All Newbies: The only indicator you'll ever need

[hitman123]

To all newbies in trading I can offer the only indicator you will ever need: the realtime price. And the only method you'll ever need: know just 1 market inside out.

If you didn't like that answer, trading real money may not be a great idea until you come round to this way of thinking.

Of course, everyone needs to learn this for themselves - the best education you will ever get is real money losses. Ouch, they hurt don't they? But that will be your coming-of-age if you decide to use moving averages, oscillators, RSI, stochastics, bollinger bands, fib levels, etc... this is all junk. It's all just lagged guesswork that can be right now and again, but mainly is wrong. Ask any experience technical trader and if they search their souls they know this is true. Even a stopped clock tells the right time twice a day. So even a useless indicator like RSI can get it right twice a day - see what I'm saying? You'll win $1000, and lose £100,000.

No magic indicator or system exists, but if you know just 1 market by watching it day after day after day after day for months, watch it move, watch how it twists and turns, just watch. Don't guess it, don't want anything to happen, just watch. When you learn it inside out, as if you're married to it, then you will know when it's too low and when it's too high. That's your indicator: price. You will know when to buy it and when to short it.

Don't draw lines on the chart, forget moving averages, throw away those same old boring indicators that EVERY platform in the world now offers for free. I mean think about it: if everyone has access to them on their platforms in this day and age, do you really think you can win with them consistently whilst others somehow don't? Doesn't make sense does it?

Choose 1 market.
Learn it.
Marry it.
Commit to it.
Watch it.
You will learn when it is due to come up and due to go down.

That, my friends, is as good as it gets.

Hope this helps.

 

[TheBramble]

Couldn't have said it better myself. And I have tried.

But, as good as it gets, it's unlikely to hit the mark. No matter how often it's stated.

 

[Crap Buddist]

Vicar of Canary Wharf.....

Marry a market and it will nag like any wife does when it wants you to do something.


Marry a market yet divorce from yourself.


For better or worse moments, union with a market is love.

 

[hitman123]

Thanks TheBramble

I just wish somebody had told me this years ago when I started it.

It took many lost years and lots of lost cash before I understood this.

Yet still today people are inventing indicators and some even have the nerve to name the indicators after themselves!! Not only are they leading people astray but also trying to immortalise their names in the history of trading concepts. They are (almost) the worst kind.

If you can make good money with just 1 thing, for example Lean Hog futures, then you must stick with that. IBM will not move like a Lean Hog future, nor will the EURUSD.

But every market has a personality and, like people, they become predictable when you take the time to get to know them. I know when my best friend is lying, because I know him. I know when my market is too high, because I know it.

I just hope some newbies read this.

 

[Crap Buddist]

Practice listening-You hear things.

I just wish somebody had told me this years ago when I started it.

If that were the case, then who would of told us of the joy of discovery ? Discovery is our unique experience speaking. It's there if we listen.


Sometimes though it just falls on deaf ears. :cheesy:

 

[shadowninja]

But how many times have you seen a market quite high and watched it climb to all new highs?

 

[Rhody Trader]

To all newbies in trading I can offer the only indicator you will ever need: the realtime price.

How about we strip it down even further and take the "realtime" out of that statement? Unless your timeframe is very short, you can probably get away with delayed or end-of-period prices.

 

[hitman123]

No ShadowNinja, you're missing the point!

You said "a" market. There should not be "a" market, there should be "your" market.

And you will know it inside out. When you know it, it will act in a predictable way.

Forget markets and choosing random symbols.

Choose 1, understand it, love it.

 

[hitman123]

Yes a delayed price for longer term trading is fine of course; when a market is closed it's not going anywhere!

 

[shadowninja]

No ShadowNinja, you're missing the point!

You said "a" market. There should not be "a" market, there should be "your" market.

And you will know it inside out. When you know it, it will act in a predictable way.

Forget markets and choosing random symbols.

Choose 1, understand it, love it.

Yes, I read that above.

I only trade EUR/USD and my question is still valid.

 

[hitman123]

Then it's simple money management: you get out quick BECAUSE you know your market is doing something odd. The next predictable entry happens, you get in, you make a decent profit that covers losses. Over time you win. We all know how that works. This will come as second nature.

As a sidenote, I find the problem with FX markets is they are wildly unpredictable anyway, not ideal for anyone, especially as they are 24 hours, I mean when do FX traders sleep? But newbies will discover this as they begin the hunt for their market to marry.

 

[Lee Shepherd]

hitman123,

This following question is writing meaning no offence.

Are you preaching what you know or are you implementing this very same idea?
Simply put, I assume by what you speak of you are a successful trader over many months/years and show a solid profit for which is your main source of income?

 

[shadowninja]

Ah, that would make sense, then. Thanks. I do have very few indicators (my screen last year was like a Christmas tree) but I do like MAs, still.

 

[hitman123]

Profitable as secondary source at the moment as I work from home doing something else too. One day will be full time but not in a hurry.

Yes, it's a method that works because it has to work because there is no viable alternative. Indicators do not work, systems and squiggly lines are useless.

Please remember here the underlying lesson I'm trying to teach: choose just 1 market that works for you and stick with it forever - I think we can all agree on that one.

But I'll say it again, indicators are fun, interesting, addictive and useless.

 

[trendie]

Then it's simple money management: you get out quick BECAUSE you know your market is doing something odd. The next predictable entry happens, you get in, you make a decent profit that covers losses. Over time you win. We all know how that works. This will come as second nature.

As a sidenote, I find the problem with FX markets is they are wildly unpredictable anyway, not ideal for anyone, especially as they are 24 hours, I mean when do FX traders sleep? But newbies will discover this as they begin the hunt for their market to marry.

how is that any different to trading any indicator, expecting a particular behaviour, and then getting out if the action relative to the indicator is invalidated?

same for patterns (H&S, wolfe-waves): each indicator or pattern "probably" means something is going to happen; doesnt mean it will. but you know that if "X" happens, you get out at "Y" because thats the point of indicator/pattern failure.

even the sup/res guys get it wrong when they incorrectly judge sup/res failing or holding.

whether you trigger a trade at a pattern, sup/res, price action or indicator cross-over, its a "point of interest". if it fails, get out and wait for the next one.

so, tell me something new.

 

[hitman123]

The problem with MA's, as well as all indicators, is "what variable is correct?".

Should you use 5? 10? 104?

Should you use EMA's, SMA's or any of the others?

Should I use RSI 14 or RSI 76?

I can show you a perfect entry with a 5SMA on EURJPY weekly chart, yet a terrible string of entries using a 5SMA on a MSFT 15min chart.

See? It's robbing Peter to pay Paul.

It's an impossible question - as all indicators will work at some point but on the whole do not. So the net result, whatever you do, is loss with these things. The more you add to your screen, the worst it gets.

It doesn't work.

 

[hitman123]

Trendie

wolfe-waves???????!!!!!!!!!! LOL!!

Where do people come up with this nonsense?!!!

Oh yes that's right, this wonderfully dynamic thing we call a market, made up of infinte reason and questions, follows wolfe-waves doesn't it?!! LOL!!

Come on, let's be serious about this.

A newbie types in "technical analysis" into a popular search engine beginning with G.

He/she is overun for the next 5 years with ideas.

More ideas follow as they search on the ones they already know.

They never get anywhere. So they take the plunge with a randomly chosen set of indicators and patterns on a few charts they have no idea about.

They lose, they never trade again.

We are supposed to help newbies, not throw silly sounding indicators at them so they can add them to the arsenal of 1,000,000 they already have.

I'm trying to help them by letting them know: do not use them, they fail.

But go ahead do what you want people, when you lose maybe you'll learn

 

[Lee Shepherd]

hitman123,

You mention 'know your market', I absolutely agree but if you are using indicators, as many city analyst's do amongst many city traders (if not all use something) I will add, "know your indicators".

A moving average will work in certain periods and not in others, if you know how to calculate an MA, (and I assume you do) then you will know when (before you trade) if they are likely to throw out false signals or a high probability that it wont. This is of course, just high and low probabilities. This goes for any and all indicators even including the wacky ones.

As the saying goes, 'theres more than one way to skin a cat'. I believe you have found one for the moment. I'm sure we'll speak again in 6 months if you are still using the same. Either that or you'll be selling it.

 

[trendie]

Trendie

wolfe-waves???????!!!!!!!!!! LOL!!

Where do people come up with this nonsense?!!!

Oh yes that's right, this wonderfully dynamic thing we call a market, made up of infinte reason and questions, follows wolfe-waves doesn't it?!! LOL!!

Come on, let's be serious about this.

A newbie types in "technical analysis" into a popular search engine beginning with G.

He/she is overun for the next 5 years with ideas.

More ideas follow as they search on the ones they already know.

They never get anywhere. So they take the plunge with a randomly chosen set of indicators and patterns on a few charts they have no idea about.

They lose, they never trade again.

We are supposed to help newbies, not throw silly sounding indicators at them so they can add them to the arsenal of 1,000,000 they already have.

I'm trying to help them by letting them know: do not use them, they fail.

But go ahead do what you want people, when you lose maybe you'll learn

I was being flippant when I mentioned Wolfe-Waves.
Its the principle of getting out when the expectation between indicator and event causes a mismatch, meaning bail out.

the problem with "study the market, for years, then get enlightenment" is that you cant really pass that onto newbies. You cant really quantify that, except in account statements.
Indicators/patterns/rules introduce objectivity, and a chance to verify rules, and to teach others.

I learnt to drive a car by being taught about mirror, signal, manouevre, clutch, gears, brakes, stopping distances, law.
I wasnt given a car and told to spend a year studying it for myself, and learning stopping distances by experience, or finding out what speeds result in speeding tickets by experience.
Newbies still need rules.

 

[Lee Shepherd]

I dont believe we can actually scrutinize the fact that indicators DO NOT work, I'm sure we would find much evidence where people have failed using them, on the other hand we will constantly find many people that have and still do use them successfully.

For every person who uses indicators correctly and successfully would be able (I'm sure) to find fault in, not the indicator, but the person that used it incorrectly and failed.