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  • #221
  • Oct 26, 2008 11:39am Oct 26, 2008 11:39am
The thing is, depending on the time frame used, the market is always ranging, and it's always trending. Also most people would agree there are many approaches to Forex trading. If someone knows how to "profitably" use indicators for their particular style of trading then who is to say it doesn't work? If another makes money using no indicators, then who is to say that is wrong?

What I have noticed though, keeping it simple is easier than getting wrapped up in some elaborate indicator because the experience I have trading has made it easy to just see whats happening only on price action. Sometimes I feel like trading in different ways. I might scalp, or I might take a position and sit on it a while. I have found just one SMA tells a lots if the time period is correct for what you wish to do. Another method I use is classical chart patterns combined with the speed of price action.

It's also not just about getting the "prediction" right of which direction the price will go. Setting the SL, TSL (if used) and MM is just as critical. How many times have you been stopped out, to then see the price move nicely in the direction you thought it would? We then start blaming the broker and all sort of excuses when actualy it comes down to just not reading the overall trend well enough.

So, to surmise, I would never say its wrong for someone to use an indicator if they can show me a positive outcome using it. I would also say I don't believe there is an indicator that can do better than the human brain at finding out ways to achieve the same sort of results.
  • #222
  • Oct 28, 2008 11:01pm Oct 28, 2008 11:01pm
good indicator is like during the interview you hire a right skill person.

if you using the indicator right way means the guy you hire know how to run the busineses.
  • #223
  • Nov 1, 2008 4:13pm Nov 1, 2008 4:13pm
i think the indicators never lie to us....but our mindset did...
  • #224
  • Nov 2, 2008 9:45am Nov 2, 2008 9:45am
Indicators give traders comfort i think. The market is chaotic there is no way to predict movement in the future.

I have seen descriptive statistics and inferential statistics and they both do not work unless your trying to find excellent long term buys or shorts based on excellent fundamental truths.

If you want to make money "trading" do so by pulling the trigger rarely when there are excellent opportunities in price in relation to strong fundamentals and hold. If you will just start by looking to buy something that no one even wants then u have begun your first step as a successful "trader". Be a contrarian not a crowd follower.
  • #225
  • Nov 3, 2008 2:25am Nov 3, 2008 2:25am
thanks for good advice I'll try...
  • #226
  • Nov 3, 2008 2:45am Nov 3, 2008 2:45am
Quoting TreasureHunt
i think the indicators never lie to us....but our mindset did...
yes..you have nly to read it crrectly!!
  • #227
  • Edited 3:17pm Nov 3, 2008 3:51am | Edited 3:17pm
Hopefully the attached chart illustrates how there are many ways - indicators, candles, interpretating possible broker behavior - that can all be used profitably.

The MACD histogram divergence will give the trader who's looking for it a heads up that price is about to head south. The trader who uses price action will see the same deceleration in the decreasing slope in the magenta lines drawn between successive price highs, making the MACD redundant.

The white arrow (stochastic falling below 80 after a prolonged overbought period) likewise gives a fair indication that price will fall. The signal is somewhat late, potentially resulting in a lower profit on any short trade, but it's still an accurate signal, and much depends on how far price falls, and how the trader exits. To the contrarian trader, it's a valid entry. To the trend trader, it might be sacrilege to be trading against the strong recent upmove.

Price action-wise, we see a upside breakout through the obvious resistance shown by the first dotted line. Turns out that, despite being an apparent continuation of the uptrend, this is a fakeout. The trader who interprets this as some kind of stop-hunt will eventually be rewarded in this instance (but will miss many other opportunities when fakeouts don't occur). However, provided the breakout trader's exit minimzes damage, then he will fare OK, and will get a second chance if he shorts the double top created at the second dotted line. The long candle wicks denote a seesaw battle which the bears finally win. The big red candle sandwiched between the 'flipover' of the wicks might be interpreted as the big boys, having taken out the stops, now starting to forcibly moving price downward. Regardless of whether one simply follows the momentum implied in the candles, or attempts to look for underlying broker motivation, the result is still a likely downmove.

The trader who uses a combination of PA and indicators, e.g. a red candle breaking previous candle lows at the top of a Bollinger band, likewise gets a signal.

Of course there are any number of other indicators or studies that could be applied. My point is that all entry methods ultimately come down to interpretation, and - as somebody posted earlier - all roads can lead to Rome, provided that they are used judiciously enough.

I'm not targeting anybody specifically, but to suggest that one's own approach is the only valid way to trade, expresses implicit ignorance. Ignorance that's perfectly understandable, though, because after a trader has found a profitable method that suits him - whether PA, indicators, fundamentals, whatever - why should he bother to conduct further research elsewhere?

David
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  • #228
  • Nov 3, 2008 5:23am Nov 3, 2008 5:23am
Quoting hanover
....to suggest that one's own approach is the only valid way to trade, expresses implicit ignorance....

David
Totally agree, no-one has the monopoly on profitable trading strategies....however they do all have one thing in common - money and risk management.

My advice would be to keep it simple, after all this is just a 2-horse race, how many indicators do you really need? Aside from that, so many indicators use the same basic ingredients, one is bound to confirm the other.

Instead of spending time searching for that elusive perfect indicator focus more on working out how you're going to lose as little as possible when you're wrong and make as much as you can when you're right. That may sound obvious but how many 'traders' do the exact opposite!

My http://smiley.onegreatguy.net/2cents.gif
  • #229
  • Nov 3, 2008 7:27am Nov 3, 2008 7:27am
Quoting lostinspace
Totally agree, no-one has the monopoly on profitable trading strategies....however they do all have one thing in common - money and risk management.

My advice would be to keep it simple, after all this is just a 2-horse race, how many indicators do you really need? Aside from that, so many indicators use the same basic ingredients, one is bound to confirm the other.

Instead of spending time searching for that elusive perfect indicator focus more on working out how you're going to lose as little as possible when you're wrong and make as much as you can when you're right. That may sound obvious but how many 'traders' do the exact opposite!

My http://smiley.onegreatguy.net/2cents.gif...
ditto
  • #230
  • Nov 3, 2008 12:08pm Nov 3, 2008 12:08pm
Quoting hanover
Hopefully the attached chart illustrates how there are many ways - indicators, candles, interpretating possible broker behavior - that can all be used profitably.

The MACD histogram divergence will give the trader who's looking for it a heads up that price is about to head south. The trader who uses price action will see the same deceleration in the decreasing slope in the magenta lines drawn between successive price highs, making the MACD redundant.

The white arrow (stochastic falling below 80 after a prolonged overbought period) likewise gives a fair indication that price will fall. The signal is somewhat late, potentially resulting in a lower profit on any short trade, but it's still an...
and probably even more important than entry methods.... exit methods ?

I know that for anyone starting trading the panic really sets in when they are in a trade that is in profit and they 'dont want to lose what they have got'.

Not getting out when you should still be in has to be the hardest mental discipline in trading IMO
  • #231
  • Nov 3, 2008 12:10pm Nov 3, 2008 12:10pm
Quoting KudzuFX
ditto
We know it makes sense but I wonder how many people will actually follow the advice, money management isn't exciting enough for them, they need indicators with lots of lines and colours!

You know what would be great, little neon flashing arrows saying Buy or Sell, with xbox-type shoot-'em-up sounds as they made/lost pips, they'd love it!

Hey, there's a project for Oanda, PipKombat - Trade or Die! mwahahahahaha......
  • #232
  • Nov 3, 2008 5:05pm Nov 3, 2008 5:05pm
Quoting lostinspace
We know it makes sense but I wonder how many people will actually follow the advice, money management isn't exciting enough for them, they need indicators with lots of lines and colours!

You know what would be great, little neon flashing arrows saying Buy or Sell, with xbox-type shoot-'em-up sounds as they made/lost pips, they'd love it!

Hey, there's a project for Oanda, PipKombat - Trade or Die! mwahahahahaha......

dat t t t t t t t

dat t t t t t t t

dat t t t t t t t

bamm bamm

*

"I just scored 1.67 pips - am i awesome or what"


.
  • #233
  • Nov 3, 2008 5:08pm Nov 3, 2008 5:08pm
Great gorillas' gallbladders, Batman, looks like I got that call right! Even down to the exit on the high momentum exhaustion candle (red arrow in the screenshot below). Better frame it for posterity, and go buy a lottery ticket. LOL. It's calls like these that can seduce me into believing that I'm smarter than a rank newbie, but fortunately I've come to learn that even the smallest hint of complacency is extremely dangerous.

Didn't like the way price blasted through the triple confluence (Fibo 38.2, prior S/R, daily pivot = green arrow), though. Thank goodness heavy resistance justifies tight stoplosses. Exactly like you (lostinspace) say "focus more on working out how you're going to lose as little as possible when you're wrong".

Quote
Not getting out when you should still be in has to be the hardest mental discipline in trading IMO

IMHO, that's why it's important to (1) have a predetermined exit plan; (2) play only with money that we can afford to lose. The rest comes with experience and confidence.

Some ideas for an exit plan:

1. Many experienced traders say that letting profits run as long as possible provides an edge in itself. True maybe, but we have to exit somewhere, because price will never trend indefinitely (to zero or infinity). We could use an (e.g. ATR based) trailing stop or indicator (e.g. MA crossover - yes, another possible use for indicators, LOL) to achieve this. Too tight an exit, and we will choke potential profit on many trades; too loose, and we'll give more pips back on average, possibly even allowing a win to become a loss (assuming that's bad).

2. Profit targets. These might be statistical (e.g. average move length from backtesting); or technical (key levels or conflueneces; or chart patterns like AB=CD; Fibo 138.2, 161.8 extension levels, etc). But to provide a real edge, the probability of reversal needs to be high enough, on average, to justify the curtailing of potential profit.

Clearly there's a delicate balance involved, because I've tried EAs that use random entries, and simply setting TP at different multiples of SL, and the results showed no statistically obvious edge. The higher the multiple, the lower the win rate, an inherent inverse proportion. It seems curious to me that math is largely impotent here, because by somehow containing loss, but letting profit run, in the real world, does actually work! The only possible answer I have is that this delivers profit optimally when (dare I say it) entry is based around significant levels.

Of course it's possible to scale out using combinations of the ideas in (1) and (2).

Anyway, the important thing is to have a clearly defined exit plan, one that somehow keeps the emotions at bay.

Quote
......after all this is just a 2-horse race......
Yes, but the jockeys are not necessarily equal. LOL.

Gotten off-topic, sorry, I won't hijack this thread any further.

David
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  • #234
  • Nov 3, 2008 5:19pm Nov 3, 2008 5:19pm
stochastics, stochastics, stochatics

study The Stochs and price action

your chart is too crowed - i think

all i use is multiple stoch, an ma and price action

works for me
  • #235
  • Nov 3, 2008 5:20pm Nov 3, 2008 5:20pm
Quoting hanover
Great gorillas' gallbladders, Batman, looks like I got that call right! Even down to the exit on the high momentum exhaustion candle (red arrow in the screenshot below). Better frame it for posterity, and go buy a lottery ticket. LOL. It's calls like these that can seduce me into believing that I'm smarter than a rank newbie, but fortunately I've come to learn that even the smallest hint of complacency is extremely dangerous.

Didn't like the way price blasted through the triple confluence (Fibo 38.2, prior S/R, daily pivot = green arrow), though. Thank goodness heavy resistance justifies tight stoplosses. Exactly like you (lostinspace) say [i]\"focus more on working out how you're going to...

btw - what pair is that? kiwi?
  • #236
  • Nov 3, 2008 7:41pm Nov 3, 2008 7:41pm
Quoting KudzuFX
btw - what pair is that? kiwi?
Kudzu, thanks for your reply.

Yes, it's NZDUSD M15, a continuation of the chart I posted back in post #227. I was just being light-hearted, LOL.

Re the chart being cluttered, the stoch and MACD windows are redundant, as I'm trying to teach myself trading level confluences and candle patterns (explained further here). Back in post #227 I was attempting to illustrate how any or all of indicators, price action, and/or interpretation of bank machinations could ultimately lead to the same objective. Hence the clutter.

There are many ways to profit. Some folk like lots of info on their charts, others perfer to trade naked. Both can work. Anyway, I agree, it's definitely possible to profit using stochs. Boxingislife (here) and Spudfyre (here, here and here) are two of many contributors here who opened my eyes to their possibilities some time back.

Wishing you many pips also,
David
  • #237
  • Nov 3, 2008 10:15pm Nov 3, 2008 10:15pm
Quoting hanover
Kudzu, thanks for your reply.

Yes, it's NZDUSD M15, a continuation of the chart I posted back in post #227. I was just being light-hearted, LOL.

Re the chart being cluttered, the stoch and MACD windows are redundant, as I'm trying to teach myself trading level confluences and candle patterns (explained further here). Back in post #227 I was attempting to illustrate how any or all of indicators, price action, and/or interpretation of bank machinations could ultimately lead to the same objective. Hence the clutter.

There are many ways to profit. Some folk like lots of info on their charts, others perfer to trade...

i guess it's a joke that only forex traders would get - a chart loaded with a million indicators - may look impressive to a newbie, but we know it definitely is over compensating. Didn't Freud have something to say about over compensating?
  • #238
  • Nov 4, 2008 2:57am Nov 4, 2008 2:57am
Quoting hanover
Great gorillas' gallbladders, Batman, looks like I got that call right! Even down to the exit on the high momentum exhaustion candle (red arrow in the screenshot below). Better frame it for posterity, and go buy a lottery ticket. LOL. It's calls like these that can seduce me into believing that I'm smarter than a rank newbie, but fortunately I've come to learn that even the smallest hint of complacency is extremely dangerous.


David
Good trade, as near perfect as anyone's going to get!

But why would it be wrong to believe you're smarter than a rank newbie (and not just a rank newbie, some people have been plugging away at this for ages!), if you consistently make calls like that and have the discipline to trade your plan then you obviously are!

I think complacency is the unavoidable natural result of doing something repetitively but it doesn't mean we're any less aware or alert when something 'different' happens, in fact by allowing our subconscious to manage the more mundane tasks it frees up valuable resources so we can concentrate on the important stuff.


On the topic, I don't use indicators myself because I could never find anything that I was good with or that helped, my charts are embarrassingly bare
  • #239
  • Nov 6, 2008 4:21pm Nov 6, 2008 4:21pm
"Why indicators will fail you"

I totally agree - indicators use historic data, they can never predict with any like hood where price movement will go. It's just a gamble. Fundamentals are ruling the markets at the moment... Follow them.
  • #240
  • Nov 6, 2008 11:37pm Nov 6, 2008 11:37pm
An indicator is just that. Most of them lag behind price action because they need the data from closed time periods to produce the "math" result. They cannot predict the future any more than you or I can. But indicators allow us to do something more valuable.

By using indicators and oscillators, we are able to "reorganize" the price information into readilly recognizable patterns. Take a moving average for instance. Look back, as far as you like, and see how many times the price continued up after closing above a given moving average. From this we can draw a statistical probability that if the price closes above (long) or below (short) a particular moving average, then the probability is that the price will continue in this direction for a while longer.

This presents us with an opportunity to exploit that probability to our advantage.

You can say the same of an oscillator. For example if the price closes above a particular moving average, and the RSI reading is also above 50, there is a greater probability that the price will continue to move up than to move down. Thus we see an opportunity to exploit this probability and place a long position.

This doesn't mean that the price will ALWAYS move the direction "indicated" by these tools, only that it will PROBABLY move that way. The margin for success must be tested and an accuracy rating applied. For instance, a certain combination of "indicators" produces a 65-70% accuracy. This means that 7 times out of 10 the price will move the way we want and we can exploit that.

The other half of this is to prevent the price from slipping away from you during that other 30% of the time. So we place a stop according to how much we're willing to risk to see if the probability goes in our favor. By cutting those losers off quickly, we are free to exploit the remaining winning trades and make money.
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