It's Unreliable

Yep. the school of hard knocks and walking it forward are the only way to success

Nice discussion starter and good thread. Here are my 2c, coming from the perspective of statistical time series forecasting, which is the scientific version of what these snake oil salesmen are selling.

First, trading profitably is possible only because markets form trends. True, there's options trading (and volatility pumping etc) that can make money without trends, but in the context of home based trading for individuals trends are needed in some form.

Second, trends are predictable using moving averages. There's a whole academic literature about it. The slight niggle is that the moving averages are useful only if there's already a trend in place, without which the moving averages will cause more pain than pleasure.

One simple way of separating out trends from noise is to use multiple moving averages. For example, one may use three judiciously chosen moving averages and develop a trading system based on that. This idea was popularised by Bill Williams and called The Alligator.

Third, needless to say Williams didn't tell the full story. One has to think for oneself in developing a trading system. That is, one needs knowledge about system development. This is not offered by the snake oil people.

Fourth, in the long run it's not sustainable to trade the markets without considering what they really are. That is, one needs an understanding of market structure, i.e. everything from Wyckoff theory to understanding the relevance of volume, price, and time.

Fifth, and most importantly, one needs self-knowledge; that is, understanding one's own motivations, actions, and behaviours as they relate to market activity. For me the chapter "Zen in the Art of Trading" in Jack Schwager's The New Market Wizards has formed the foundation of my approach to this.

The above is what works for me. I trade index futures mostly off the 1m chart. In addition I also use a 15m chart with multi-scale linear predictors for context.

Hi here2there,

I agree with you on that 100%. What I have discovered after many years in the markets is..."What Works for Me Is What Works."

I enjoy reading your thought-provoking post. May not always agree, but still enjoy.

Best of trades to you.

That’s true! Whether fundamental or technical analysis, traders can’t predict the market 100%. The market is always moving. Indicators are just probabilities. Traders can enhance their winning chances with strong risk management and trading discipline.

your problem is you are trading the wrong markets



source

I opine that it is flawed to think of edge based only on entry parameters, as exit cannot be separated from entry. So if you would want an edge based on a coin toss, you'd have to at least flip it twice, once for the direction you want to enter in and the second time for the target(s). Suddenly our coin toss edge is =<25%, and the 30% systems don't seem so bad. When you consider overall profitability, the coin toss is thrown full out of water, because the targets were made random, there is no sustainable RR metric to give positive expectancy.

But say you decide to predetermine a fixed stop loss and profit level that would usually mean positive expectancy for a 50% win rate for every trade, so that all you'd have to do is flip a coin for entry any time you wanted. This would on the other hand be like watching a person being run over and crushed by a long-haul truck then flipping a coin, heads he'll live tails he dies. At this point you do not get to assign a 50% probability to his survivability, a passer-by basing his judgement on past experience of people who have been run over flat by trucks would more likely be right on whether the victim survives than you. His additional past experience is not a crutch to his final assessment.
Again trading is negative sum, think of this person as always appearing only at any times you were making coin flips at such deterministic events as these, he would soon have all your money. Perhaps you could say well then I won't flip my coin after the person has been run over, but isn't that information edge. Likewise, you cannot go around flipping coins at people you meet in the street, heads you live, tails you die. Firstly the statement would be meaningless, die at what time, and of what etc., maybe if you added that, it would make you coin flip more meaningful to that person, hence why exit cannot be separated from entry, and why you have to determine first a context to attach to, which in itself consists of choices.

In the same way, you want to flip a coin and enter a market, at 2:1 risk reward, but are you really entering at 50% odds, even if your R:R was 1:1? A trader(passer-by) judging your actions would probably dismiss your result as he maybe sees lower lows and lower highs where you are entering, or maybe he knows some insider info, he is in a sense more in tune with the reality the market is offering(edge?).

Remember that "flip a coin" example is good when you have infinity money in your pocket. In real life you can have your tail 100 times in a row and it will wipe you out.

ABSOLUTELY!!!

To rely something you need to have data.
I suggest you to read my binned post here it will open your eyes and give new prespective.

https://www.forexfactory.com/thread/...or-experienced

I still think that trading needs some auxiliary tools, whether it is an indicator or an EA