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

indicators take away the feel of the market, so less is better.

While all indicators including any form of price representation on a chart are lagging, some forms of indicator are predictive in nature based on their assessment of where price currently resides relative to historic price.

No matter how you cut it, all traders who derive information from charts rely on some form of autocorrelation relating to an assessment of how past price behaviour extends into the future.

For those that use chart paterns, any completed chart pattern is a past event and when you sit on the right edge of the screen, you rely on a historical pattern to emerge based on an assessment that a 'future' price pattern will unfold based on it's repetetive occurrence in the past.

We trade on market information that is embedded in price. The only way for that information to be reflected in price is from participation. As a passive observer of the market, the trace that price leaves on a screen is a pattern of past participant behaviour. Just like a fossilised imprint of dinosaur tracks. However in passively observing, you are not adding any information to the market.

Information is transferred to the market through a participant interacting with other participants at only two points in time. The point of entry and the point of exit. Once an entry is taken, an individual participant is at the mercy of what oher participants do as they have no control over the way price unfolds until they once again interact with the market through exit.

....so to profit in this market you actually depend on a certain behaviour being expressed by other participants in the market that is complementary to your initial predictive entry. Things like fundamentals or viewpoints of future projections using TA are simply expressions of a participants viewpoint on the market and are not 'causes' in themselves. They are just important agents used in decision making. The actual cause for price movement is the process of interacting with the market.

You will always be on the right hand side of the chart unless you can time travel.

Now whether you believe you can predict the way a market unfolds is actually a 'belief system' and not a fact. The fact is only ever known after the event itself.

We all predict outcomes of uncertainty. This uncertainty is not random but complex and actually IS the gross summation of all the ways participants interact with the market. With perhaps a quantum computer or parrallel processing, you theoretically could determine a future outcome with certainty in the briefest moment when participants place an order and before it is executed (which is what HFT attempts to do in various ways), but until this day, everyone simply guesses future direction. Some guesses are better than others.....but the best guesses simply take 'fact' (or past price action) and assume that some future correlation exists between future events and past events. All classical systems are boolean (eg. yes/no) in nature and deterministic due to causality ('cause and effect') and causality as a principle depends on participant interdependencies.

If markets were truly random then correlation between instruments, systems and timeframes would be a misnomer. The nature of economics is that there is a reason for every decision taken (whether rational or irrational) and in dealing with participation, complex interactions arise from inter-relationships and dependencies. No participant operates in a vacuum and a market interaction requires the 'meeting of minds'.

Just hope that your mind and the mind of others (whether they are human minds or algorithmic extensons of the human mind) result in profitable interactions. :-)

you repeating: money flow, money flow, money flow....tells nothing...can you explain how you interpret those two columns of sell and buy?

.

You got the memo......*a classic film*

are human minds/thoughts random? are human behaviors random?
it there any indicator can tell you people`s thoughts or behaviors precisely or to some extent ?
if you have found out the answers for above questions, so you have found the truth of the market.
why? markets are crated by humans!

Good points.

During normal market volatility, human behaviour is extremely complex but during extreme events, certain gross behaviours become more common amongst participants that perhaps could be exploited called 'fear and greed'. This stems from good old evolution, namely flight or fight tendency.

During phases referred to as 'market capitulation' the summation of gross behaviour can lead to significant price movement of uni-directional nature. You can see these long tails in various instruments from time to time. Using an assumption of human behaviour during this time, you could probably capitalise on it.

News events can also create this phenomenon but reliably exploiting these is far more difficult and requires HFT to trade a spike and sufficient liquidity.

Using extremes is a good way to test the resolve of the mind and subsequent behaviour. The practice of torture for example is a way to fast track the mind towards base common behaviour.

Mr. Copernicus, Thank you so much for sharing your broadwide knowledge...

Your posts are gold...

Happy profits to all FF members,
MrJinks.

Apologies if this has already been mentioned but - indicators can only be applied on EXISTING DATA. ie., trades already placed.
They cannot tell you how many traders are watching the market, how many are about to enter a trade and in which direction.
Consequently indicators assume that what has been happening will continue. They need to be used in relation to other data. ie., support/resistance lines where a large number of traders may be waiting to pounce, time of day where new traders are entering the market, etc.
This can totally invalidate your indicators.
Someone earlier in this thread said that no new indicators have been released to the retail level for many years. That is probably true.
You need to question the value of all of the standard indicators as they are provided by your broker. Your broker is not your friend - they are in business to make money from you!!
I do not use any of the retail indicators. I have developed my own. ( Please do not request to see them as I will not be releasing them.)
BTW your broker is probably trading against you (it is in your agreement with them if you choose to read it) and they know much more about things like pending orders so they have a big advantage over you.
Having said all of this, you can still make money in forex. You just need to think differently.
Cheers, Aich

Many thanks for the kind words Mr J

This.

I am especially annoyed by the widespread misunderstanding of indicators and their usage. Indicators are created to lag behind. The common concepts in technical analysis (momentum, direction, volatility) are based on the study of recent price behaviour against a lagging reference point. Indicators are based on price action which itself is simply an indicator of what price has done in the past.

Repackaging indicators to appear as a 'leading indicators' doesn't confer onto it some kind of unique predictive quality.

Sorry for the rant.

Now you tell me. Looks like I am going to have to try and get a refund on the 'indicator gift pack' and look for a different Christmas present for you. Some people are soooooooo difficult to buy pressies for.

This is the core of trading,

money into usd,money into ypy,money into risk gbp,eur,chf,nzd ect,flows into one of the three groups =trend.

confliction= range ,what dont you understand

you need to trade one system for range or one system for trend,one system will not work for this market.it really is that simple.

establish the condition and apply accordingly

picture with "sell" and "buy" column...numbers in those columns....

what are you asking me,the values represent the change in there value,if they are in synce then the market is trending if they conflict the market is ranging,the idiosecrecies are for you to find out but as a a general rule of thumb you can establish what the market is doing or the present market structure,excuse my mis spells

you need to understand what the market is doing.your indicators will lag you.if you want to make money watch the flows in and out of usd,yen,and the risks ,pounds euro ect.spend a couple of days watching the bond prices,look for harmony and confliction.then compare that to the relevent fx pairs,im not saying they are a leading indication but theymight establish an understanding of the flows,

trend ,harmoney,agreement

confliction,range

everything you need is within those two colums

ok.how do you interpret it? example?

http://www.forexfactory.com/attachme...1&d=1415736665

this is market synce and harmony,pink space,unable to be maniplilated