Why Indicators will fail you

Cause selling as the market has already gone down is not a good idea. In your example you dont start buying or selling thill the currency has already moved several pips in that directoin. thats not how the big boy trade

I'm sorry but I don't understand what you are saying. If I wait for the Fib retracement I am already surrending PIPs and increasing my risk. When I wait for a trend break I am surrendering far fewer PIPs and at a lower risk. Can you please explain what you meant? I must be missing something.

Just a quick post,

It is good to understand the fibs when you use them and understand why we are looking at them. Fibs alone mean very little , they will almost never cause the market to move , or bring us a reason to trade. The idea is that when the market breaks in a direction , and we see a nice move, at that time traders will start taking profits out , causing a retracement. How big that retracement will be? That depends on how many people think that this is a good place to take profits at.If there is a strong trend going on , then most traders will keep a trade open little more , so the retracement will probably just be a 23% or maybe 38% , but if the market is somehow ranged , and there is no major news goinon , then you can expect a 61% or 78% retracement.
Usually the 50% fib is the one with a good probability, and if we are right, and we go with the trend, then that's the place you want to get in at.

Happy Trading,
Mr.Green
www.GreenForexTrading.com

This statement is so right on. The pitfall that traders fall into all the time is blindly following indicators/rules. They are guidelines only.

yes that's right indicators is only the tools the most important is old school theory like what's the trend , how to draw a right trend lines etc

you guys do know that price action is an indicator....

this thread is a good one

At least we can agree on something. I posted the same view quite a few pages back.

I think this thread should die with the creator who started it. Looking back, it is very clear of his intentions. A sophisticated method to lure victims to his mentoring program.

As Derryn Hinch would say SHAME SHAME SHAME....

Just saying Hi

At the end, they are just tools that indicate not forecast the future.

I use price action 90% of the time and the one indicator I do use I use about 10% of the time. time frames. trend lines, fibs etc do not give you any distinct advantage so i don't use them because they can be very subjective in my opinion. yeah sometimes you'll find cluster or what not but still too subjective for my taste. if they work for yall, awesome! keep on going with it! price is price on any time frame and if does what i like to see, then i trade. if not, then i don't simple as that.

what about this indicator , thanks .

you got a point...then that would be the one i use 90% and the other "indicator" 10%

Candlesticks in themselves are NOT indicators (candle stick patterns may be)...they are a record of the market PRICE ACTION; and in a dynamic market like FOREX, PRICE is really the only thing you should be trading...not the indicators.

Traders who complain that indicators "don't work" are missing the fact they are trying to TRADE off the indicators instead of the Market itself...and I am amazed to see how many traders make all their decisions from what an indicator says instead of just observing the price action in context. They are missing the point...the most important point in trading.

Again, don't trade indicators...trade the PRICE ACTION and use indicators in a system to verify probability or the lack thereof on a possible setup...that's all. The PRICE is the MARKET...not the indicators.

Sure, indicators will always fail you...because you're basing your trading decisions on the wrong thing. If you doubt this idea, force yourself to trade off naked charts (completely sans indicators) for two weeks;at first you'll probably feel helpless w/o your beloved indicators as a crutch until you learn to perceive, interpret and appreciate the price action itself.

In the long run, if you can wean yourself off dependency on indicators and focus more on price action...your trading should dramatically improve.

I still think price can "indicate" where the market may go. I see the concept/metaphor he is using. but i totally see your point too. but i use only one for confirmation. that's all i need.

price tell indicators what to do, indicators do not tell price what to do, hence 95% failed retail traders.

"Line Chart is the best indicator,
it has 100 percent accuracy in reflecting the current market.."

- craid -

After trading for a number of years I read, All About Technical Analysis by Constance Brown. She has a chapter that talks about the big picture approach to TA. In it she breaks down into categories the different methods of trading into: Pattern recognition, Market price data or indicators, behavioral, and correlation between different markets. Price action would fall under pattern recognition, fibs and trend lines under market data, and oscillators would fall under behavioral. She advocates using one of these items from each category to confirm others in order to make a successful trade. Her books required reading to become a CMT (Chartered Market Technician).

I think this makes sense. In reading this site from about Nov. 2008 I agree with gspajon #240. I also agree with fry2010 #256. That post indicates that many traders misunderstand indicators. One of the reasons is that many websites, including investment websites provide incorrect information. For example, RSI which was developed by Welles Wilder is still explained the way Wilder used it. But his method of using it has been shown to be wrong as far back as the 90s by Andrew Cardwell. Divergences for example, are not reversal points in price as much as they are signals for the existing price direction to continue. 70 RSI is not the place to sell if the range of RSI stays about say 40. And there is more.

The point is that indicators are effective if you are using them correctly and the only way to know if you are using them correctly is to test your assumptions.

Cardwell also discovered Positive and Negative Reversal for RSI, however if you Google them you will find almost no information on them. These are momentum changes in RSI that are significant enough to use as a trading signal.

My experience of having learned price action from James16 nearly 4 years ago is that price action is not always enough, that you need something like a behavioral indicator to indicate the mood of the market. Fore example, Price action with no momentum is a risky trade. Price action and momentum pointing in the same direction is a strong trade.

The reason I would pick a momentum oscillator over a fib is that fibs can be drawn from many places. A momentum oscillator (ex. 14 period) will be the same for a trader on the EURUSD Hourly in Japan and England as it will be for someone in NY.

Can somebody show me an indicator which fails, in the sense that taking all the signals I will lose money? It should be easy after 9 pages in which the discussion seems to converge to this conclusion.

Wow, if you're having trouble finding indicators that fail...I DEFINATELY want to talk to you! LOL.

Great! Can you post it?

this is thing about new traders and all people looking at this game that pisses me off.

Indicators will fail on certain entries and so will price action. You can't get a guaranteed out come in the market. You just have to accept it. even if your strike rate is 99.99999999999999999999999999999999999% you can hit buy/sell and have 100% no questions asked that the trade will be a winner or a loser.

you have to get over this mental hurdle to make it. indicators or no indicators at times we will lose. all we have to do is make more then we lose to make this venture worth while doing.

*** Sorry for the rant but I just got back from Avatar and i was badly disappointed, CG was great but the story & plot was garbage of the worst kind!** ** Dances with wolves in space!**