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Indicators CAN work!

  • #21
  • Dec 21, 2011 3:29pm Dec 21, 2011 3:29pm
You cant use the same variable (price) to predict price.
In Math that dont have sense.
All indicators are laging and works only in some special conditions of the Market.
But indicators realy works for know what the losing traders do.
Big boys and winner traders use for know, when and where un-informed traders do and where they put they orders.
Then take money from they.
In order to understand this game sum cero, you need to work with Order Flow.
Order Flow -->> Price action -->Patterns--> indicators
  • #22
  • Dec 21, 2011 4:02pm Dec 21, 2011 4:02pm
Quoting Dopey
Well, you know then how you can tell kids what and what not to do in their best interest, yet they still like to just find out things on their own. This is something we really never outgrow, we just learn to modify it to the point where we try not to hurt ourselves too much.

The point is you can tell people all day long what's good for them, what works or doesn't, and they're still going to do what they want to do, such as use indicators. I was just wondering why you even bother.
And I don't understand people who try to generalize their opinions. If indicators don't work for you or you don't like them, fine, but don't say it cannot work for anybody.

I can understand why people think like that, most likely they were also in the situation where they thought indicators will make them a lot of money. I was also in that position in the first months of learning about Forex trading and obviously you get disappointed. But when I finally realized how I must look at indicators, I made trading easier for me.

csabz90: I think for a trader it is important to accept the fact that markets are unpredictable. Yes, we obviously expect price to go in a certain direction if we short/long a pair, but if it doesn't, I stay calm. Indicators are only following price, they are here to help us visually. This is why I do all the filtering.

I'm not fighting the market, I'm going with the trend. If there is no clear trends, I'll switch to my range trading strategy (without Indicators, maybe this one will make me RICH *jk*).
  • #23
  • Dec 21, 2011 4:31pm Dec 21, 2011 4:31pm
Quoting Forex5050
Hi,

I've read recently a lot of threads in this forum and I've noticed that a lot of traders here think indicators are bad and cannot work in trading Forex. It seems a lot of people here are trading just price action. I can understand their arguments, but I think nobody should say "it doesn't work" when there are people who are successfully trading with indicators.

I have already live trading experience, but I consider myself still a newbie in this business. I'm successfully trading using a CCI overbought/oversold system (+100, -100) on...
Indicators do work but it all depends how they are used. For example its pointless to use a hammer to screw a screw but its perfect when hammering a nail. Indicators are the same. I personally don't use much indicators in my trading, I do have a excel file that I export a price chart filled with all the common indicators, it filters all that noise and tells me directional bias and I use PA for my entries. Its all how you read them and how you use them in your trading. PA works for me, indicators may work for you but at the end of the day no one can argue with profits.

Just my 2 pips
  • #24
  • Dec 21, 2011 4:39pm Dec 21, 2011 4:39pm
Indicators can work to indicate a trend. They are sometimes good at indicating the beginning of a trend and sometimes the end of a trend. Where they fall down is in so called "overbought" (1) and "oversold" (2) areas. This is where indicators break, a bit like a thermometer which will only read up to a certain temperature. Another area where they fall down is ranging markets (3). They don't work unless the trader recognises the ranging market pretty early and either ceases to trade or takes it down to a time frame where the range is a series of trends.

As these 3 areas comprise quite a large proportion of market movement, I'd say more than 50% of the time, then it's fair to say indicators won't work without some discretionary input from the trader.

An alternative is to mix up indicators so that all trades that aren't strongly trending are excluded. This is possible and brings about weird and wonderful indicators such as the Damiani Volatimeter. Damiani is a well respected trader so the less I say about my efforts with this the better. I'm waiting for him to bring out an indicator which will make money when the price is going sideways.

I'm sure there are traders out there who use indicators successfully but I would bet they know a thing or two about support and resistance, trend lines, bullish bars, news spikes, bear flags, falling wedges etc. Whether they know they know these things is another matter. I've read posts in Trading Systems where the poster sometimes can't explain why not to take a trade, they just know. Then you have indicators which are actually quite good, like Ichimoku. Is Ichimoku an indicator? It draws complex support and resistance levels and trends, as well as providing entry and exit points. Even so, I reckon some of the best traders would easily out trade Ichimoku.

I've tried out just about every kind of indicator and in the end come back to price action before entering or leaving a trade.

If indicators were any good then you'd just write the EA, sit back and wait for the money to roll in.
Gone to a better place
  • #25
  • Edited 9:02pm Dec 21, 2011 6:38pm | Edited 9:02pm
Quoting Forex5050
csabz90: I think for a trader it is important to accept the fact that markets are unpredictable. .
I like share one idea.
Generaly, yes the Market are not predectible.
But.... In some conditions People (because Market is people) act in the same way and are realy predectable.
Example: look at any shop mall, people moving without clear direction, but the fire alarm starting and you will see clear direction for most of the traders.
The same is in zones, where the traders need to take action.
  • #26
  • Dec 21, 2011 8:31pm Dec 21, 2011 8:31pm
Hi forex5050,

I agree with you. Indi does help me in making decision. Indi has its own power if we understand its characteristic and behaviour in certain condition.

BTW, when we want to make decision, we should have a certain reason to it, right? We need a certain tool (we understand well) to help.
When people trade just using price action, it means he is using price as his indi. Is price (we see on chart) LAGGING? Yes, it is. Laging or not, is doesn't matter. The most important thing is we should understand our indi well. AND we do know the reason why we open that position. Then we empower our system with proper Money Management.

It is just what I am doing.

Thank you
  • #27
  • Dec 21, 2011 9:53pm Dec 21, 2011 9:53pm
i believe indicators are more of a hindrance then a help when entering a trade. the only one i use is a MA and i use this to exit trades when i can't see any obvious confluence area's to take profits.
  • #28
  • Dec 22, 2011 3:05am Dec 22, 2011 3:05am
Thank you Forex 5050 for your answer. I never said anything about the market being predictable or not staying calm when it goes the opposite direction, what I said was that the reason for analyzing the market with or without indicators is trying to see the next move. So I would definitely say that indicators have predictive power (not all, but consider that even candles are indicators), but it depends on the trader if they can use it well.
Anyway, this is only my opinion and I respect that you think another way.
  • #29
  • Dec 22, 2011 4:03am Dec 22, 2011 4:03am
Quoting csabz90
Thank you Forex 5050 for your answer. I never said anything about the market being predictable or not staying calm when it goes the opposite direction, what I said was that the reason for analyzing the market with or without indicators is trying to see the next move. So I would definitely say that indicators have predictive power (not all, but consider that even candles are indicators), but it depends on the trader if they can use it well.
Anyway, this is only my opinion and I respect that you think another way.
Sure, thank you for your comments and successful trading in 2012 to you.
  • #30
  • Dec 22, 2011 4:55am Dec 22, 2011 4:55am
Quoting StrategoFX
i believe indicators are more of a hindrance then a help when entering a trade. the only one i use is a MA and i use this to exit trades when i can't see any obvious confluence area's to take profits.
Price action on the faster timeframes can be quite noisy. Indicators just help provide a clearer picture.

They have absolutely no predictive power, the people who designed them never claimed they had predictive power either.
  • #31
  • Dec 22, 2011 5:17am Dec 22, 2011 5:17am
Razzle anyone who designed a system involving indicators all claim they have predictive powers. Hence 'buy here' and sell when this indi crosses this indi etc..
  • #32
  • Dec 22, 2011 5:29am Dec 22, 2011 5:29am
Quoting Forex5050
Hi,

I've read recently a lot of threads in this forum and I've noticed that a lot of traders here think indicators are bad and cannot work in trading Forex. It seems a lot of people here are trading just price action. I can understand their arguments, but I think nobody should say "it doesn't work" when there are people who are successfully trading with indicators.

I have already live trading experience, but I consider myself still a newbie in this business. I'm successfully trading using a CCI overbought/oversold system (+100, -100) on...
Hello there,
Its very simple,
YOu can trade with indicators,or without,you can trade OHLC bars or Candles,you can do paper trading (old school trading),goal is same,to make you trading more relaxed and precise.If your indicator can help you according your trading style than that is good and you need a lot of practice...

Cheers
Petar
"Buy on fear, sell on greed !!!
  • #33
  • Dec 22, 2011 6:32am Dec 22, 2011 6:32am
Quoting Forex5050
If indicators don't work for you or you don't like them, fine, but don't say it cannot work for anybody.
I wasn't agreeing or disagreeing with him or anyone else about anything. I was simply commenting on his insistence to tell others what and what not to do.
  • #34
  • Dec 22, 2011 7:33am Dec 22, 2011 7:33am
Quoting smikester
Indicators can work to indicate a trend.
I don't doubt that for a moment.

The potential problem with stating it that way is that it can come across, to some, as an attempted "defense of indicators", and it really isn't that at all, because prices themselves can actually indicate a trend more quickly, more clearly and more reliably than any indicators can.

All indicators are doing, to show a trend, is taking information one can already see in the form of prices, reconstituting and reconstructing its recent historical developments a little in the blender, and displaying it in a different form, which many people (though no profitable or really professional traders) find attractive.

Quoting smikester
Where they fall down is in so called "overbought" (1) and "oversold" (2) areas.
I think they fall down in many areas, actually, of which that's certainly one. But that's because "overbought" and "oversold" are nonsensical terms derived only from indicators themselves. They don't really mean anything at all in the real world.

Quoting smikester
I'm sure there are traders out there who use indicators successfully
And yet, strangely, there seems to be no convincing evidence that there are, at all? Even with my background, I've never met one.

Quoting smikester
Then you have indicators which are actually quite good, like Ichimoku. Is Ichimoku an indicator?
I don't think there's much question, given the way it was originally researched and constructed, that it's intended to be an "indicator". Whether or not it's "quite good" is another matter altogether.

Quoting smikester
If indicators were any good then you'd just write the EA, sit back and wait for the money to roll in.
Indeed.

The lack of a clearly profitable EA, after all these years and so much research, speaks volumes.
  • #35
  • Dec 22, 2011 9:06am Dec 22, 2011 9:06am
What many don't consider about most indicators is that they are created for higher time-frames likely daily,weekly and monthly during the 70's.

That might explain why the masses of new traders can't make sense out of why oh why price didn't follow their 1m chart MACD divergence.
Measure twice, cut once
  • #36
  • Dec 23, 2011 12:54pm Dec 23, 2011 12:54pm
The key thing to consider when thinking about indicators, or trading in general, is 'does this make any sense?'.
The breaking of a wave cannot explain the whole sea.
  • #37
  • Dec 23, 2011 1:34pm Dec 23, 2011 1:34pm
Quoting Xela
The potential problem with stating it that way is that it can come across, to some, as an attempted "defense of indicators", and it really isn't that at all, because prices themselves can actually indicate a trend more quickly, more clearly and more reliably than any indicators can.

All indicators are doing, to show a trend, is taking information one can already see in the form of prices, reconstituting and reconstructing its recent historical developments a little in the blender, and displaying it in a different form, which many people...
Agreed with the whole post, but wanted to quote the most important parts.

What I would love to see is a talented (or at least decent) discretionary trader post live trades for a few days/weeks/months. After there's a sufficient amount of trading, go back and historically apply a variety of technical systems to the period that was traded, and compare the 'signals' generated by the technical systems, to the trades taken on a purely discretionary (combination of PA and intuition, whatever else) basis. What I think you'll find is that (assuming the trader is decent) a lot of the successful trades taken on a discretionary basis will match up with signals generated from a technical system (i.e. MA1 crossed MA2 and generated a buy signal at the same time the discretionary trader was initiating a buy for his own reasons), but what you won't see is the discretionary trader take trades where signals were generated but would've ended up failing; when the RSI was telling you 'oversold' on a breakout sell day, or when the MAs were crossing in ranges, etc. That is, in essence, what 'we' are saying when we say indicators don't work. Left by themselves, they will generate more failed signals then successful signals when exposed to a variety of market conditions; the discretionary trader is not hindered by being a slave to such a system.
  • #38
  • Dec 23, 2011 1:48pm Dec 23, 2011 1:48pm
Personally,i believe indicators work.but just like a lot of things in life,in forex too,you can't just use them alone.one needs some other things to assist them to work well.
Just like so many other things in life,Things work for us when we BELIEVE in them firstly.
For example some believe in German cars,some in Japanese cars and some in American cars,but everyone works well for each set of people.
Also in forex most work with Trend,Momentum or Acceleration(London/New York) comes to mind.
Another thing i have learn over time is that..whatever is not useful to humans,generally go into extinction somehow,BUT once they are still there in their lives,then they are still useful and they still work.

Merry Xmas All.
It Is Well With My Soul..(Amen)
  • #39
  • Dec 23, 2011 1:49pm Dec 23, 2011 1:49pm
..."Losing traders, looking for indicators to get "good entries points"
Winner traders looks for losing traders and take the other side if the trade..."

From the book Time Compresion.
(This is a realy good book in order to understand the market and what the traders do.)
  • #40
  • Dec 23, 2011 2:48pm Dec 23, 2011 2:48pm
Quoting smittens4212
What I would love to see is a talented (or at least decent) discretionary trader post live trades for a few days/weeks/months. After there's a sufficient amount of trading, go back and historically apply a variety of technical systems to the period that was traded, and compare the 'signals' generated by the technical systems, to the trades taken on a purely discretionary (combination of PA and intuition, whatever else) basis. What I think you'll find is that (assuming the trader is decent) a lot of the successful trades taken on a discretionary...
An absolutely fascinating experiment, this would be!

Yes, indeed ... most interesting thoughts.
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