It seems like this is good thinking and good in practice, too.
Keeps things simple and keeps from form-fitting!
Thoughts?
Ignored
In a nutshell, the success or failure of an indicator is based on the number of people looking at it. An indicator alone will not reveal some great market inefficiency, or foretell some huge market move. An indicator will work if tons of people see the same indicator showing the same signal, and they all chose to act on it. Conversely, an indicator will fail if nobody sees the signal generated from it. It is for these reasons why so many indicators fail to begin with. By changing values, adding different indicators, and by all other means complicating the picture in front you you, you are moving away from what other people see, and lessening the likelihood that you will be moving with the majority of the market participants. It is for these same reasons that simple support and resistance is so successful. Everyone who is looking at the chart can see those levels. At the same time, however, the more exposed your system is, the greater the chances are that someone is waiting to take money from you. The key is to use the concepts evident to almost all participants, but trade them differently than the average trader.
To stay on topic, with that in mind, leaving the settings at default may technically heighten the success rate of the tool because those settings will have a greater chance of being used by many other people.
In a nutshell, the success or failure of an indicator is based on the number of people looking at it....
Ignored
It all depends on how you look at indicators. If you view them as a self fulfilling prophesy then your reasoning is corect. I however find it difficult to believe in the self fulfilling prophesy of the indicators especialy when it comes to forex. The chance that in the huge forex market you would have enough traders looking at RSI with the same settings or MACD with the same settings and generate enough order flow to move the market is ridicoulos. There is no one single indicator (default settings or not) capable of generating order flow. When those indicators are able to preditct a move it is just a mere coincidence, because there had to be other particiapnts in the market with different reasoning for getting in that generated enough order flow for the market to move. At best indicators are tools for gathering statistical data about price. It may be posible to find patterns in that data that repeat often enough to build a system around them. That however is rather difficult. There might be self fulfilling prophesies in this buissness i just dont think that the common indicator is one of them.
It all depends on how you look at indicators. If you view them as a self fulfilling prophesy then your reasoning is corect. I however find it difficult to believe in the self fulfilling prophesy of the indicators especialy when it comes to forex. The chance that in the huge forex market you would have enough traders looking at RSI with the same settings or MACD with the same settings and generate enough order flow to move the market is ridicoulos. There is no one single indicator (default settings or not) capable of generating order flow. When those...
Ignored
I completely agree. In terms of finding strategies that follow the consensus of what the majority of traders are anticipating, indicators offer a poor example.
