Are indicators worthless?

This is a discussion on Are indicators worthless? within the First Steps forums, part of the Reception category; I ditched stochastic's a long time ago. Recently, I pulled it up again to have another look at it, as ...

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Old Jul 9, 2012, 5:11am   #1
 
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Are indicators worthless?

I ditched stochastic's a long time ago. Recently, I pulled it up again to have another look at it, as I thought that maybe I had missed something. I didn't. I'm thoroughly convinced that I could draw a random squiggly line across the bottom of a chart and have just as reliable buy/sell signals. I wonder, if I could find a way to test that?
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Old Jul 9, 2012, 9:01am   #2
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Re: Are indicators worthless?

Most indicators are worthless because they lag prices. To make money trading you need either a forward looking indicator or in the worst case a coincident indicator. Keep this in mind and it will save you a lot of money. I am not aware of any forward looking indicator, naturally. The closest thing you can get to coincident indicators is price patterns. Google for "price action lab". That program can find many price patterns that have historical win rates you specify. Some will be flukes but some work very well. You can use a cross-validation test to separate the good from the bad. Stay away from indicators. I paid too much using them.
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Old Jul 9, 2012, 9:28am   #3
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Re: Are indicators worthless?

jack - I very much agree, the best indicator is your eye. You could indeed run a check on the value of indicators but it would be simpler to use a random horizontal line - buy above, sell below?

The only indicator I use at present is moving averages, but only to confirm my perception of trend direction from the price bars themselves. But I am looking at a way of aggregating the shares in an index that are in up / downtrends and giving buy / sell signals on the day to get an idea of market breadth and sentiment.
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Old Jul 9, 2012, 10:23am   #4
 
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All you need is price
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Old Jul 9, 2012, 10:45am   #5
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Re: Are indicators worthless?

All indicators are worthless....but some are less worthless than others .....
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Old Jul 9, 2012, 12:12pm   #6
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Re: Are indicators worthless?

They're worthless to me. That doesn't have any significance for anyone else of course.
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Old Jul 9, 2012, 12:18pm   #7
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Re: Are indicators worthless?

they have no predictive power, but they are far from worthless. Quite the opposite in fact.

There's a bit of a problem in that the way people are encouraged to use them is generally not favorable, quite the opposite in fact, but that in itself is almost an edge isn't it.
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