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Are indicators useful?

  • Post #1
  • Quote
  • First Post: Nov 26, 2005 7:36am Nov 26, 2005 7:36am
hi guys,

If one spent the time to study indicators and yet failed to profit from the trades, are they still worth the effort to learn?

In the end , all it does is confuse the traders and if they can make decent profit without the use of indicators, why not and why overate the use of indicators?

Hope the senior traders CAN SHED SOME LIGHT INTO IT.

As a rookie trading live next year I don't want to learn something that take up so much time and still end up broke and confused.
Quoting Blackship
hi guys,

If one spent the time to study indicators and yet failed to profit from the trades, are they still worth the effort to learn?

In the end , all it does is confuse the traders and if they can make decent profit without the use of indicators, why not and why overate the use of indicators?

Hope the senior traders CAN SHED SOME LIGHT INTO IT.

As a rookie trading live next year I don't want to learn something that take up so much time and still end up broke and confused.

None of indicators give 100% reliable signals. If it was so then market soon would have eliminated this.

Indicators are based on past price movements, hence they cannot predict market exactly. Stoch coming from overbought zone not always shows market is reversing.
do not rely only on indicators (oscillators).
kiss the trend
Indicators are simply tools in your trading toolbox. It depends on how many of those tools you want or need to use in order to repair your problem, problem being when to get in and when to get out. You should be able to recognize chart patterns which, when used along with indicators, can influence your trading decisions.

Here's a FREE AMAZING FOREX SECRET INDICATOR: The
human mind. Once you trade real money, it's mind over indicators.
Because helping each other is a good thing.
I have tried to put together many trading systems using heaps of different indicators and have found that most of them don't work.

A fast way to lose all your money is to buy/sell moving average crossovers or buy when stoch is overbought and sell when it is oversold or buy when RSI is below 30 and sell when it is above 70 or using MACD crosses (same as MAV crosses anyway).

I should say that some of the above strategies have merit in stock markets that I have tested on.

Simon
Quoting Blackship
hi guys,

If one spent the time to study indicators and yet failed to profit from the trades, are they still worth the effort to learn?

In the end , all it does is confuse the traders and if they can make decent profit without the use of indicators, why not and why overate the use of indicators?

Hope the senior traders CAN SHED SOME LIGHT INTO IT.

As a rookie trading live next year I don't want to learn something that take up so much time and still end up broke and confused.
Indicators are the stick which a blind man uses to help him feel the way and make life easier for him, but they DON'T make him SEE anything real, because he is still blind.

When the blind man uses the stick, he can touch something with it, but when he actually moves, things might have already changed, that's why indicators are like the stick, they LAG.

Imagine that you are a blind man (GOD forbids), should you use a stick or not??


Thanks,

Nader
I advise you all to run statistical correlation analysis of indicators. You will be very shocked, I know, it happened to me... Most indicators are almost identical, if not 100% identical to each other.... So when you buy your super advanced charting package with 30 indicators, there are only maybe 5 or 6 indicators that are different enough from each other...
Quote
If one spent the time to study indicators and yet failed to profit from the trades, are they still worth the effort to learn?

I am generally pessimistic on technical analysis, but perhaps TA indicators are worth it even if they don't generate profit. That is, if they improve your risk management and reduce losses that would have otherwise occurred. You'd need a control to prove this...very hard indeed!

Quote
In the end , all it does is confuse the traders and if they can make decent profit without the use of indicators, why not and why overate the use of indicators?

Myself, I don't use indicators much at all, other looking at old highs and lows. One day I may go so far as to look a measure of momentum and maybe moving averages, but I like to leave charts as clean as possible. For me, there is only one true line on the chart and that is the price.
"Always bet on black"
I can only echo what most are saying here, all indicators are after all are mathematical calculations of price, I figure why add another step between the price action and the most powerful computer system on earth, your brain.

In saying that, trying to interpret price action can be a very daunting task for beginners, especially if they have no trading background in other areas (like me), but with some patience, and the aid of support, resistance and trend lines, things will become clearer.

My only indicator I would suggest to look into, purely to follow a trend, would be the ADX, which I use sparingly.

Best of luck!
You can quit and they won't care, but you will always know.
Why use indicators, when you can use the Force?
"Do or do not. There is no try" ~Yoda
until now only one indicator amazed me: Force Index which is essentially (so far as I untestand it) a multiplication of momentum and volume. It gives great signals for exits, and good for enters.
time is money! Z
Well, anyone care to share how to use this Force Index (indicator) ? Thank you in advance
I developed my own model. Timeframe 15min till 1h. I tested it on xtrade platform.

Try to use period 200 (sic!) and note how exact it shows the end of a trend just sticking back to zero. You can also look for divergence (price vs. indicator) which might give you yet better results but in this case you need to be patient, otherwise you step out too early.

This works on "trendy" pairs

The problem is: when to enter. Just move of the indicator from zero doesnt guarantee anything, you need to have some extra signals. I failed, however I have not tried hard, cause Oanda does not offer this indicator anyway.
time is money! Z
Can one grapple the concept of trends and overbought/oversold without the use of indicators?
William eckhardt views on indicators:

Schwager: Do you have any opinion about popular technical overbought/oversold-type indcators, such as RSI and stochastics?

Eckhardt:I think these indicators are nearly worthless.I'm not implying that you shouldn't do research on these approaches-you can be very promiscuous in your reseach but not in your trading,



I rest my case
Indicators are useful but they do not generate correct signals 100% of the time.
They do improve my decision making when applied correctly and therefore are certainly worth learning.
This is only my opinion however it is comming from an experienced and successful trader.
Good luck in learning these tools or discarding this approach, which ever you choose.
indicators that just read the price are HIGHLY overrated in my opinion. moving averages, oscilators, overbought/oversold, etc etc etc. they all just do a fancy calculation with the price. so really, the price tells you just as much as these indicators. the one "price reading" indicator that i think does have value is the ADX.

there are other indicators, like volume, open interest, put/call ratio, implied volatility, etc. that are NOT based on price. these indicators are VERY useful, because they give you information that the price alone does not.
Relax and be happy.
Quoting Blackship
William eckhardt views on indicators:

Schwager: Do you have any opinion about popular technical overbought/oversold-type indcators, such as RSI and stochastics?

Eckhardt:I think these indicators are nearly worthless.I'm not implying that you shouldn't do research on these approaches-you can be very promiscuous in your reseach but not in your trading,



I rest my case
and if Eckhardt said it, it HAS TO BE TRUE! that guy is not only a friggin genius, but he has like 100 years of backtesting experience!
Relax and be happy.
haha Merlin... that's pretty funny but true...
[quote=merlin]indicators that just read the price are HIGHLY overrated in my opinion. moving averages, oscilators, overbought/oversold, etc etc etc. they all just do a fancy calculation with the price. so really, the price tells you just as much as these indicators. the one "price reading" indicator that i think does have value is the ADX.



Merlin

You have touched on this subject(ADX) before. Can you expand some more on your reasons why you regard the ADX indicator as being better or more useful than most others?

Or, can you steer me towards a website or book that can explain how the mechanics of this indicator works. Hopefully you don't need to be a mathematician to figure it out, cause I'll be lost

Thanks a lot.
Quinn
I started out with nothing, and I've got most of it left!
  • Post #20
  • Quote
  • Edited at 10:19pm Dec 8, 2005 10:17pm | Edited at 10:19pm
While some people can trade with price action alone, I think indicators can be helpful, especially if you don't have too much experience. For instance, watching MAs of different periods on a chart can help you see the strength and speed of trends. Alternately, watching indicators on a higher time frame, paying special attention to the angle of separation of an MA/MACD crossover, can be very helpful in lower time frames. Yes, you can probably see the same things by watching price action or drawing a few trendlines, but I find indicators to be a quick shortcut. With either price action or indicators, you'll start to notice repetitive patterns. That's really the goal of any type of TA or chart reading: to know when your setups are likely to work out, and to know when you should stay out.

I watch the price action, too. I use few entries based on indicators, but if the candle is ugly (i.e., long wicks or a hammer for a short entry), I probably won't take it.

John
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