Are Indicators Worthless?

I have tried for years to find a way to make consistent money using indicators.
I have not had ANY luck and have come to the conclusion that they are only accurate 50% of the time.
No better than flipping a coin.
Using many indicators seems not to solve the problem, since each one is only 50%; therefore using many indicators does nothing.

Also, if these indicators worked, there is NO WAY that their creators would make them available to the public.

I have had much better success using price action only.

If you have found a way to make consistent money using indicators, the more power to you.

Has anyone found a way to make consistent money using indicators?

I don't care which ones that you use; I am just curious if anyone has found a way to make consistent profits by using them.

What are your thoughts?


-Take Whichever Way Works-
Bruce Lee
Jeet Kon Do

Considering how much people spend on new-fanlged indicators, they certainly aren't worthless.

I may invent a couple myself !

mrsoul said:

I have tried for years to find a way to make consistent money using indicators.
I have not had ANY luck and have come to the conclusion that they are only accurate 50% of the time.
No better than flipping a coin.
Using many indicators seems not to solve the problem, since each one is only 50%; therefore using many indicators does nothing.

Also, if these indicators worked, there is NO WAY that their creators would make them available to the public.

I have had much better success using price action only.

If you have found a way to make consistent money using indicators, the more power to you.

Has anyone found a way to make consistent money using indicators?

I don't care which ones that you use; I am just curious if anyone has found a way to make consistent profits by using them.

What are your thoughts?


-Take Whichever Way Works-
Bruce Lee
Jeet Kon Do

Click to expand...

Brokers make a good consistant return out of them I understand

think macd and Stoch"s give best return


Brokers just love to put them in the hands of a new trader, give loads of them away with every platform

illusions of control imho ~ excuse to trigger

those that use them proper I think use them with other stuff to confirm / add weight to their trade idea / a filter and on longer timeframes to

month week day


did ok with a macd method when I started, probably just consistant entries / exits and a bit of random re-enforcement thrown in for good measure



Andy

I have had the same experience which is what made me realise that trade entry is only a small percentage of your trading strategy. Money management is what really makes a difference. I have backtested dozens of indicators and the only thing that gives me a +ve equity curve is changing my position sizing. Funny that everone concentrates on entry

mrsoul said:

I have tried for years to find a way to make consistent money using indicators.
I have not had ANY luck and have come to the conclusion that they are only accurate 50% of the time.
No better than flipping a coin.
Using many indicators seems not to solve the problem, since each one is only 50%; therefore using many indicators does nothing.

Also, if these indicators worked, there is NO WAY that their creators would make them available to the public.

I have had much better success using price action only.

If you have found a way to make consistent money using indicators, the more power to you.

Has anyone found a way to make consistent money using indicators?

I don't care which ones that you use; I am just curious if anyone has found a way to make consistent profits by using them.

What are your thoughts?


-Take Whichever Way Works-
Bruce Lee
Jeet Kon Do

Click to expand...

There are many that say indicators are useless ! ..And to some point I understand this attitude, I have worked years on indicators, and have found my way, by learning to think of them as a useful tool to consistently earn a living. If you do better with “price action” or indeed other ways of trading then you should go down that road to make it work. Indicators can require lots of knowledge to make them work for you in a consistent way, and this can be very frustrating at times. But there can be reward down the line if you can stick with them and make it work for you.

mechtraderpro said:

There are many that say indicators are useless ! ..And to some point I understand this attitude, I have worked years on indicators, and have found my way, by learning to think of them as a useful tool to consistently earn a living. If you do better with “price action” or indeed other ways of trading then you should go down that road to make it work. Indicators can require lots of knowledge to make them work for you in a consistent way, and this can be very frustrating at times. But there can be reward down the line if you can stick with them and make it work for you.

Click to expand...

good groucho joke

What, precisely, is an indicator?

flashs on and off

front and rear of the car

both sides

you use them to indicate your intentions to other road users !!!

tenbobtrader said:

flashs on and off

front and rear of the car

both sides

you use them to indicate your intentions to other road users !!!

Click to expand...

that's all they're worth.

Has anyone found a way to make consistent money using indicators?

Click to expand...

Yes Grey1 certainly did and consistently so every day for weeks on end. However, I am more interested in using price action which suits me better.


Paul

It is NOT Indicators but it's use, and in which mode of market must one use it, and which set of Indicators are used to double check the price action, is the science one has to know.....

Indicators, in some way just MAGNIFY price action.....or provide leading probability of a price....

After all Indicators only use OHLCV generally, but thay all take into account the TIME into calculations.

It is not indicators, but it's precise use that is the problem when apparently they seem to fail....

I consider the following book by Steve Achelis as probably one for the best....
http://www.equis.com/products/training/?f-038-033

Much has been said/written about tech indicators and the subject genders strong opinion, that opinion seeming to fall into 2 definitive camps…they work or they do not!
There are repeating easily recognisable indicator patterns/set-ups which provide both useful confluence and the ability to more accurately pinpoint a market entry thereby minimising risk, in conjunction with price action as the final arbiter of entry.

In using indicators ask the following;

i. Do you really understand what they are telling you about price ?
ii. Do they tell you anything about price that price alone cannot ?

and then

iii. Do they add value/inform your trading decisions?

Answer those questions about any tools you use in your trading, and if all 3 answers are affirmative, then you have a useful tool.

There seems to be an underlying assumption by many that if an indicator is any good, it must be like that all the time.
The problem with this notion imho is that markets are not technical all of the time and therefore indicators do not work all of the time - and neither does contiguous backtesting for the same reason.
You have to be selective about what you are trading and what type of indicators suit it e.g. trying to get on board a Trend, trying to trade a Range, etc etc.
The missing element in all this are those times when the market is not technical, for example when news has hit and when things like oscillators get over bought/sold and then more so and more so.
There are times of the day when certain behaviours are typically exhibited and other times when things are quiet and indicators simply lose their way.

Of course this is not good news for anyone looking for an easy life trading with indicators, and many choose to ignore it in the hope that some magical indicator will come along that works all the time, and just go on and on looking for it.

As Paul says, Grey1 was both succesful and consistent, but he only used his methods at the right time when the fundamentals of the day were understood and the conditions were right.

Glenn

I think the brokers provide indicators on their trading platforms in order to lure traders to trade.
I think the brokers know they don't work.
If the brokers knew they worked they wouldn't make them available to the public.

Indicators are tools of the trade. If you use the right tool for job at hand you can do well. Blindly following any indicator or using the same indicator for all situations is a quick way to zero. You really have to know what it is they are telling you. My opinion is indicators are useful tools for entry points and initial exit targets when you already know which direction you will be trading. S/R lines, Bollinger Bands, or a moving average are all useful but not infallible.

Peter

I think the brokers provide indicators on their trading platforms in order to lure traders to trade.
I think the brokers know they don't work.
If the brokers knew they worked they wouldn't make them available to the public.

This assumption/comment is utter rubbish......For anyone to accuse anyone, one has to know the system first....

One cannot accuse anyone for doing something that they do not have a clue in first place....!

zambuck said:

I think the brokers provide indicators on their trading platforms in order to lure traders to trade.
I think the brokers know they don't work.
If the brokers knew they worked they wouldn't make them available to the public.

This assumption/comment is utter rubbish......For anyone to accuse anyone, one has to know the system first....

One cannot accuse anyone for doing something that they do not have a clue in first place....!

Click to expand...

If they worked, why would ANYONE make them available to the public for free?

technical indicators (i.e stochastics, MACD) is all rubbish, like you said works 50% of the time, therefore random, and so are technical patters (head and shoulders etc). Studies have proven that if you flip a coin an infinite number of times, it will create patterns such as those used in technical analysis. That is the one thing which annoys me about the users of T2W, they rely sooo much on technical analysis but fail to realise its limitations. I do not totally disregards technical analysis as there are definitely some useful forms of analysis such as support/resistance and moving averages. But that is about as far as it goes for me. Moving averages are generally very important as they are incorporated into quant models used by hedge funds and banks etc. So they do have some importance. What I do is use fundamental analysis to generate ideas, and then just look at some support/resistance levels in the asset and pick a good price to get in.

mrsoul said:

If they worked, why would ANYONE make them available to the public for free?

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precisely. don't be a sheep and follow what others do, most ppl are lured into these winning strategies (which are all based on technical analysis), but be different and have common sense. Technical analysis is not difficult lets face it, it is hardly stochastic calculus, so therefore it is too good to be true. And guess what it is, if technical analysis was so correct, I think most people on T2W would by multi-millionaires.

Not saying trading has to be complex and mathematical, but to consistently make profits of technical patterns and basic indicators is nonsense. You have to be innovative in trading, you have to try your own analysis, your own indicators etc