cool.

Quote
Nice trade so far. What time did you enter it GMT?
GBP/CHFBuy 1.26244
MTM 1.26421
Feb 10, 2020 6:51pm
  • #14
  • Feb 11, 2020 9:06pm Feb 11, 2020 9:06pm
Quoting viptrading
{quote} That sounds pretty cool. {quote} GBP/CHFBuy 1.26244 MTM 1.26421 Feb 10, 2020 6:51pm
Thanks. That was quit a bit ahead of my reading your post where you requested a pic. of an entry. Now, I see.
  • #15
  • Feb 11, 2020 9:20pm Feb 11, 2020 9:20pm
Quoting viptrading
{quote} That sounds pretty cool. {quote} GBP/CHFBuy 1.26244 MTM 1.26421 Feb 10, 2020 6:51pm
I neglected to mention that this is the official corrected version of the Panel. In other words, I've made modifications to correct some inherent problems.
  • #16
  • Feb 11, 2020 9:56pm Feb 11, 2020 9:56pm
We have a test tomorrow...spent whole night reading all the text books.some of us can only memorize those text in complete silent.while some can only concentrate while playing some music.between the two,they can't imagine how the other do it.
Don't mind me.. i'm crazy
  • #17
  • Feb 11, 2020 10:00pm Feb 11, 2020 10:00pm
@JetTrader

Your system seems to have a lot of thought put into it and since you coded the indicator yourself and understand the ins and outs of it I don't think it falls under the category of bad indicator based systems. Since you're really only using one indicator I don't think it would cloud your judgement too much and it seems you are using it as a tool instead of trading blindly.

I still think naked charts are superior though as I said before since most good trading opportunities can be seen and taken more quickly and easily that way imho.

I have to ask, is there any time where you follow only the indicator for your entry and exit? Or are there other factors that you take into consideration before taking a trade, such as directional bias or economic factors.

If so, why not code an EA to see if you can create a signal based entry using the logic behind your systematic entry?

That's always my first thought when someone uses an indicator based system. If the only criteria for entry is a perfect setup using indicators then why not automate it...
  • #18
  • Feb 11, 2020 10:31pm Feb 11, 2020 10:31pm
Quoting viptrading
If so, why not code an EA to see if you can create a signal based entry using the logic behind your systematic entry? That's always my first thought when someone uses an indicator based system. If the only criteria for entry is a perfect setup using indicators then why not automate it...
Good question.

2 reasons I can think of,

1. The coding skills and knowledge requirement is beyond the typical retail coder,
2. The retail trading platforms do not support the level of technical requirements for complete automation.

The cost of such a complete automation venture involves brains, money and time investment. The more practical and realistic goal is partial automation in the form of indicators and alerts.
Know what you trade
  • #19
  • Feb 11, 2020 10:52pm Feb 11, 2020 10:52pm
Quoting BWilliam
{quote} Good question. 2 reasons I can think of, 1. The coding skills and knowledge requirement is beyond the typical retail coder, 2. The retail trading platforms do not support the level of technical requirements.
Maybe. However, based on my understanding of JetTraders explanation it seems the trades he takes are situational. In this case it's only use would be for manual trading.

I do wonder though, if there is ever a sweet spot where everything lines up perfectly to the point where his indicator alone is good enough to actually predict a move on it's own without any manual intervention. An EA that scans all the logic and takes a trade only when all criteria is met. Even if it works much worse than trading manually, it would be worth the time to try it since in theory you could have a set and forget system that makes money on autopilot. Sounds to good to be true though and I highly doubt it since I haven't been able to create anything like that despite trying very hard for years. Also he probably would be a billionaire by now if he did find something like that. And if he was why would he be on here lol.

The closest I got to something like that is one of my old robots that made money consistently for 2 years, even made 100% in one day on Brexit day. The issue was it was trend based and lost 50% of that 100% gain in the following few weeks in the consolidation. In total it made about 90% in 6 months trading 9 pairs but also was really high risk. Needing 1k per pair to use it low risk. I really believed it was the perfect system. It was always in a trade in the market so it never missed a move. Testing it showed it made money during trend and ranging markets for the most part, since it used both trend following and anti-trend logic based entries. I backtested years of 99% model quality data. It worked on every forex pair, and when traded in a basket of uncorrelated pairs its pretty much guaranteed to make a profit. Here's the issue though, if used low risk the return wasn't that impressive. I just simply can make more trading manually since I can pick and choose where to put my risk and add real time reactions to my analysis.

I still think creating a profitable EA is technically possible but the work needed to go into it might not be worth the return. Especially considering the fact that it can just stop working one day if the market changes dramatically. Maybe one day I will be able to go back to my old project and keep working on it but for now I will stick to trading manually.
  • #20
  • Feb 12, 2020 3:12am Feb 12, 2020 3:12am
I got rid of all my indicators years ago:

https://www.thistradinglife.com/post/minimalist-trading

But one thing trading has taught me is humility and so I know that what works for one trader doesn't work for another. Naked trading makes sense to me but I'm sure there are thousands of successful traders out there who love their indicators just as much as I love my naked charts.

Each to their own and all that...
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