People say systems don't work (only pure price action does)

By random, you mean randomize the price and time of the entry and exit? Interesting, I think I'll try that. (Can't be any worse.)

Indicators are a crutch. So it makes it easier for beginners to jump in and lose all their money.

Sooner or later you have to get away from indicators IMHO. So the best way is to not use them to begin with. It makes it a bit harder with a longer learning curve in the beginning but it will pay massive dividends over the long haul and the long haul is what this is all about.

Besides being a crutch, indicators and systems based on them cannot readily adapt to all the suttle and not so suttle changes that occur in the market, day to day, week to week, year to year. What works today may not work 1 year from now. However, when you are relying on price action rather than indicators you will naturally be more in tune and aware of these market changes. Not so much a conscious awareness, but something that becomes a part of that gut feeling we all eventually develop and learn to rely on.

I think indicators serve a huge assistance and not so much of a "crutch". I also thing price action is needed.. but price action alone is not needed.. you can trade price action with an indicator and be much more successful.

Indicators are great for two reasons, they can help you stay a bit more discipline and also help see things you might overlook.

The only thing you have to be aware of is that indicators are lagging.. and with that knowledge you can use indicators properly.

I like the full stochastic a lot! since it measures momentum and is based on how fast prices are moving over time.. with the knowledge that it is lagging I can say "alright its approaching overbought levels but rather wait for a lagging sign to get in I can now turn to price action and see when the turn is really happening"

also you can learn to use indicators in a non lagging fashion if you open up two time frames.. the 5 minute shows stochastic reaching overbought.. but the 1 minute shows stochastic has already turn downward .. now we have a leading indicator.. since stochastic turned on 1 minute the 5 will follow and momentum will turn down so prices hold a high probability of moving down.



PS: I am not a fan of more than one indicator and 1 usually is enough to assist.. it helps give some confirmation along with the price action.

Well thats my 2 cents.. interested to know what you think, thanks!

Systems do work if that is the kind of trader you are......It needs discipline.....I can share a system with you that I can explain....

Price Action if I understand you right (Elliott) that works too but you have to be excellent ....either completely intelligent or 8-10 yrs. experience

I think you need both.....you need the WHole Path searching for the TRUTH.

I also think this is a computer running for the queen at rothchilds house so go ahead and try and crack the code....

I am trying.....they know, so they have a system to trade it, but can we come upon one........yes but not as profitable as theirs.......

you will only go as far as you knowledge takes you.....then comes the question....be it at whatever level of trading you are at......

FYI

While I can't say much about the effectiveness of indicators as I have only been demo trading for half a year and that's not long enough to vouch for anything, I would like to share an interesting experience that happened to me.

When I started learning forex, I thought indicators were the best things to ever be created; MACD, Bollinger Bands, etc. I actively sought out system after system that used numerous indicators that cluttered the screen, tested them for 1-2months and failed miserably (although I agree that 1-2months is in no way long enough to test the effectiveness of a system). However, in the midst of all the huha, I did some price action trades that I have picked up from free bits and pieces of information on the internet, simply by observing the charts and only aiding myself by drawing trendlines and S&R levels. I always posted comments and recorded my individual trades so I know that why I entered the trade and such.

Now that it is coming to the end of 2010, I thought to myself why not review all the stuff that I've done over the past 6months learning forex? Thus I opened my notepad where I recorded all my trades using whatever system I have tested, and lo and behold, my most profitable ones turned out to be merely using S&R levels/trendlines/candlesticks. While I'm not saying that those trades make the most money (nothing is 100% accurate), they turned out to have the best reward:risk ratio (this took me a long while to understand its importance, I can have 50% winning trades but if each winner is 3:1 I would still obtain substantial profits).

I am now determined to concentrate solely on price action come 2011 and trying to stay away from indicators and get rid of all my bad trading habits. As the saying goes; one man's meat is another man's poison, there are definitely people out there who trade brilliantly with indicators, and it all boils down to whichever suits you best!

Good luck to everyone in 2011!

Without having read all the other pages here is my opinion if anyone cares about it.

No system (which means a few indicators and a handfull of rules so you could basicaly hardcode it into an EA ) will ever work. It's just not flexible enough.
That doesn't have to be the indicators fault while they do have alot of disadvantages compared to PA. I've never seen a successful trade who doesn't use his own discretion even if he used Indicators as guidelines. Humans are simply better at understanding the market situation than stupid indicators. If you soley rely on them you will run into trouble.

Now if you compare PA to Indicator based systems. Price Action doesn't lag and gives you a boatload of information that no RSI could ever give you. Where are buyers most likely to come into the market? Are they coming? How strong? Do buyers lose strength over time (Bars fail to make new lows). It's simply so much better. I would never use Indicators to get a signal. You could use them to give you a quick overview of how fast the market is like the MA Rainbows do. But forget all that Crossover and Oscilator crap. The market doesn't care about it. It only cares about Order Flow which you can observe with PA.

In my early days I tried many indicators systems and always ended up changing things to get rid of losing trades instead of accepting them. And indicators made it easy because there are so many of them and so many settings. One combination should make you alot of money atleast that's what all the n00bs think. With PA there is nothing to optimize no settings that might have worked in the last 3 month but will probably stop working the day you use them. It's alot more honest.

Another big thing for me is that I have to belive and be able to explain what I do. If I use a RSI for signals why should that work? What's the fundamental explanation? Self Fullfilling Prophecy is a bit of a lame explanation but that's what indicators lovers always come up with. With PA you know where the Buy Stops are because everyone on the planet sees the same range market and people place their orders on swing highs/lows or range bounds. That's what causese all the Supply and Demand and moves the price. That is something I can agree and rely on. Not some Vodoo Magic.

There are systems that succeed temporarily and some that will succeed as long as humans behave the way they do.
Problem with most people is that they want to find a system without understanding underlying mass psychology in the markets. You need to know how the mass normally tends to react to certain things and then build a system around it.
If you identified such a behavior, then your system will never fail (over the long-term).

VERY well said.
[quote=Dopey;4176996]At one time, virtually everyone in the world believed the world was flat and that you would fall off the edge.

At one time, the vast majority of Germans believed that Adolph Hitler was good for Germany.

At one time, the vast majority of people believed the earth was the center of everything and that the sun orbited it.

At one time when I decided to sell everything I own and go live in Turkey, everyone I knew, except my mother, told me it was mistake and that I would regret it. Twenty-three years later I'm still living abroad and I've lived a life so far that people only dream about. Of all those people I knew then, I only miss my mom.

Really, how much more evidence does one need to finally understand not to listen to what the majority says? If the majority says "baaaa", then you should be barking.

Dear sir, wanna share some point of views for this discussion,
I assume the "system" you mean here is the mechanical ones, well in my opinion,a mechanical system without human's interfere (especially for the exit) have a 50-50 chance of success, why? Because as we knew, markets are partially random, so some of the time a mechanical system might generate positive results and the other time it could be negative results. The problem occurs when negative results consecutively appears as the positive results do, will the traders keep in faith with their "systems"? I guess that most of trader can't stand a large number of consecutive losses. And, in this point they will be thinking that their system doesn't works (don't you wondering if your system still be profitable after a 10 times consecutive losses as it might also be 10 times consecutive winnings? For the average people i'm sure they will be start wondering ) And the problem is people will start losing faith in their systems and start searching another system because a mechanical system can produce such consecutive losses (yes i'm sure)

But when you trade the price action, you know exactly why you are taking the trades, why did u cut your losses, and why you are exiting for small profits. So you will not be losing faith in what you are doing because you know exactly what you are doing. And, as the other business, one of the requirements to be successful is having "faith" in what you are doing.

Trade well sir

I know it's a while since this was posted but this is what I always say, look what happens to the sheep.. They get led to the slaughterhouse!

Read the whole thread, nice points all however i think we need to look at the facts a bit as well.. I have been trading for a while now and i have noticed one thing in common with all the big traders that trade big lots and make big money.

They all use price action and use daily support and resistance.

Not the silly lines drawn by a indicator, lines drawn by by the trader from previous major turns in the market.. The market repeats itself over and over.. They do not happen often that price gets to these lines, it can be once a week on all major pairs.. Once price gets there at resistance we look for a bearish price action signal and when at a major daily support we look for a price action signal to buy..If none happen on the h4 or daily then no trade. It is a simple system however does not provide many signals like i said.

However that is the most profitable system i have tried. And i have tried nearly all indicators. They paint signals after they are gone so mostly you will enter after the signal has happened so means the market will turn possibly.. However like others mentioned because of the 50% rule many say they work.. Well i disagree. I have tested many strategy's in a forex tester program, tried them all nearly and the only system that i have had work is major support and resistance lines with price action entry..

I have not found any other way of doing it at all.. And that was me spending countless weeks testing all sorts of indicators. And with a tester program that means years of trading.. None i tried worked except price action. If you have not used a forex tester then i suggest you do.. Do around 10000 or more trades and see how you view different systems, try them all.. I have tried so many..

In fact i found that price action style i said above gives around 75% prob and a good risk reward as well, most trades done can be a much as 100 to 150 to 200 pips on a single trade... Or even more if you lock in pips.. This is not uncommon and then for losses of only around 50 to 70 pips if you are wrong.. It does not even matter if you lose half your trades with good price action triggers. You still make profit.

I reckon everyone should look at all those that make money from trading full time, not the ones that do it part time hey.. There is big money in this business once you can see the patterns in the overall market.. Good luck all, this is just my opinion, i hope it helps some people overall..

Regards,

Timon

people in general are idiots. price action is a bullshit discretionary way of ruining accounts. many accounts have failed triying to achieve mastery in this area. as long there is a scientific way of looking at the markets the bullshit way of the discretionary trader does not make much sense. do you want the reason why so much people fail? 1 is discretion .trying to be the master of the markets. 2 people who use systems fail because the systems are poorly designed and also don't do the proper backtest. a system must be able to produce results in any timeframe, any instrument and regardless of date. a good system is profitable since the begining of the markets and will likely continue to produce good results in the future.

this forum is good for price action confluence trading http://www.forexfactory.com/showthread.php?t=548483