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The Most Useless Indicator

  • #1
  • First Post: Oct 6, 2011 4:20am Oct 6, 2011 4:20am
Hello.

It's been awhile since I started a thread and I'm bored so I thought it would be fun to start a thread on "the most useless indicator" to pass the time while my trades make their way to my stop losses, ha!

Basically, this is the worst indicator you have ever seen. Feel free to name several if there are more than one. Attaching a chart with the indicator is also encouraged so that we may see this disaster of an indicator in action!

Here's one from my collection, it's called "Entry". I've kept it only as a memento of a time where I tested everything that exists back when I was a noob. It basically draws a tiny arrow you can barely see after several bars have passed and you've already missed the move. It also repaints!
Attached Image (click to enlarge)
Click to Enlarge Name: the worst.gif Size: 18 KB
  • #2
  • Oct 6, 2011 4:59am Oct 6, 2011 4:59am
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  • #3
  • Oct 10, 2011 8:04pm Oct 10, 2011 8:04pm
yes, the most useless indicators are those that repaints.i still remember there is one time, i spents almost 2 weeks backtesting happily on a repaint indicator, dreaming how rich will i get before i go to a demo account and realise that it repaints.
  • #4
  • Oct 10, 2011 8:09pm Oct 10, 2011 8:09pm
I agree, it is a useless indicator, one that kinda makes you think you're in when you realize that the market has already moved ahead..
  • #5
  • Edited Aug 13, 2016 3:23am Aug 12, 2016 4:55pm | Edited Aug 13, 2016 3:23am
Quoting 2+2=4ex
Hello. It's been awhile since I started a thread and I'm bored so I thought it would be fun to start a thread on "the most useless indicator" to pass the time while my trades make their way to my stop losses, ha! Basically, this is the worst indicator you have ever seen. Feel free to name several if there are more than one. Attaching a chart with the indicator is also encouraged so that we may see this disaster of an indicator in action! Here's one from my collection, it's called "Entry". I've kept it only as a memento of a time where I tested everything...
Here is a picture showing the correlation of nine MT4 standard indicators with respect to the next price return. The response is

(Close[bar]-Open[bar])/Open[bar]*100.0,

and the indicator values are calculated on the previous bar (which is bar+1). As one can see from the picture, there is no relation between the value of an indicator and the next bar return value. Simply put, the nine indicator in this study have no predictive power at all.
The data is captured from EURUSD,D1, and the default input settings of all the indicators were used.
Attached Image (click to enlarge)
Click to Enlarge Name: ind_return.png Size: 171 KB

And here is the correlation when the difference of the last two values of the indicators were used. There is clearly no relation between the directional change in value of an indicator and the next bar return value.
Attached Image (click to enlarge)
Click to Enlarge Name: diff_ind_return.png Size: 167 KB
Trading is the hardest way to make easy money...
  • #6
  • Aug 13, 2016 1:35am Aug 13, 2016 1:35am
Do you blame the hammer for bending the nail?
Do you blame the saw for cutting the wrong length?
A quote from another galaxy: "It's not the tool, it's how you use it."
My Threads: Trading is as simple as 1-2-3, Highest Open / Lowest Open Trade
  • #7
  • Aug 13, 2016 12:30pm Aug 13, 2016 12:30pm
Quoting MathTrader7
{quote} Here is a picture showing the correlation of nine MT4 standard indicators with respect to the next price return. The response is (Close[bar]-Open[bar])/Open[bar]*100.0, and the indicator values are calculated on the previous bar (which is bar+1). As one can see from the picture, there is no relation between the value of an indicator and the next bar return value. Simply put, the nine indicator in this study have no predictive power at all. The data is captured from EURUSD,D1, and the default input settings of all the indicators were used.{image}...
Very nice MathTrader7! You have visually shown that none of the particular tools selected and tested is fit for the intended job. And finding an advantage in the markets doesn't need to be any more difficult than finding one (or more) tools that IS appropriate for the intended job using this same method. Thanks for reminding me of this simple truth.

Your two pictures also show that some of the tested tools are somewhat or very similar to each other.
  • #8
  • Aug 13, 2016 12:40pm Aug 13, 2016 12:40pm
Quoting FXEZ
{quote} Very nice MathTrader7! You have visually shown that none of the particular tools selected and tested is fit for the intended job. And finding an advantage in the markets doesn't need to be any more difficult than finding one (or more) tools that IS appropriate for the intended job using this same method. Thanks for reminding me of this simple truth. Your two pictures also show that some of the tested tools are somewhat or very similar to each other.
You're welcome! Hope the two pictures are useful for people who are looking for such visualization of the correlations.
Trading is the hardest way to make easy money...
  • #9
  • Aug 13, 2016 12:46pm Aug 13, 2016 12:46pm
Quoting MathTrader7
{quote} Here is a picture showing the correlation of nine MT4 standard indicators with respect to the next price return. The response is (Close[bar]-Open[bar])/Open[bar]*100.0, and the indicator values are calculated on the previous bar (which is bar+1). As one can see from the picture, there is no relation between the value of an indicator and the next bar return value. Simply put, the nine indicator in this study have no predictive power at all. The data is captured from EURUSD,D1, and the default input settings of all the indicators were used.{image}...
How about correlation of bars making new daily high/low?
How about correlation of bars crossing previous day's high/low?
How about correlation of bars crossing weekly open?
Use H1 chart period.
Thank you.
Cheers
My Threads: Trading is as simple as 1-2-3, Highest Open / Lowest Open Trade
  • #10
  • Aug 13, 2016 1:42pm Aug 13, 2016 1:42pm
MathTrader7, Thank you for producing work that shows what many traders have feared for decades. The likely hood of there being a holy grail, mathematical solution or formula, that does not actually cheat the rest of the system is very low.

I have always had a problem with the assumption used for all systems that time is constant. When there is a break in time, meaning a weekend, a holiday, an emergency closure circuit breaker type of event, the formula based approach seems to loses its accuracy. We as traders attempt to code and change parameters to limit the impact of this skip of the markets heartbeat, but the accuracy outcome is still similar.

Addressing time in a piece meal fashion would require formulas that have beginnings and endings during the work week with those two parameters being just as important for filtering out bad entries as the normal parameters.

Between greed and other faces of emotion that cloud the new and old trader alike, it will be hard to switch indicators based on past candles in an automated fashion. Because every trader's greed/money management arrangement is different, parameters for any indicators would need to match the user's money management style. A more aggressive money management style would lend to not trading as often to limit possible draw down. A less aggressive money management style would lend to indicators with more entries. (more false positives).

Since I am rambling a little here I will stop before you become convinced I am a fool. Now I wait to listen to what others believe and compare that to my own beliefs. Thanks in advance!
Remember what the door mouse said....
  • #11
  • Edited 6:05pm Aug 13, 2016 5:51pm | Edited 6:05pm
Quoting reggae sound
MathTrader7, Thank you for producing work that shows what many traders have feared for decades. The likely hood of there being a holy grail, mathematical solution or formula, that does not actually cheat the rest of the system is very low.
You're welcome! And I agree with you.

Quoting reggae sound
I have always had a problem with the assumption used for all systems that time is constant. When there is a break in time, meaning a weekend, a holiday, an emergency closure circuit breaker type of event, the formula based approach seems to loses its accuracy... Addressing time in a piece meal fashion would require formulas that have beginnings and endings during the work week....
This is also a valid argument. The market price which is represented as candle sticks/bars are not necessarily sampled at equal distances of time.
Trading is the hardest way to make easy money...
  • #12
  • Aug 13, 2016 6:00pm Aug 13, 2016 6:00pm
Quoting TooSlow
Do you blame the hammer for bending the nail? Do you blame the saw for cutting the wrong length? A quote from another galaxy: "It's not the tool, it's how you use it."
The nine indicators have no predictive power, but it doesn't mean that they are useless! One can use them for analyzing what happened to the market.
Trading is the hardest way to make easy money...
  • #13
  • Aug 13, 2016 6:02pm Aug 13, 2016 6:02pm
Quoting MathTrader7
{quote} The nine indicators have no predictive power, but it doesn't mean that they are useless! One can use them for analyzing what happened to the market.
I concur
My Threads: Trading is as simple as 1-2-3, Highest Open / Lowest Open Trade
  • #14
  • Edited 11:30am Aug 23, 2016 11:13am | Edited 11:30am
Quoting MathTrader7
{quote} The nine indicators have no predictive power, but it doesn't mean that they are useless! One can use them for analyzing what happened to the market.
You cannot measure every tick (candle) and expect to find a correlation. You have to trade during volume that creates momentum in a projected direction. In my opinion, your analysis seems flawed. However, it is good for all the EA hunters to know, as it is the reason they fail miserably. There are specific market conditions required for accurate interpretation, and knowing those are what separates successful traders from losing traders. If you want to trade 24 hours a day, no matter what!!, then the results are that picture.
You cannot be extraordinary by being normal
  • #15
  • Aug 23, 2016 11:19am Aug 23, 2016 11:19am
Quoting reggae sound
A more aggressive money management style would lend to not trading as often to limit possible draw down. A less aggressive money management style would lend to indicators with more entries.
Or, you could do what every other business in the world does and just measure reality. Rather than being aggressive or less aggressive, why not just use the current data? Equalize (normalize) the data and buy when price goes above it, and sell when price goes below it. Trade the middle against the extremes.
You cannot be extraordinary by being normal
  • #16
  • Last Post: Aug 25, 2016 3:56am Aug 25, 2016 3:56am
Quoting dkrock
There are specific market conditions required for accurate interpretation, and knowing those are what separates successful traders from losing traders.



Every losing trader should meditate about this sentence for a while.
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