Are Indicators Worthless?

[Splitlink]

Thanks for reminding me. I must get mine fixed before I get pinched.

 

[Splitlink]

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

I've been trying to put that across on another thread but don't think that it has gone in.

Folk will take rules as gospel, not to be broken.

Anyway, at least someone agrees with me!

 

[Trader333]

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

Can you say more about where these studies were conducted and when ?


Paul

 

[tripleogstar]

Can you say more about where these studies were conducted and when ?


Paul

I have read it in articles in The Economist and Econometric books. I will try finding the exact articles, but it has been tested. It is fairly straight forward to carry out the experiment yourself using VBA.

 

[tripleogstar]

I take it you are a technical analyst, what percentage of your trades are winning trades?

 

[zupcon]

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

You could equally well apply your argument to price action, if it worked why would ANYONE make charting applications available to the public for free ?

The answer as to why these things are provided free of charge is that its just sensible marketingto do so.

 

[tripleogstar]

You could equally well apply your argument to price action, if it worked why would ANYONE make charting applications available to the public for free ?

The answer as to why these things are provided free of charge is that its just sensible marketingto do so.

Yes but it is up to the user of the package to study the technical analysis him/her-self and apply it to the asset. It is not a big hassle for websites to provide basic charting tools, but it is for them to actually study the charts and apply the necessary analysis.

 

[tripleogstar]

But yes, marketing does obviously have a role to play in their provision of charting tools

 

[wackypete2]

I take it you are a technical analyst, what percentage of your trades are winning trades?

What relevance is this? Plenty of position or swing traders make money with a low percentage of winning trades, whether using technicals or fundamentals. Scalpers have a higher winning percentage using technicals. I agree with a previous post of yours that you need to be inovative in your trading but proper money management is more important than which method you use. Obviously on these forums traders take sides on fundamantal or technical analysis and that's fine, but it's possible, although difficult, to trade a lousy plan, flip a coin, or throw darts, and still keep above water if you can manage your money, be smart, and keep greed in check.

Peter

 

[squall321]

You could equally well apply your argument to price action, if it worked why would ANYONE make charting applications available to the public for free ?.

you could go even further

if livermore-style tape reading works why would they even bother to tell people the price of the share?

 

[zambuck]

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.

So you don't use TA......and are a millionarire...!
...presumably as your Sunseeker is moored at a marina...!

 

[N Rothschild]

indicators do exactly what they say on the tin, give you an indication of what the market is doing, doesn't mean its right! to many people take them as gospell

 

[zambuck]

...Exactly...but the discussion seems to going in direction that someone is asking question on a premise that TA has to be a black box and that it does not work as no one has become millionarires...!!....The whole discussion is going in direction of banal....

It has been pointed out that TA can be supplied by whoever but it is the intelligence of a user and their feeling about the market that is a real art......

 

[Trader333]

I am curious to know how tossing a coin could give indicators that have volume as a key element such as vwap ? In addition to that how would coin tossing give cycle analysis indicators such as Fisher Transform ?


Paul

 

[tripleogstar]

I am curious to know how tossing a coin could give indicators that have volume as a key element such as vwap ? In addition to that how would coin tossing give cycle analysis indicators such as Fisher Transform ?


Paul

it doesn't give the indicators, obviously, it gives the patterns created by charts i.e head and shoulders, flags etc whatever else technical analysts look at. Indicators are a bit more of a mathematical concept and some are useful,

 

[meanreversion]

There's a lot of guff on this thread. Here is my two cents worth -

1. The opinion has been stated that indicators must be worthless because you can get them for free; why would anyone let you know what they were for free if they worked? I suggest you read "Way of the Turtle" by Curtis Faith. In it, he details how a class of 20 students were taught a precise way to trade, which was unambiguous and unequivocal. When let loose in the markets, only 20-50 pct of these students actually followed the very clear rules given them, which would have made them a fortune. In other words, you could tell 1,000 people a profitable trading strategy for free and the majority would just ignore it anyway.

2. How can you possibly know the value of an indicator without determining your exit strategy beforehand? Most trades will be in the money at some point and out of the money at another - how you get out of the trade determines the value of the indicator. In "Trade your way to Financial Freedom", Van Tharp details how a random entry system can make money, using suitable exit criteria.. these revolve more around money management than anything else.

I find entry a small part of the trade - knowing what to do if the trade starts to move in your favour is more challenging.. trailing stop loss? targeted profit point? combination of the two? For this reason, I believe it's impossible to "prove" indicators are worthless, any more than any statistic is worthless (e.g. GDP growth last year was +3pct, now it's -1pct - is GDP as a figure worthless??)

 

[Hip Hop]

At the Ministry of Pips, we develop custom indicators that calculate thousands of elements regarding an assets price including, but not limited to, "time as a 3 dimensional element", velocity, price and its position based on 3D.

The Ministry Of Pips says yes to indication ! And has been authorized to launch a journal, so you may follow the progress, as we take trading into new dimensions.

Link to Ministry Of Pips trade journal for any who are interested in the "power" of indicators.
http://www.trade2win.com/boards/trading-journals/67794-ministry-pips.html

Hip Hop, Ministry Of Pips.

 

[Trader333]

we develop custom indicators that calculate thousands of elements regarding an assets price

Any indicator that calculates thousands of elements will be utterly useless in my view



Paul

 

[aleclaw]

flashs on and off

front and rear of the car

both sides

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

........so, indicators are the same as turn signals then.......!

 

[wackypete2]

........so, indicators are the same as turn signals then.......!

When your indicator is signaling a reversal, put your left turn signal on, when it's signaling a continuation of trend put your right turn signal on, when it's flat or shows no signal put your hazzards/flashers on... then do the hokey pokey and shake it all about