I was thinking long and hard and now i realise that all the mathematical technical indicators (such as MA's, MACD's and so on) should be dropped outright...
I had spend months developing and testing indicators and mechanical trading systems and I see that highly profitable MTS CANNOT BE MADE. Thank God that human brains are still required to trade and not the power of the computer... Atleast we have a chance against large banks. After all if MTS could work then the banks would sweep all of us off... I mean who can have the bigger computer, Joe shmoe or CitiBank?
Anyhow here is not my original idea as to why indicators don't work. They don't work because they always have parameters in them! The lenth of cycles in the markets change ALL the time so that a static indicator would become either too slow or too fast producing either too later or too early signals. I realize more and more what curve fitting is... ALL the oscillators, and "trend following" indicators such as MA's have them... Even fibonacci lines are somewhat curve fitted... Not only the fact that price rarely touches pip by pip (on which brokers chart?), the interpretation of which line retracement or what constitutes breakout/retracement is vague...
The strategies most people use can be divided into two broad categories. Trend following and ranging, or expanding-contracting.
Those whose strategies follow the trend will lose during the range, and those who use range based strategies will lose during the trend... Plus trading with tight stops and reverses can really give charity to the broker...
It seems that the market either trends, ranges, or whipsaws which causes those who catch the trends or ranges or executive stop-reverse tactics to lose all in their own turn...
Setting smaller SL will cause one to be hit out much more often...Setting larger stop loss would eventually give enough large loses to flush the depo... And I was a fan of stop and reverse tactics until the market changed....
And since the trend/flat cycles change all the time, you never know when the trend will become flat and vice versa...
Any ideas? Thank you.
I had spend months developing and testing indicators and mechanical trading systems and I see that highly profitable MTS CANNOT BE MADE. Thank God that human brains are still required to trade and not the power of the computer... Atleast we have a chance against large banks. After all if MTS could work then the banks would sweep all of us off... I mean who can have the bigger computer, Joe shmoe or CitiBank?
Anyhow here is not my original idea as to why indicators don't work. They don't work because they always have parameters in them! The lenth of cycles in the markets change ALL the time so that a static indicator would become either too slow or too fast producing either too later or too early signals. I realize more and more what curve fitting is... ALL the oscillators, and "trend following" indicators such as MA's have them... Even fibonacci lines are somewhat curve fitted... Not only the fact that price rarely touches pip by pip (on which brokers chart?), the interpretation of which line retracement or what constitutes breakout/retracement is vague...
The strategies most people use can be divided into two broad categories. Trend following and ranging, or expanding-contracting.
Those whose strategies follow the trend will lose during the range, and those who use range based strategies will lose during the trend... Plus trading with tight stops and reverses can really give charity to the broker...
It seems that the market either trends, ranges, or whipsaws which causes those who catch the trends or ranges or executive stop-reverse tactics to lose all in their own turn...
Setting smaller SL will cause one to be hit out much more often...Setting larger stop loss would eventually give enough large loses to flush the depo... And I was a fan of stop and reverse tactics until the market changed....
And since the trend/flat cycles change all the time, you never know when the trend will become flat and vice versa...
Any ideas? Thank you.
