Are technical indicators truly helpful in trading, or are they just a way to make the process feel more scientific and controlled?

[ImogenBeaumont]

Since most indicators lag behind price action, do they actually add value, or just create a false sense of certainty that many traders rely on? What's your take on this?

 

[xatta]

It's that "false sense of certainty" that causes problems and not the indicators themselves. Studying the behavior of the financial markets is a social science and not a natural science. Can you guess what I am going to eat for lunch today? You could look at my past choices for lunch and other related data, and make a prediction that is much, much better than random. Still, you will fall far short of 100% accuracy.

 

[ImogenBeaumont]

It's that "false sense of certainty" that causes problems and not the indicators themselves. Studying the behavior of the financial markets is a social science and not a natural science. Can you guess what I am going to eat for lunch today? You could look at my past choices for lunch and other related data, and make a prediction that is much, much better than random. Still, you will fall far short of 100% accuracy.

Nice analogy there. Thanks.

 

[Larisa]

Since most indicators lag behind price action, do they actually add value, or just create a false sense of certainty that many traders rely on? What's your take on this?

Indicators are helpful, but relying solely on them can be risky. Price action should always lead! Indicators are just there to support your decisions, not dictate them.

 

[accoladius]

It totally depends on the person and the strategy.

There really is a Billion ways to make and lose money trading.

Some people use several indicators and every doohickie available, some people don't even use charts, trading is often more about you than what you use in my opinion.

 

[ImogenBeaumont]

Indicators are helpful, but relying solely on them can be risky. Price action should always lead! Indicators are just there to support your decisions, not dictate them.

But I have seen people who in their price action analysis, solely rely on indicators. How would you assess them?!

 

[ImogenBeaumont]

It totally depends on the person and the strategy.

There really is a Billion ways to make and lose money trading.

Some people use several indicators and every doohickie available, some people don't even use charts, trading is often more about you than what you use in my opinion.

You are right, but it doesn't rule out the need for asking for other's opinion to find a better and more profitable trading strategy.

 

[THT]

Since most indicators lag behind price action, do they actually add value, or just create a false sense of certainty that many traders rely on? What's your take on this?

Depends on how you use them

If you use Indicators as the books tell you, you'll go bust - that does not mean they don't work

I've used Indicators for 15 years highly successfully in conjunction with reading a chart

Walter Bressert published some great work on this in the 80's and 90's

 

[ImogenBeaumont]

Depends on how you use them

If you use Indicators as the books tell you, you'll go bust - that does not mean they don't work

I've used Indicators for 15 years highly successfully in conjunction with reading a chart

Walter Bressert published some great work on this in the 80's and 90's

What you say sounds reasonable. I just doubt if one should rely solely on indicators.

 

[AriaS]

Just tools that provide different perspectives of the market, and sometimes, when lots of people use them, they can work as a self-fulfilling prophecy.

 

[tomorton]

Classic teaching on using indicators says use price action to identify a market which is moving strongly, and the indicator to tell you when to get in and when to get out. The underlying aspirations are to get into a movement before it's even visible on the chart and to get out before its end is even visible on the chart. Which explains why this approach doesn't work.