This is a discussion about why indicators are completely useless.
Let me begin with this....
In an uncertain environment the human mind gravitates and clings to anything that can give meaning to what's going on. Indicators fill this role perfectly. Just like reading your horoscope, YOU make it fit into your analysis. There are countless settings and time frames and indicators to choose from, one (probably many) will alway back up your argument. The problem is when it works we find comfort in that fact, and when it doesn't we forget about it. We do this because we WANT to believe that they work, because deep down we hope that its true and they can make us rich.... People have the tendency to regard all things good as their own doing and all things bad to some external cause. This is just human nature, and it works well for indicators. "Yes I made money, my indicators are great", or " Damn I lost, maybe I should adjust the settings". The truth is the more I learn the more I see nobody knows what going to happen, it's just money management and your own psychology that will make or break you. With all the intelligent people out there don't you think someone will have invented the perfect indicator, and be sitting on the beach watching the money role in. To date I have yet to hear of something like that, and I am confident I'll never hear it. These indicators are just instruments that improve market liquidity... think about it.... with all the different indicators and setting, there will always be a signal going off. This ensures that banks and those with clout can off load their positions to the unsuspecting crowd. And, even if banks use indicators it's only to see what everyone else may be thinking.
So indicators are
1) slow
2) and therefore impede your performance
3) Self validating due to infinite arrangements
4) Give you confidence when you shouldn't have any
5) Help you become a sucker
Ps. I know there will be talk about the market being fractal ... this is just another way to validate indicators.
Let me begin with this....
In an uncertain environment the human mind gravitates and clings to anything that can give meaning to what's going on. Indicators fill this role perfectly. Just like reading your horoscope, YOU make it fit into your analysis. There are countless settings and time frames and indicators to choose from, one (probably many) will alway back up your argument. The problem is when it works we find comfort in that fact, and when it doesn't we forget about it. We do this because we WANT to believe that they work, because deep down we hope that its true and they can make us rich.... People have the tendency to regard all things good as their own doing and all things bad to some external cause. This is just human nature, and it works well for indicators. "Yes I made money, my indicators are great", or " Damn I lost, maybe I should adjust the settings". The truth is the more I learn the more I see nobody knows what going to happen, it's just money management and your own psychology that will make or break you. With all the intelligent people out there don't you think someone will have invented the perfect indicator, and be sitting on the beach watching the money role in. To date I have yet to hear of something like that, and I am confident I'll never hear it. These indicators are just instruments that improve market liquidity... think about it.... with all the different indicators and setting, there will always be a signal going off. This ensures that banks and those with clout can off load their positions to the unsuspecting crowd. And, even if banks use indicators it's only to see what everyone else may be thinking.
So indicators are
1) slow
2) and therefore impede your performance
3) Self validating due to infinite arrangements
4) Give you confidence when you shouldn't have any
5) Help you become a sucker
Ps. I know there will be talk about the market being fractal ... this is just another way to validate indicators.