Trading with and without Indicators

Exactly.

To the notable exception of the pSAR which is designed to exit a trade by trailing the SL[1], an indicator is only here to give a specific mesurement on the PA. If you want an indi to tell you "long now!". I see this as a misusage of it.

"They are useless because they lag". Of course they do, they can only. But the H1 chart lags by an hour as well. Sometimes this lag is even useful. With no lag a MA cannot behave as a dynamic S/R. HH/HL is inherently a lagging indication of the trend. To avoid exiting too early the Dow theory uses this lag: the trend is in force until proven otherwise.

"They are useless because they just rehash the price". Of course they do like any filter does to give a mesurement which is not obvious from the raw price. Can a quant basket trader estimate the Hurst exponent or reject a unit root with naked eyes?

Some of them are indeed useless because they extract nothing usefull out of the price like RSI[2]. Some of them are even mathematically wrong (Bollinger Band[3]).
But one can perfectly use them and manage their trades properly as Ferru says. They will make profit. If they are happy with this profit why should they stop using them?




[1] And not to enter because it changed color like some want to do! (and complain it ain't work)
[2] As long as someone is willing to buy high, price will keep raising. Divergences are seen directly on the chart with a couple of trendlines.
[3] BB use the notion of standard deviation in an environment where the variance (square of the Std Dev) is undefined.

Not that I feel ignored but here you go. This guy used no indicators or PA or anything like that. He understood is all about belief and he exploited it.

http://www.cbsnews.com/stories/2000/...in242489.shtml

You win!

well, guys, u can trade without chart and indicators such as MACD, RSI... it's true, if you trade commodity futures you will know Turbo 2 platform, the only thing you see is... numbers. This one is my favorite trading platform.

The only indicator i'm using is a moving average, and even then i'm only using it as a method for price to cross, not an actual MA cross in the traditional sense. Even the best indicators such as Stochastic can make you miss out on some trades sometimes. The lag effect can annoy you and you can miss out on some really important movements.

Exactly. Generally when you enter a trade based on - lagging - indicators, you are already late by few pips from where PA traders were entered.

I think using indicators are just waste of time (understanding how all these indicators work and applying them with other etc.). To me, understanding the price action and the candlestick chart is enough to make successful trading decisions. Very few will agree with me I know.

in all strategies I use the TMA indicators, as derived from MA. with him, I do see a movement

This is a great post! You, sir, should post more.

It's amazing to see how the more things change, the more they stay the same...

In the early days, traders were using nothing but "price action" (Dow Theory, Wykoff, Edwards & Magee) to speculate. There were no instantaneous data and fancy computers...so there were no indicators, no oscillators. Traders back then were using nothing but their eyes to spot reversal/continuation chart patterns, volumes, markets correlations, and gaps. They were also using nothing but rulers and pencils to draw opens, closes, highs, lows, S&Rs, trendlines and trend channels. The result was that the vast, vast, vast majority of traders failed to make money. This majority then concluded that "price action" doesn't work. Thus, a solution (a new way) was needed to gain an edge.

Fast forward to the last few decades, we now have instantaneous market data, powerful computers, and many more people with advanced degrees in finance, mathematics, statistics, psychology, etc.. Thousands of indicators and oscillators were invented. Advances in communications makes the world a smaller place, ancient methods and calculations in other parts of world became well known worldwide (Fibonacci, candlesticks, renko, heiken ashi, ichimoku, etc.). New (and not so new) theories/techniques were invented or re-discovered and became available to everyone (Gann, Elliott, cycles, pivots, bands, astrology, market profile, trading psychology, risk/money management, meditation, algorithm, automated trading, confluence, etc.). And yet, the vast, vast, vast majority of traders still failed to make money. This majority then concluded that the "new" method doesn't work. Thus, a solution (a new way) was needed to gain an edge.

So, in conclusion...get ready for the big revelation...make sure you're sitting down because it's going to be life changing...here it is:

Let's get rid of indicators and go back to "price action"

I wonder what the future result will be for the vast, vast, vast majority of today's "price action" traders? Maybe this time it will be different!!!

And what is "price action" anyway? I'm not sure that most traders in general (and some posters in this thread specifically) have a clue what they're talking about.

To me, "price action" is reversal/continuation chart patterns, volumes, markets correlations, gaps, opens, closes, highs, lows, S&Rs, trendlines and trend channels (just like the way Edwards & Magee described it in their book - 65 years ago). But then again, I might not know what I'm talking about either...just read my disclaimer below.

overbought and oversold indicators are the whackest.....I use the vilified MAs ....the trick in this game is to use discarded systems and make money with them.

Indicators are not the essential part of trading. They are just to help traders. There are many indicators , all are different in their readings. So if you want to do efficient trading with any indicator you should work may times with it to check their reliablility. Some people like to do trading without indicators. They think indicators misguide them .

I wonder why there's so much arguing. If you are comfortable with indicators and you make consistent profits with them, then there's no problem right? If you want to discard indicators and use nothing but naked charts, by all means. As long as you are happy with it and making consistently. That's the most important. That said, if you want to use indicators, make sure you understand how to use them properly and know what their pros and cons are. Use them for confirmations together with your other price action analysis.

As a side note, with advance technology nowadays, you can already program indicators and make signal alerts or even EAs. If you are using multiple indicators to confirm trades, you can easily program a screener to find potential trade setups for you, without you even cluttering your charts and doing it manually. Who says then that you cannot use too many indicators?

Because there's an almost unlimited market for them, among the 98% of traders who are effectively subsidising the other 2%.

I think it's a very emotive issue. It can be a little frustrating, understandably, for the great majority of the (tiny) group of consistently profitable traders, most of whom know that their trading became profitable overall only when they removed all or virtually all the indicators from their charts and (re-)learned the interpretation of the fundamentals of price action, that the great majority of the (huge) group of losing traders who delight in indicators, "EA's" and "automation", and so on, won't really listen to them.

I don't use any indicators at all, for any of my "proper trading", and wouldn't want to.

Occasionally, I try some fast-moving scalping of Cable and/or the Euro, mostly for fun (and for tiny stakes), and I do tend still to put a 20-period SMA/EMA on my chart, then, though I'm really not clear whether or not it actually helps.

Everyone is different and have different preferences. Whether we are successful or not depends on a lot of other elements besides the technicals and whether we actually make money consistently. If one uses indicators "properly" and has been winning consistently it doesn't make them any less "not proper". For example, if we know the "proper" way to trade "overbought" condition with RSI is not above the 70/80 region, but after it crosses the 70/80 down, then we just wait for that to happen and confirm with price action. If we don't follow this rule, and we lose because the high can get higher, then whose fault is it? Its not the indicator, but its us, who doesn't want to use them properly, even though we know.

That's why, its no point arguing over all this. If your method makes money for you consistently, then its good.