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Indicators CAN work!

  • #41
  • Dec 23, 2011 3:13pm Dec 23, 2011 3:13pm
if you use an indicator as a signal, but then you decide when to use this signal (( You - the filter - and the signal -tells you when to enter- )) what is the indicator doing exactly?

1.) Its flipping the coin for you

do you want to bet on this coin toss?
  • #42
  • Dec 23, 2011 3:18pm Dec 23, 2011 3:18pm
Quoting smittens4212
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.
exactly.

if indicators worked, program the logic and never look at a chart again. unfortunately, after 7 years of mt4 automation, no system is still standing. But only rewashed, renamed, and applied at a different time series.
  • #43
  • Dec 23, 2011 4:41pm Dec 23, 2011 4:41pm
It's true what you guys are saying but actually nobody here (not even the title of the thread) suggested that indicators ON THEIR OWN work well. The question really is: can they be used for anything?
Everyone who was in favour of indicators said that they MAY help (visually for instance), but a trader has to be able to justify their actions with what they would see on the naked chart anyway (s/d, breakout, patterns, etcetc) and not by saying 'the indicator told them to sell.'

Have a great Christmas!
  • #44
  • Dec 24, 2011 5:20am Dec 24, 2011 5:20am
Quoting Forex5050
It's about understanding that indicators have no predictable power. They are lagging behind price and you have to know how to filter the signals!

Agreed, on the whole, but the last statement here is not necessarily true.

Are all indicators created equal?
Are all sports cars created equal?
Are all NFL teams created equal?
Are all cups of coffee sold in the morning created equal?

An indicator lags behind price, if that's the type of indicator you design and build. But, an indicator that is predictive by design, is a leading indicator by nature.

Most traditional indicators off the shelf, are by design, lagging indicators, but that does not mean that all indicators are lagging, or that none of them have predictive capability.

Building and designing the indicator you want, instead of accepting the indicator you don't want, is the key to using an indicator that works.

Your indicators will detect, exactly what you design them to detect and nothing else. So, simply design a better indicator that tells you what you want to know about the market. It really is just that simple. But, how many people do you know who have actually done that - designed their own indicators?

That requires a deep understanding of data analysis and that is not what most traders getting into Fx want to here. So, they reach for something off the shelf and then wonder why they get the same results as everyone else. Or, they say that indicators have no predictive capacity, when it is the designer that determines that, not the indicator itself.

Good indicator design comes from asking good questions about the market's behavior.
  • #45
  • Dec 26, 2011 11:16am Dec 26, 2011 11:16am
Yes..., indicators can work...

After years of trading, sometimes I wonder "Can I trade the market without any indicators at all? Can I define the trend, entry and exit point if I don't use the indicators?"

These questions make me stop my live trading and get me back to the demo account. Then With the demo account, for Months I tried to trade without indicators try to define the trend, entry, exit and try to make a complete method of how should I trade the market, even if I have no indicators.

My journey leads me to price action trading method. And I am not too depended on the indicators again...

CCI (Commodity Channel Index) is one of my favorite indicators. That's why I create price action 50 CCI system.

With a proper indicators set up, the technical analysis will be sharper and the confidence is rising.

Indicators can work? Yes, they can... just don't too depend on them...

Happy Holidays
  • #46
  • Dec 26, 2011 11:54am Dec 26, 2011 11:54am
Quoting Forex5050
It's simple, I'll write it down here.

Daily chart with a 200 SMA on it -> if price is above the 200 SMA, trend is up. If price is below the 200 SMA, trend is down.

H4: Short if trend on the daily is down and CCI crosses from overbought (above 100) below 100.
Long if trend on the daily is up and CCI crosses from oversold (below -100) above -100.

Test it on your chart and see what works best for you. As risk-on pairs move similiar, I like to filter these out and take a position in the pair with the strongest trend.

Cheers
hello, just wanna tell u...cci is the same as bb...u can try using bb(period 14)..the +/-100 value in cci is equal to sd+/-1 for bb and 0 is equal to ma..
  • #47
  • Dec 26, 2011 12:30pm Dec 26, 2011 12:30pm
I don't mean to be disrespectful to the thread starter and loyal fans of indicators, but in my humble opinion, all indicators are just lagging behind the real action in the market by too much, because indicators are derived from the real price action from the past.

One would have argued, there are parameters that we can set to make the indicators more sensitive, but that will defeat the purpose of including more data points to form a better picture of the underlying being observed.

.
  • #48
  • Dec 26, 2011 12:59pm Dec 26, 2011 12:59pm
Indicators work, and they are the only way you can have a correct entry point/ some traders use it for exit too without risking too much pips; of course, with the right money management strategy.


TA truly works.
  • #49
  • Dec 26, 2011 3:02pm Dec 26, 2011 3:02pm
If 95% of the traders use "indicators" and more than 90% of the traders losing money.
Why not think, we learn a wrong game. ?
Think again and see videos about Market Maker and you never will see one indicator in the screen.
  • #50
  • Dec 26, 2011 3:07pm Dec 26, 2011 3:07pm
Quoting the redlion
Technical analysis was made to ANALYZE price not predict, or come up with mechanical automatic ATM machine strategies that are simply fictitious, fallacious, and inane.
Why would say that? I code most strategies I like in testing, and they DO work like auto ATM. Only problem is explain important nuanses of human thinking to computer is often very hard.
  • #51
  • Dec 26, 2011 3:48pm Dec 26, 2011 3:48pm
Quoting trader4all
Indicators work, and they are the only way you can have a correct entry point
The only way?

And the professional traders who've made their livings successfully trading forex for decades without ever using an indicator, and all the people sitting on the trading floor of Goldman Sachs and other institutions like them ... are they all fictional characters, or something?

Quoting trader4all
TA truly works.
Nobody's questioning that.

(At least, not in this thread, they're not. So far.)

But there's plenty of technical analysis that doesn't involve indicators at all, you know?

Support and resistance are part of technical analysis.

Trendline breaks are part of technical analysis.

1-2-3 formations and Ross Hooks are part of technical analysis.

None of them involves any indicators.
  • #52
  • Dec 26, 2011 4:31pm Dec 26, 2011 4:31pm
Quoting Xela
The only way?

And the professional traders who've made their livings successfully trading forex for decades without ever using an indicator, and all the people sitting on the trading floor of Goldman Sachs and other institutions like them ... are they all fictional characters, or something?
i read about succesfull individual traders and even hedge funds who use indicators. if you don't know how to use them that doesn't mean they don't work.

Quoting Xela
Nobody's questioning that.

(At least, not in this thread, they're not. So far.)

But there's plenty of technical analysis that doesn't involve indicators at all, you know?

Support and resistance are part of technical analysis.

Trendline breaks are part of technical analysis.

1-2-3 formations and Ross Hooks are part of technical analysis.

None of them involves any indicators.
i tried a lot of tehniques around 123 formations and i could not make them work in a systematic way. my current strategies based on indicators work far better then any support resistance or price action stuff i have tried in the past.

in support of indicators you can read the book come into my trading room - elder alexander where you can see actual traders, size account and method. you can also check this http://www.dukascopy.com/swiss/engli...nnerApril2011/.
the returns of these retail traders are greater than any other successful institutional trader i have ever heard about. many of them use indicators but there are some(2) who said that they use only price action and support resistance.
  • #53
  • Dec 26, 2011 5:32pm Dec 26, 2011 5:32pm
There has always been bickering about which is better, indicators or price action. I just don't get it. Just figure out what works for you and get on with making some money.

There is no right or wrong way of trading and the only person you have to prove anything too is yourself!
  • #54
  • Dec 26, 2011 6:01pm Dec 26, 2011 6:01pm
Quoting the redlion
many people looking at a naked chart think they are trading price, i find it quite misleading, candles are indicators, what do they measure? how can you use them to fit your approach. Do you want to trade "price action" go trade from quotes.

now do you realize that the QUOTES are the MARKET, they are the REALITY, every other study was design to MEASURE QUOTES
It depends on which candles you are looking at bearing in mind that they simply encapsulate the flow of quotes...they don't do anything else. Most are misinterpreted....the few that are critical are hard to spot. That in a nutshell is price action.
The road to pipland is arduous and fraught with challenge.
  • #55
  • Dec 26, 2011 6:12pm Dec 26, 2011 6:12pm
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 a 4H-chart....
Hi Forex5050,

Thanks for sharing your strategy.

Trend filter on D1 with 200 SMA, signals on H4 with 14 CCI crosses from -100 for long, +100 for short.

And what about :

- the exit logics,
- stoploss,
- takeprofit,
- trailing stop,
- break even,
- time range,
- number of open trades,
- money management,
- duration of the trades,
...

?
  • #56
  • Dec 26, 2011 6:35pm Dec 26, 2011 6:35pm
Quoting deltatrade
i read about succesfull individual traders and even hedge funds who use indicators. if you don't know how to use them that doesn't mean they don't work.
I didn't actually say that they don't work.

The statement I questioned was that they're the only way to have a correct entry point, which clearly and verifiably isn't true.

Quoting deltatrade
i tried a lot of tehniques around 123 formations and i could not make them work in a systematic way.
For me, they work very well, with patience and discipline.

Quoting deltatrade
in support of indicators you can read the book come into my trading room - elder alexander
Alexander Elder, actually. I have it right here, thanks - together with his other book "Trading For A Living" (which I prefer).

Please excuse the observation that you seem to be trying to dispute something I didn't actually say.

Just as I'm sure everything you've said is entirely correct and accurate, it remains factual that there are also professional traders who've been successful for decades without an indicator, and that you won't find many indicators at all being used on the trading-floor of Goldman Sachs.
  • #57
  • Dec 26, 2011 7:19pm Dec 26, 2011 7:19pm
50/50 you have an interesting thread.i honestly think that if you trade selectively and infrequently it is possible to make gains with indicators. The best way i can advise is to trade off inner candles but having said that i dont use indicators but prefer to trade using odds and percentages of what has happened in the past ie what has a pair done in the last 1 to 5 days, its a bit like playing poker.sometimes though once the trade is made i might just see where the support/resistance and adr is and sometimes i'll let my trade run. i do compound and my way is successful. There are many many trading ways online using indies etc but 90% ish of people fail,,, why??? successful trading cannot be made trading on past history indies, we are moving forward we cannot see around the corner.
SEE LINE,TRADE LINE..PRICE HAS TO GO SOMEWHERE,,, PRICE WILL GO SOMEWHERE.
  • #58
  • Dec 27, 2011 11:39am Dec 27, 2011 11:39am
Indicators can work some of the time, but define some of the time? I have used indicators in the past (not anymore), here is what I find.

IMHO, Indies make the action blurry, take away your attention from what is actually happening to the price and flow. Indie traders in forex are a decent bunch, but need to realize that idies are just tools and many factors go into why the price moves.
It's easy to be humbled but hard to be humble.
  • #59
  • May 27, 2012 8:13am May 27, 2012 8:13am
I personali dont use indicators like MACD, Stoch, RSI anymore, only trend line breakoute. Cause was to much flashy things on my screen and i could not focus on price action but i still belive that some indicators can give odds to your favore and in long run you can be successful just like Professional players play Hold Em.
Mark Douglas has writen about it in his book Trading in Zone.
  • #60
  • Edited 2:07am May 30, 2012 12:51am | Edited 2:07am
IMO
- INDICATORS "CAN" work is a broad term. What exactly "WORK" means is what you need to clarify first.
- There is a Plethora of things named "INDICATORS" not just those inbuilt ones or those simple graphs and stuff.
- Many indicators are useful to understand many conditions about the market, at least, if not to trade profitably (for naysayers)
- Accept that there have been thousands around which beat around the bush and display same stuff but some INDI's (simple or custom ones;depending upon your strategy) can be very helpful for deciding your trading entries/exists/edits.
- Those who say "All INDI's are useless and have no use in trading" prolly got fed up trying to use quite a few of them(commonly available ones) as a holy grail (mostly individually as their only trading criteria), and ended up losing money
- A SIMPLEST EXAMPLE: A custom INDI i use, charts (& displays a %age;as per coded classification) about the relative volatility of the pair/s i trade.
Given the fact i need a certain degree of volatility (high/low/medium), its more than important for me to enter trades @ that degree of volatility. As per detailed backtesting i did using that indi, there are 30% more winners based on such entries/exists/edits. (Further JFYI i have ascertained similar results in forward testing for > 1 yr)
That only is "MORE THAN ENOUGH" for me to say INDI's work or help improve/manage your trading efficiently.
- SECOND EXAMPLE would be of an INDI telling/emailing me that "manager" EA has shut down other EA's and trading has been halted (all orders closed) on successfully reaching the daily/weekly %age profit target/s & posts the stats of each EA, time stamps etc.
- In fact a candle on candlestick chart is itself a simple INDI which shows price as 4 numbers (OHLC).

So overall,
YES, INDI's work and surely help in trading (not most though). Further it all depends upon where u r fitting them into your strategy and what kind of strategy is it. Simply buying and selling on <30 & >70 RSI won't make profitable trading.

Hope this helps



P.S.
Note to Novice Traders: The above doesn't mean you need to move to a search for those custom indi's now. Find your trader type within, try few common strategies, then search or make indi's which help you use that strategy, efficiently (WITHOUT changing any rules)
100 Fold Challenge->Interested? ->https://www.forexfactory.com/thread/32152
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