In support of indicators

[pb]

Over the past one year, I have noticed a significant shift on this site to price-volume trading (tape reading, in other words). That's perfectly fine, I don't have a problem with that. What I do have a problem with is the missionary zeal with which many of the PV proponents shoot down many indicator-related discussions in flames. They regularly call all indicator users lazy bums, people who are just trying to find short cuts and so on...not very palatable things to hear.

So here are a few things in support of indicators and their users:
1. Indicators summarise data, just like all statistical measures (e.g., sample mean, median, mode). You take a glance at an indicator value and that should give you a decent idea of the behaviour of the underlying data. Like all summarisation, there is a trade off, i.e., you lose the lowest level details and you need to know how to interpret your chosen measure. If the user can handle that, there shouldn't be any problem.

2. Mocking people for using indicators is no better than fundamentalists claiming technical analysis doesn't work, or buy-and-holders scoffing at short-termers, or investors hating shorters.

3. It's totally and utterly wrong to claim that indicators don't work and the PV fanatics know that, but keep repeating this claim. There are thousands of consistently successful traders all over the world who trade using indicators: many of them very well known. Did Linda Raschke and Larry Williams spend all their professional lives using things that don't work? I don't think so.

4.What's more disturbing is that very often, discussions involving the PV zealots bring out another aspect of their personality. Many of them will claim trading is extremely difficult and you need some kind of secret door unlocked within you before you start 'seeing' things. While trading is difficult, it's not any more difficult than it actually is. The talk of dark, mystic cults, of secret clans (the so called 'star chamber' for example) makes me rather uncomfortable. Do I want to be one of these people? Take a wild guess.

So there you are. Now I am ready for all the hate mails.

 

[JumpOff]

Hi Pratbh,
I currently find myself in the PV zealot camp. This is not because I think "indicators don't work." It's because when I used them, I found them so distracting that I forgot that price was the primary indicator! As someone who is relatively new to all of this, it made sense to me to begin to obtain some basic TA skills, and then see where all that leads. So I've pared down the variables I'm studying to: price, volume, resistance, support, and Trendlines.

Trading seems extremely obvious and simple to me when I look at a chart after the fact. It seems less clear in real time, but I doubt that any mystical exercises will improve my performance. I prefer the scientific method. Observe, hypothesize, experiment, record data, analyze, evaluate, then begin again if necessary.

I admire anyone who is trading real money and making a profit day in, day out. Whether they use indicators or not is of no importance to me. There seem to be plenty of successful and wannabe traders of all styles hanging about, and almost all have been helpful to me at some point.

JO

 

[Trader333]

What's more disturbing is that very often, discussions involving the PV zealots bring out another aspect of their personality. Many of them will claim trading is extremely difficult and you need some kind of secret door unlocked within you before you start 'seeing' things

Roughly how many are you talking of here ?


Paul

 

[pb]

JumpOff, you are not a zealot. Certainly not. You use what works for you, which is perfectly fine. You are not out there to prove everybody else wrong. So good luck to you.

Paul, I am talking about 5 people I have come across. But these are not any odd fans of price and volume. They have a good number of posts under their names and some have a cult-like following.

 

[Salty Gibbon]

pratbh

Why should it matter what anyone else thinks about indicators or for that matter about anything at all ?

Do your own thing, do what works for you and what you are comfortable with.

If a certain group of people think indicators are rubbish, so be it, but why should it matter to you what they think anyway ?

 

[pb]

Salty,
I know where you're coming from, but:

By extension of your logic, T2W or the internet (or free speech for that matter) might as well cease to exist, because they are after all just means of exchanging opinions. The question is not about having opinions, it's about respecting others' opinions and not claiming one is right and everyone else who doesn't agree is wrong.

Or may be I am being too obtuse.

 

[Salty Gibbon]

Opinions are worth listening to if they are based on reasoned logic.

If somebody just rubbishes indicators without explaining the basis of their argument, then that opinion is not worth listening to.

A lot of people rubbish Chelsea but they have just won the League so their opinion is horse-s**t isn't it ?

Opinions should be backed up by rational explanation in order to be worthy of respect.

 

[BroadSword]

...Many of them will claim trading is extremely difficult and you need some kind of secret door unlocked within you before you start 'seeing' things...

I couldn't possibly guess who you might be talking about! (not)

If somebody just rubbishes indicators without explaining the basis of their argument, then that opinion is not worth listening to..

Very true of course...

Opinions should be backed up by rational explanation in order to be worthy of respect.

Very true also, but that doesn't stop a lot of what is (increasingly unpleasantly, IMO) said here though, does it?

 

[trendie]

pratbh.
As Salty has said, it doesnt matter what other people think.

I have been with T2W for over year, and I went through the process you are going through, wanting to prove intellectually one method being better than another.

It doesnt work that way. I find I post less, because I have found the best indicator for evaluating my trading ability.

 

[peterpr]

Wry smiles all round.

So which camp am I in? Both :!: Talk about a fence-sitter eh?

My main modus operandi is intra-day using 1 - 15 minute charts depending on the instrument and the results of my current batch of backtesting/optimising endeavours. Have to say I use all manner of 'indicators' for back-testing, including some pretty esoteric ones. BUT, when I'm in front of the screen managing live trades, its live price/volume action I am focussed on. Most indicators are simply derivatives of price/volume - in much the same way as an option or future is a derivative of the underlying. I can't see how you can possibly reach background decisions about trend, potential reversals etc without them. They are part of the toolset that facilitates more effective use of live price/volume action as the triggers for trade entry and exit IMHO.

I tend to be dismissive about anyone who holds dogmatic views extolling the exclusive benefits of either one or the other.

 

[pb]

Just to clarify, the point of this thread is not to say that price-volume studies don't work or one shouldn't use them. Far from that. The point of this discussion to say that indicators are not useless either. And their users shouldn't feel intimidated here, just because indicators are not fashionable with a group of people.

Use what you like.

As long as it works for you, who cares what you use?

 

[Bigbusiness]

I think it is good to have a sense of humour about this. I don't think it matters what method a person uses to make a profit, as long as they can do it consistently and without risking too much on each trade. When someone dismisses one method and states that their way is the best, I have to laugh, as they obviously do not know what they are talking about.

 

[Trader333]

At the end of the day it simply doesnt matter what anyone else may or may not think if you are able to consistently get profitable results by the means that you choose to use and that is it in my view.


Paul

 

[Trader333]

Bigbusiness,

"Snap"

Well almost


Paul

 

[Bigbusiness]

Bigbusiness,

"Snap"

Well almost


Paul

Yes, great minds think alike, I was about to post "snap" until I saw your post

 

[Trader333]

pratbh,

Paul, I am talking about 5 people I have come across. But these are not any odd fans of price and volume. Each has a good number of posts under their names and some have a cult-like following.

Yes it will be interesting to see how many posts into this thread we get before one of the 5 decide to contribute. Maybe we should have a sweepstake on this and my estimate will be that it is not more than 30 posts before it happens (unless I have missed a post by one already ?)


Paul

 

[kriesau]

I think it is good to have a sense of humour about this. I don't think it matters what method a person uses to make a profit, as long as they can do it consistently and without risking too much on each trade. When someone dismisses one method and states that their way is the best, I have to laugh, as they obviously do not know what they are talking about.

Now that what I call an intelligent insight - well said.