Choose one indicator, your life depends on it!

[foredog]

Don't indicators just show reaction to previous price movements, therefore you are by default watching price action, by remote almost, by watching an indicator?

Wouldn't it be easier to then cut out the middle man and just watch the actual price?

How many times were

RBS
Northern Rock
Bear Stearns
Lehman
Woolworths
etc etc etc

Showing as oversold on some stooopid indicator????

 

[Hoggums]

All indicators are is a mathematical averaging of past price action - sometimes comparing it to an even further back in time price to get a "relative" price.

THEY HAVE NOTHING TO DO WITH FUTURE PRICE ACTION.

They do not predict anything. They merely tell you how things were - and their data is never up to date because virtually all of them use past data in their calculation.

 

[new_trader]

Indicators of any sort are written by software engineers in order to sell their products to the misguided and gullible public.

 

[Mr. Charts]

"Choose one indicator, your life depends on it!"

Understanding buy/sell pressures.

The rest is flatulence.

Richard

 

[dcraig1]

All indicators are is a mathematical averaging of past price action - sometimes comparing it to an even further back in time price to get a "relative" price.

THEY HAVE NOTHING TO DO WITH FUTURE PRICE ACTION.

They do not predict anything. They merely tell you how things were - and their data is never up to date because virtually all of them use past data in their calculation.

A bit of a straw man, methinks. There are lots of time series you can derive aside from things like stochs, RSI and MAs of various types.

Chart of today's DAX. See how DAX swings from MP POC to MP LVA. Look at the histogram type plot which is a smoothed (fast EMA) of the count of contracts traded at the ask minus contracts at the BID (market delta). See how buying pressure drops off dramatically at the double top. And look at the market delta at the retest of the LVA. Tell me with a straight face that this is not useful.

 

[new_trader]

A bit of a straw man, methinks. There are lots of time series you can derive aside from things like stochs, RSI and MAs of various types.

Chart of today's DAX. See how DAX swings from MP POC to MP LVA. Look at the histogram type plot which is a smoothed (fast EMA) of the count of contracts traded at the ask minus contracts at the BID (market delta). See how buying pressure drops off dramatically at the double top. And look at the market delta at the retest of the LVA. Tell me with a straight face that this is not useful.

It is not useful. All indicators are 'experts' in hindsight

Tell us with a straight face, did you trade it and make money?

The question is, what happens next!!??

 

[Joey25]

I'm with dcraig1. Market participants do remember the past and act accordingly.

I'm approaching midlife so perhaps that is why I find MP appealing, however it is the most reliable approach I have found.

If you're connecting swing highs with straight lines or drawing horizontal lines along clusters of candle bodies, then I'm afraid you are also using an indicator of sorts.

I trade options simply from the probability density function implied by the prices - that is completely forward looking and trading without indicators.

 

[dcraig1]

I'm with dcraig1. Market participants do remember the past and act accordingly.

Of course they do. Perception of "value" is based on past price as well as fundamental valuations and whatever other magic one can come up with.

Indeed it would be a very strange market that did not look at past price.

 

[dcraig1]

Hmmmmm ..... DAX has moved on a bit, bounced within a whisker of yesterdays LOD, moved up to VWAP/ pivot (they happen to approximately coincide), run out of buying juice (as evidenced by market delta) and failed this test.

 

[pips-galor888]

Don't indicators just show reaction to previous price movements, therefore you are by default watching price action, by remote almost, by watching an indicator?

Wouldn't it be easier to then cut out the middle man and just watch the actual price?

How many times were

RBS
Northern Rock
Bear Stearns
Lehman
Woolworths
etc etc etc

Showing as oversold on some stooopid indicator????

Does this mean that all those who believe there is no point in looking to the past to "help" determine the future basically are saying the the likes of Elliot Wave theory is a load of bull-droppings?

All the books I've read on both fundamental & technical analysis say that "although the price does not remember the past, traders DO!".

Also, if the masses, and more specifically the "Big Boy" traders, are using such theories then would it not stand to reason that they are self-fulfilling prophecies?

 

[foredog]

Totally agree that there is a point in looking to the past, i do it all the time.

If price of X has hit Y three times and reversed in the past and this time it hits Y and goes through it and doesn't reverse then trade the way it's going.

No waves squiggles or hocus pocus.

At what point would the indicator tell you it's broken the S/R?

I'd imagine a few funds use some indicators but i'd hazard a guess that most "big boy" traders do not sit there worrying if the 5Ma is below 10ma and something else is red before they sell something thats crapping out.

 

[Paul71]

Picture this:

You are being held at gun point and forced to trade forex!

You can have just one SINGLE indicator to help in making your buy/sell decisions

Which indicator would YOU use (and how )?

If i had to choose one, mmm, probably the Frosty Jack indicator.

 

[fibonelli]

Momentum Divergence and Extreme Band Deviation can be suggestive of future price direction. S/R analysis is very important.

Anyway back to the OP, I'd want to be able to draw horizontal and diagonal lines.

 

[pips-galor888]

I'd imagine a few funds use some indicators but i'd hazard a guess that most "big boy" traders do not sit there worrying if the 5Ma is below 10ma and something else is red before they sell something thats crapping out.

I have to disagree with that "assumption" totally (my lively hood depends on it!). I have worked in the front and back offices of two of the biggest banks in the world (well, maybe not these days!), USB and DB, as a software developer and my experience has been that traders generally have to show a good reason for taking a trade, which they usually do with either a fundamental event or a technical indicator! Unless its an exceptional circumstance (usually authorised by the floor manager), if a trader takes on a trade without a good reason back office pick up on it and the trader is "spoken" to!

 

[foredog]

So they weren't allowed to sell something making new lows in a downward trend unless they had an indicator saying sell as well?

If you've been there with UBS etc then i can't argue with you, but i never really knew people using indicators when i was in the city. Different trading strategies i guess.

I just found that indicators tend to overcomplicate what is in essence a very simple business.

 

[pips-galor888]

So they weren't allowed to sell something making new lows in a downward trend unless they had an indicator saying sell as well?

Although you may be very right in sticking to price movement as your only "indicator", don't you find it odd that the most widely used indicators (eg: stoch, ma, rsi etc) do usually reach one end or another at key turning points?

I didn't say they "weren't allowed", I said they had to justify selling something making new lows (in the case of a lower low probably a fundamental reason, but I would think that looking at multiple time frames, some technical indicator or another was also saying that there is still space to go further in the same direction).

I doubt more than 25% of big boy traders (an unscientific number I've subscribed to based on what I've seen) in big companies have the knowledge or experience to make a trade based solely on the chart. A lot of the youngsters are usually too arrogant and unwilling to learn (by devoting time), if they have a tool in-front of them giving them buy/sell signals. My experience is limited to 2 big companies and a hand full of smaller European banks and asset managers in London and Europe, however, IF this were common practice throughout the world, then it gives more weight to technical indicators (most of which are based on core indicators such as stoch, ma, rsi etc) and hence affect price movement.

 

[yacarob1]

EMA 10 for me.

It can be multi-functional and tell a thousand stories.

 

[renok]

I prefer Fibonacci, even I'm a beginner and need lots of practice, I only work with it , plus some other indicators.

 

[Hotch]

It's all bull**** and it's bad for ya.

It doesn't matter what you use, "price action" lags just as much as indicators. Just pick something, and run with it.

When you get down to it, people are making money using anything and everything (FAPT is the exception that proves the rule, bring on the lawsuit).

 

[colinmacg]

Picture this:

You are being held at gun point and forced to trade forex!

You can have just one SINGLE indicator to help in making your buy/sell decisions

Which indicator would YOU use (and how )?

Moving average crossover?