Have you ventured to the dark side yet?

[wannagetstacked]

I am starting this thread to find out how many of T2W members have abandoned indicators in favour of price action? Looking through the majority of posts makes me angry, if you had no experience and came here for enlightenment you would have to search very hard indeed.There are some quality contributors on T2W that need to be listened to: skimble,A320 to name two.
I cannot comprehend why people still use these indicators to guide their trading when price charts tell you what is happening and provides excellent technical exit points and stop loss points. By all means use indicators for their intended purpose to provide u with an easy view of what has happened,NOT what is going to happen.
I do not wish to start an argument with indicator junkies. Just hope that another thread similar to "no indicators revisited" could be started with some quality pieces of education.
Threads from the dark side should dominate the new posts list along with much more money management awareness for new traders.
It is my guess that only around 2-5% of T2W members will post on this thread.
All i ask is you leave a post saying whether you are a convert or not.

If 5 % of members do post it will be interesting as it is a percentage mirrored by the average failure rate of 95% for new traders. Coincidence?...........

I am a firm believer in karma and hope we can get some finally floating around these threads.Why are there so many pointless arguments? Helpful concise contributions only please.

So leave a post and bring price action into the lives of the thousands of T2W traders.
Lets question the methods of the mass majority, and try to help people make money.



Thanks

Nathan

 

[pogle]

I don't use any indicators in my trading. When I get bored I often mess about with various indicators but the only conclusion I ever seem to arrive at is that the don't help! I find they need a degree of interpretation and if I can't simply say "if X > 60 then buy, if X < 40 then sell" I can't see much point in interpreting the indicator rather than the price.

I too miss the "No indicators revisited" thread although I had very little to contribute but I imagine is just wasn't worth the effort for skim because of all the flak she took.

BTW, a320 now posts regularly on the another forum so perhaps he really has gone over to the dark side!

pogle

 

[des44]

Hey Nathan,

Interesting thread, and I concur that a stock's price action supersedes indicators comparing them side-by-side. At the beginning of my trading venture I exclusively used indicators to trade by only to blow through a butt-load of cash. As I started to lean more towards price action (using candlesticks) I also started to become profitable. To this day I put little weight behind indicators and at times seldom even utilize them.

You mentioned the thread "No Indicators Revisited", which I have not read yet. Why has it made you so angry and explain to me what the "dark side" is if you would. Thanks.

d-

 

[Trader333]

des44,

Darsiders are people who trade on price and volume only with no other indicators whatsoever. The "No Indicators" thread is massive with over 1200 posts on it and has not had much recent contribution for a variety of reasons. Here is the link:

http://www.trade2win.com/boards/showthread.php?t=7751&page=1



Paul

 

[Roberto]

I am starting this thread to find out how many of T2W members have abandoned indicators in favour of price action?

I haven't _quite_ but I'm trying with some success to wean myself off indicators. I certainly use price as the basis for my trades far more than I ever used to, and I'm not at all unhappy about that (though I confess I'm not yet willing to remove DMI/ADX from my charts). Part of my difficulty is that I'm increasingly trading Forex rather than stocks or indices, and there's no volume with Forex, though a conversation with dbphoenix has pointed me in the right direction for assessing buying and selling pressure even without volume. But I agree with you and welcome your thread.

 

[Roberto]

You mentioned the thread "No Indicators Revisited", which I have not read yet. Why has it made you so angry and explain to me what the "dark side" is if you would.

Paul was not the only one angered. As he very tactfully put it, it was for a number of reasons. An excellent and highly recommended thread. And so is "Journey from the Basement", IMHO.

 

[dbphoenix]

des44,

Darsiders are people who trade on price and volume only with no other indicators whatsoever. The "No Indicators" thread is massive with over 1200 posts on it and has not had much recent contribution for a variety of reasons.

Paul

Nothing wrong with wiping the slate clean and starting afresh from time to time. I sponsored a PV thread several months ago but, as with many threads, it waddled to a halt through bloat. Let's face it: newcomers aren't going to wade through all that.

So, best of luck to you. There seems to be a general shift toward PV from indicators which may or may not last depending on the reasons for the shift, at least one of which must be reserved for the usual graille search.

 

[TheBramble]

BTW, a320 now posts regularly on the another forum so perhaps he really has gone over to the dark side!

a320 has ALWAYS been working from the Dark Side - darker than you would care to imagine. (Trust me on that!)

 

[wisestguy]

Am I a convert ? yes and no .

Yes , I mainly watch price action , but the time bars are important in relation to your trading timeframes.

No, I still pay attention to a couple of indicators.

 

[wannagetstacked]

For the record,I trade from forex and so will not discuss traditional measures of volume as they are not applicable.
I have found the problem many people have with the switch to the dark side is the time and effort it takes.
One cannot expect to succeed without many many hours of bar by bar real time analysis of each candlestick to to see the different buying and selling pressures and to gain the ability to know where a stop and exit would be for any trade made,
I would like to discuss further the subject of exit and stop points, as i trade off multiple time frames with 5 min chart my main end focus stops and exit points become of extreme importance. I read an article in the Technical analyst magazine this month about how a random entry system(which i am not condoning) with correct exit and profit taking points which produced an impressive return. The importance of exiting strategies such as paring down when in profit are paramount in my eyes and can make or break a trader. I know some will say exit points cannot be predicted,which i agree, but knowing how to react to those changes is key.
I will now contribute a little on how i plan exits and stops on some of my trades.
For example:

If trading from a market hook (eg, market structure high or low)
After an down/uptrend of 3 or more bars i will wait for a hook to form, my stop loss will be 1-2 pips above the high of the hook, my entry point 1-2 pips below the 3rd bar in the hook.
KISS
There you go, a simple entry and stop setup, obviously ternding or consolidation filters have to be in place. I will not discuss these filters as they are very individual from trader to trader and should be developed through candle by candle analysis of your chosen market.
For exits, a simple strategy i use is to pair out 1/3 or 1/2 my profits when i have made my stop loss in profit. My stops are usually in the region 6-12 pips, therefore 1/3 -1/2 profits are paired out after 6-12 pips are made
I also use a trailing stop which is effective at filtering and missing noise on the majority of trades. I am a percentage trader, That means waiting and waiting for my initial filter to be met, and then analysing whether the conditions are met.
For example if the hook formed at the end of a trend provides a stop loss level of 15 points and you feel the move cannot make 30 points(1st and second profit taking levels would be at 15 pips and 30 pips using the previous profit taking setup i gave) then simply do not take the trade,how hard is that? aparently very hard for most traders as an indicator can never give you this level of detail. This simple strategy would outperform the majority if someone adapted it wholeheartedly and it doesn't even go deeply into candlestick analysis, The only caveat is the waiting you have to endure.


Phew that was a lot of writing and i don't feel i've scratched the surface of price action.
I feel this simple method provides concrete entry points,stop loss point,and exit points.

I provide this not as a system but as hopefully a stepping stone for the thousands of indicator traders. Give it a go, watch the charts and see how the hooks form,your entry points are breached, and where profit taking levels occur.

A little about money management: This strategy, if thats what it is called, uses an average of 10 pip stop loss on popular currency pairs. Using fixed fractional MM:
£10000 account
1% risked per trade = £100
10 pip stop loss = £100/10 = £10 per point

Consider this further if you will, 5 minute charts provide noise, but i feel this is acceptable noise when it means you can keep your stop at 10 points,
If you are a beginner you will not find a safer entry into trading, and it forces you to follow price action.

Have i wrote too much? Hope not, if you liked my post send some good karma my way.

Thanks

Nathan

 

[TheBramble]

I am starting this thread to find out how many of T2W members have abandoned indicators in favour of price action?

You would be better off starting a poll - that would give you a more definitive idea of the numbers.

I cannot comprehend why people still use these indicators to guide their trading when price charts tell you what is happening and provides excellent technical exit points and stop loss points. By all means use indicators for their intended purpose to provide u with an easy view of what has happened,NOT what is going to happen.

Price & volume alone give you no more an idea of what is going to happen than do indicators in and of themselves. Indicators are simply derivations of price and volume. To argue ardently for either (just P&V OR just Indicators) are equally pointless positions to take. Having used and tried both approaches I believe it's important to maintain a perspective which gives you the greatest benefit in support of your trading activities.

Looking at price & volume alone alerted me to many things inherent in the various combinations of OHLC&V data that I would perhaps not have taken on board had I relied solely on indicators. But I also eventually came to realise that indicators DO provide an immediate visual grounding to so many traders that to ignore what THEY were likely to be doing next was to give up a key to part of the puzzle.

Sure price & volume is important - but it's not the be all and end all.

Just hope that another thread similar to "no indicators revisited" could be started with some quality pieces of education.

Agreed. Haven't you just done that?

If 5 % of members do post it will be interesting as it is a percentage mirrored by the average failure rate of 95% for new traders. Coincidence?...........

Bit of an assumption (or two...) there, but for my part, I would guess the 95/5 Losing/Winning traders ratio (if it is such) would contain numbers proportional to those in the overall sample group.

I am a firm believer in karma and hope we can get some finally floating around these threads.

Karma comes in two flavours - good and bad.

 

[TheBramble]

I have found the problem many people have with the switch to the dark side is the time and effort it takes.

Nathan, you speak as someone of significant experience and knowledge in this area. As you've only just come on board at t2w which other boards has this been under discussion on or are you involved in training traders in these techniques?

Before anyone suggests I'm being contentious - I'm not. It just seems that Nathan knows a thing or two in this area and would be nice to know how he knows.

 

[henry766]

what does a hook look like Wanna?

 

[FTSE Beater]

Hi All

I ventured to the darkside a long time ago, and haven't looked back. The thing I've learnt is:

The best thing to do, is start with a price only based strategy. Once you are happy with that, have a look at the %win, average win and average loss ratios for that strategy. Add in the indicator that you think you want, see how that effects the figures and I would be surprised if they improved the statistics.

I just wish I knew this 6 years ago

 

[eddyjo]

Does trading NR/IB qualify for the darkside ?( with just one MA)

Eddy.

 

[wannagetstacked]

Great post Gamma. There are too many things that effect the market to try and interpret them all,

The post regarding what a hook is, a great description is given for free by joe ross, i forget the link but i'll try to find it.

The post regarding my trading background: i am a private trader and would prefer not discuss my personal details any further.

My intentions for posting here are to meet some like minded traders and provide help wherever i can, I'll tell you anything you'd like to know and will definately never sell you anything(before the accusations start flying about me being a new poster to the boards.

I would like to also gather some views on money management strategy development, we should all know the basic rules,but these can often contrast with how we trade. I for example generally trade from 5 minute charts and try to only accept trades with around a 10 pip or less stop loss. Therefore if you had a £10000 account:
1 % risked
£10000/100 = £100
£100/10pips = £10 per point with 1% risked per trade

I hope this can provide some enlightenment to new traders who often randomly pick 25 points as a stop loss. If you watch the charts and wait for a hook to form you will be able to see what your stop loss will be.
Eg. stop loss on a hook setup would be the difference between entry point and the high of the hook formation, you can therefore wait for setups that meet your stop loss setup. This means you have a definitive stop that works in harmony with your money management strategy.
Just my view on this area.

I would love to hear how price action followers treat their stop loss points and exit points(eg do you pair out profits). With exits i will usually take 1/2 or 1/3 profits after 10 pips if my stop loss is ten pips, after 5 pips if my stop loss is 5 pips etc.

Thanks for all your replies,keep them coming and keep the memory of the glorious "no indicators revisted" thread alive.

Nathan

 

[wannagetstacked]

Joe ross link, get the ebook by email free, discusses hooks and other useful things

http://tradingeducators.com/trading_philosophy.htm

 

[des44]

Wanna,
Do your fingers get sore?

d- *mine would*

 

[Mr. Charts]

wannagetstacked - coming out with such a statement you might be better named "wannagetsMacked" ;-)

FWIW, I have traded full time for a living for five years using very very little in the way of technical indicators.
Price action and pattern showing trading sentiment and pressures are much more important than any indicators.
The creation of indicators singly or combined with endless parameters is an industry which appeals to the mass of people always looking for a non-existent Holy Grail.
"Dark side"? I don't know where that phrase comes from, I prefer calling it the "light side" - price action, pattern, understanding volume and its advantages and limitations, trade frequency, pressures -
all those things equal reading sentiment to create consistent profit.
Richard

 

[wannagetstacked]

Lol,I am trying to learn to speed type so its a good bit of practice.
Maybe i'm posting too much, don't wanna look like i don't have a life

MrCharts thanks for your post, I have great respect for you and your methods.
Did you once mention exiting after three candles against your position?I'm always looking to learn something new,currently interested in the finer points of exiting a trade. I have my own set of rules but would greatly appreciate your input

By the way the name Wannagetstacked is derived from my hobby as an amateur bodybuilder, always looking for perfection in every aspect of my life.

Thanks

Nathan