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Why do indicators not work/work? Why is Forex not truly random?

  • #61
  • May 12, 2012 5:18am May 12, 2012 5:18am
sorry one last point,no pun intended.

the lines on my charts are not conclusive .it dosnt matter were you take your reference points from.they are your moment to reference.thats your esclusive view of time,but you must trade that that reference point .
  • #62
  • May 12, 2012 8:47am May 12, 2012 8:47am
Quoting unknown4x
Most people like to think that way - probably because it is "cool". However bear in mind that the majority of this market is traded by algorithms. Algorithms don't trade off naked charts... (not that you cannot do it... it is not as clever though as a lot of retailers like to think). TA/Quant is no shortcut. It actually is _much_ more difficult than the fundamental or simple pure PA analysis that most people (try to) do. That is also the reason why everyone runs around shouting... naked charts only... ta for wannabies... fundamentals only... blah...

it is not because it is cool, but very satysfactional when you have some "view" and you enter the position much sooner than everybody else and you know the REASON for it.....if the reason is correct you get a big winning, if it is not you get out....market is moved by fundamentals and nobody who is able to move the market will trade TA when fundamentals are unclear for him.....and btw i was not talking about TA in general, but about indicators like RSI, MACD etc, i suppose the thread was started for them....

and btw about algos big majority of algorithms for trading in institutions dont give a shit to a chart, they are pure bid/ask hf market making stuff or momentum/news etc based
  • #63
  • May 12, 2012 10:06am May 12, 2012 10:06am
Quoting katrooo
it is not because it is cool, but very satysfactional when you have some "view" and you enter the position much sooner than everybody else and you know the REASON for it.....if the reason is correct you get a big winning, if it is not you get out....market is moved by fundamentals and nobody who is able to move the market will trade TA when fundamentals are unclear for him.....and btw i was not talking about TA in general, but about indicators like RSI, MACD etc, i suppose the thread was started for them....

and btw about algos big majority...
If you are able to "move" the market then you will trade entirely different to all common FA/TA. Your biggest concern in this case is that you stay under the radar for the other big guys as long as possible to not get cornered in by them. That's also why institutional / fund trading is entirely different to retail trading and most even widely successful retailers which pull in 7 figures would not make a dime trading for funds with their strategies. The concern switches away from picture perfect entries to simply getting your volume into the market , not getting cornered by it and getting the position out again (best case before anyone knows who is to blame). When shit gets big you start to realize that most markets are actually not as big - on the spot - as some might think it is. Even the big ones have to learn that painfully from time to time... The big risk is not taking the wrong trades but not being able to get out fast enough, being constantly front runned by others etc.

That's also why HFT is so popular... You get around the volume problem by hugely increasing the number of your trades and exponentially taking advantage of micro compounding wins but in such a shear amount that it generates huge profits with a moderate risk / exposure to market / amount of money.

It was not meant to be TA vs. FA even though for private daytrading TA always beats FA - best of course is both agree.

The thread was not started for them it was about realizing that no matter what you do - a single cross is not enough for proper trading. RSI/MACD are all the same like MAs with different visual representation but of inferior quality.
  • #64
  • May 12, 2012 10:48am May 12, 2012 10:48am
Quoting diceman555

visible within our charts.but not in any one moment of time.

price only moves up or down between 2 points.dont trade the middle bit,follow the collective thought of more agressive shiny merchants.and it all becomes a lot more simple.
You have very fascinating perspective I must say. I'd like to ask a few questions to clarify some points.

These attractor points:

Are confirmed by multiple pairs/indexes having some synchronicity but the exact moments in time are not all the same between them. Is this a fair and accurate statement of your view?

Considering the GBPUSD, what pairs/indexes would you use to confirm these points? And exactly what do you look for in the net change to confirm the approach of the point. If we are exiting from chaos then these pairs/indexes could be starting from many different relative chaotic points.

Also, do you think it is possible to predict, to any degree the approximate time or price location of the points?

Many thanks for sharing your views.
Thanks for all the fish
  • #65
  • May 12, 2012 1:33pm May 12, 2012 1:33pm
Quoting unknown4x

The thread was not started for them it was about realizing that no matter what you do - a single cross is not enough for proper trading.
I'm not so sure I agree with this. It is similar to the TA vs FA argument. While it may be helpful to have an understanding of FA, it isn't really necessary. Even you pointed out "TA always beats FA", I agree and why? because FA is already 'priced in' as they say, in other words whatever fundamentals are/will be affecting the market will be reflected in the charts.

By the same argument, couldn't you say that money flows are also 'priced in'?
I guess it comes down to if its necessary to find the 'ideal' cross at any given time or whether you should just 'trade what you see' whether your currency was the real mover or not, if AU drags EU down with it, I can still make money trading EU. For me it is less about finding the perfect trade as much as just trading whatever instruments you decide to trade skillfully.
  • #66
  • May 12, 2012 3:15pm May 12, 2012 3:15pm
Quoting Aldente
I'm not so sure I agree with this. It is similar to the TA vs FA argument. While it may be helpful to have an understanding of FA, it isn't really necessary. Even you pointed out "TA always beats FA", I agree and why? because FA is already 'priced in' as they say, in other words whatever fundamentals are/will be affecting the market will be reflected in the charts.

By the same argument, couldn't you say that money flows are also 'priced in'?
I guess it comes down to if its necessary to find the 'ideal' cross at any given time or whether...
Yes TA beats FA easily nowdays but that is primarily on the shorter tfs and for private trading. If you need to place a large amount of volume aka fund etc you definitely need FA. I'm by no means opposed to FA.

Flows cannot be priced in as you trade them the moment they happen! The very second / minute whatever you like. When talking about flows i'm talking about: http://www.forexfactory.com/showthread.php?t=334165

Of course you can trade any pair but it 1) does not make sense and 2) makes you way less money with way more risk than understanding which currencies are the actual movers at that moment. If you trade EU on GU strength... well good luck you will have like maybe 1/3rd (if at all) of the pips with mega choppy trading. It's not that you cannot trade anything else. I for one take the 50 straight pips instead of the 15 lousy ones though.
  • #67
  • May 12, 2012 4:50pm May 12, 2012 4:50pm
[quote=Vogon;5661413]You have very fascinating perspective I must say. I'd like to ask a few questions to clarify some points.

These attractor points:

Are confirmed by multiple pairs/indexes having some synchronicity but the exact moments in time are not all the same between them. Is this a fair and accurate statement of your view?

yes that would be correct.but when the instruments are in harmony and perfect sync,they all tend to find there atractors at the same time.this shows in the rapid movment of all instruments working as a whole,you can clearly see the momentum.my platform looks like disco lights flashing.ofcoarse some would have traveled much more distance than others.

Considering the GBPUSD, what pairs/indexes would you use to confirm these points? And exactly what do you look for in the net change to confirm the approach of the point. If we are exiting from chaos then these pairs/indexes could be starting from many different relative chaotic points.

these atraction pointsare found across all time frames.i dont very often look at these levels on other pairs.only the fts100.if cables price is at one of these levels,then the others will also be at there levels,we can choose are reason for this from the countles lists,consoldiation ,order flow is evenly matched,ranging to name a few.this can also be clearly seen by looking at the value changes of the other instruments,they will appear out of sync,some negative some positive.they will keep returning to the same point.what im looking for are clues as to the direction .if in range and no instrument takes a lead,i have more confidence to trade the 2 points of the range.you are often given direction from the other instruments,it happens very quickly but you can clearly see the diference through the momentum.
cable tends to be played somwhat and has many shake outs.these are generaly noticable by the related pairs which dont have momentum of movment.often the lower time frame point of atraction gets taken out and spikes up to the 15 minute point of atraction.if this an iscolated move i can trade the spike back to its lower time frame point and generally be in the corrrect direction after the stop hunt,dont like these words.or can be the result of news release,over reaction ,lack of liquidity,hence price reverts back to its original atractor



Also, do you think it is possible to predict, to any degree the approximate time or price location of the points?
at the moment im unable to predict aprox time.these reference points actually originated from somthing i spent 2 years working on with the ftse100,which has totaly diferent charataristcs than fx.on the ftse i know the futer levels once price has moved from point A to point b,the first time of travel.its quite fascanating to watch price leave a futer footprint.

due to the large volume in fx and its multitude of diferent types of particepents i canot implement those same idiocyncrecies to fx,so i have to use conventional methods to locate the atractors.unfortunatly the time side is proving extremly trying.but as ive said above,i have my guidence from the other instuments and my atractor points so plenty to work with.

excuse my spelling and the simple fact i find it extremly dificult to translate whats in my mind to paper,but hope that answers your questions
thanks for the interest in my perspective of trading.........

regards
  • #68
  • May 16, 2012 1:14pm May 16, 2012 1:14pm
Quoting diceman555
...have you made this indie into a an ea,sounds very precise,i prisume it has some type of new logic within it,but again out of my depth.
It's actually not an Indicator, it is a concept, or an idea about market theory, upon which I built many different Indicators. I call them Delta Class Indicators - and yes, they are integrated into fully functional trading system, but not an EA. I found that MQL does not have the facility to handle the requirements of a more structurally complex trading system with many moving parts.

However, I am working with a handful of the custom indicators that I designed using MQL and a Visual EA builder, just to see how these indicators behave and perform using the lower time intervals. Right now, I am an Inter-Day Trader, but I like what I'm seeing out of the small number of indicators that I have decided to work with in my Visual EA project.


Quoting diceman555
the 97 % of conventional ta is being done incorectly.
Agreed. If people are going to use conventional TA, it would behoove them to try multiple time-frames and same time-frame multiple parameter differential configurations. That will expose what I call the markets "Price Displacement Value," which can then be utilized as Input to a trade decision algorithm.

But, I agree. Many people are still very one dimensional in their thought process - looking for that "special" cross-over theory that everybody else is using at the same time.
The Event Horizon
  • #69
  • May 16, 2012 1:28pm May 16, 2012 1:28pm
Quoting olsen-yersen
What is exactly Statistical Inertial Referencing?Self organized criticality?Bose–Einstein statistics?I'm throwing all the names if they stick on the pan
Statistical Inertial Referencing (SIR), is taking a look at any Extreme Value produced by any Indicator, in multiple time-frames, summing all extreme values and dividing by their number, to derive the Indicators Inertial Referencing Point (IRP).

What you will find is that when the market reaches IRP, the probability for continuance in that same direction for "X" number of pips increases dramatically. I simply call "X" the IRP Continuum, or the IRPC. IRPC is a value with an historical magnitude that can then be calculated via a Density Probability.

Ultimately, this places the position of the trade somewhere between the middle and the end of any particular move that is IRP qualified. So, you end up getting about 30% to 40%+ of the move, but on a statistical probability basis that is borderline 90%+ or greater.

The only question then, is one of signal availability - as this goes to the heart of being able to accurately project future profit potential. Of course, the key, is finding such Indicators and then conducting the SIR study.

Research before happiness.
The Event Horizon
  • #70
  • May 16, 2012 1:38pm May 16, 2012 1:38pm
It's funny how people can look at the exact same thing, but see two entirely different pictures. Of course, the Harmonic pattern got my attention upon first glance:

http://i49.tinypic.com/2luan12.png
The Event Horizon
  • #71
  • May 16, 2012 1:39pm May 16, 2012 1:39pm
Ok, I need to get back to work.
The Event Horizon
  • #72
  • May 16, 2012 3:59pm May 16, 2012 3:59pm
In my opinion to this subject, Indicators work well if you can use them properly and can discern when a market is ranging or trending, although using indicator signals will always get you in late to the market.
  • #73
  • May 25, 2012 2:09pm May 25, 2012 2:09pm
Quoting cisco92111
In my opinion to this subject, Indicators work well if you can use them properly and can discern when a market is ranging or trending, although using indicator signals will always get you in late to the market.

Using anything at all will always get you late into the market. Think about it. If the market is falling and you enter Short for any reason, then you are by definition, late. If the market is falling and you enter Long for any reason, then you are by definition predicting a pivot in market direction without price conformation in the same direction as the pivot.

This is a great example that highlights the fact that we ALL use "indicators" of some sort. Else, we are making a purely speculative decision about a pivot that has not yet occurred in the market and for which there is no direct evidence that it will occur.

iD
The Event Horizon
  • #74
  • Edited 4:09pm May 25, 2012 2:58pm | Edited 4:09pm
I'll reply to the thread in general, and to the random theory as well.

I only read the first page but.....

Forex is not random. It is moved by the human participants and their behavior.
Indicators attempt to measure this mathematically.... not possible.

It is true that you can not predict the next move. But that does not mean it is random. I'll explain:

To predict the next move would require that you can predict human behavior and the people's thoughts that proceed the behavior.
Example:

.... My thoughts are not random. Although, I sometimes do have random thoughts.
However, that does not mean that all of my thoughts are random.
Also.... just because someone can not predict my thoughts - either mathematically or by programming - does not mean that all of my thoughts are random.

Indicators fail because they can not read people's minds.
Indicators sort of work because herd mentality of large groups of people can be somewhat predictable.
Indicators seem to work in backtesting due to curve fitting.

Anything can be helpful, including indicators. But, nothing is fool-proof.
If you use more than two indicators, and you are not profitable, you're probably following the wrong path.

Support and Resistance is predictable and measurable. Time of day, obvious volatility (like we had this week in Euro, etc.), news, general fundamentals are all facts that are real and their effects can be somewhat predictable.

People's behavior and their next action / reaction are just not predictable.

Doesn't make it random..... just makes it difficult.
  • #75
  • May 25, 2012 3:54pm May 25, 2012 3:54pm
I am a price action only trader-no indicators.

But I would say that indicators do work. Indicators for the most part do exactly what they are designed to do: they qualify and quantify certain information in a (usually) visual form. Making said infromation easier to process and act upon.

One way of thinking about indicators is to think of them as defining the "is" in the market.

The problem arises when traders try to go from the "is" to the "should be". Simply, the fact that indicators do not predict price is not the failing of the indicators, but rather the trader who is mis-using indictors in the first place.

A trader can learn the nuances of an indicator(s) to the point where it is possible to have a predictive edge in the market, but this has nothing to do with predicting the future.
Without VSA, you're playing checkers while the Smart Money plays chess.
  • #76
  • May 25, 2012 5:30pm May 25, 2012 5:30pm
Quoting HiddenGap
I am a price action only trader-no indicators.

But I would say that indicators do work. Indicators for the most part do exactly what they are designed to do: they qualify and quantify certain information in a (usually) visual form. Making said infromation easier to process and act upon.

One way of thinking about indicators is to think of them as defining the "is" in the market.

The problem arises when traders try to go from the "is" to the "should be". Simply, the fact that indicators do not predict...
+1

and people remember... all the PA traders who go out bashing everything but priceaction... candles ARE indicators! Think about that. Especially high TF candles. I always get a hell of a laugh when the self proclaimed pros come out "H4/Daily/Weekly/Monthly candles... nothing else works... MAs get you in late..." A candle > M1 or M5 is as lagging as an indicator can get...
  • #77
  • May 25, 2012 5:50pm May 25, 2012 5:50pm
Quoting unknown4x
+1

and people remember... all the PA traders who go out bashing everything but priceaction... candles ARE indicators! Think about that. Especially high TF candles. I always get a hell of a laugh when the self proclaimed pros come out "H4/Daily/Weekly/Monthly candles... nothing else works... MAs get you in late..." A candle > M1 or M5 is as lagging as an indicator can get...
And is support, resistance and the daily pivot point not technical analysis, ergo a list of indicators? Price action is no more reliable than using certain indicators from the classic 4 indicator groupings. But there's also a hidden benefit of using indicators that most new traders ignore and it relates to money management.
"The meek shall inherit the earth.." Yeah right, good luck with that shit..
  • #78
  • May 26, 2012 2:16am May 26, 2012 2:16am
moving averages do work also bollinger bands and donchian channels .....the difference is whether you are long-term or short term....u wanna fade breakouts on the short term and go long on the long term(at least 4 months breakouts ) avoid the middle ground like plague.
wo-yoy! wo-yoy! wo-yoy! wo-yoi! wo-yoy-yoy-yoy!
  • #79
  • May 26, 2012 4:27am May 26, 2012 4:27am
Quoting Price
I'll reply to the thread in general, and to the random theory as well.

I only read the first page but.....

Forex is not random. It is moved by the human participants and their behavior.
Indicators attempt to measure this mathematically.... not possible.
It is true that you can not predict the next move. But that does not mean it is random. I'll explain:

To predict the next move would require that you can predict human behavior and the people's thoughts that proceed the behavior.
Example:

.... My thoughts are not random. Although,...
yes i somwhat agree with this but ther are certain for a better word indicators which can tip the balance to give us that little edge on futer price

Inserted Video
  • #80
  • May 28, 2012 4:48pm May 28, 2012 4:48pm
They mirror the past performance of price. That's exactly what they are supposed to do. I one believes in a repetitious patterns working indicators can help recognize in advance one coming along.
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