Price action vs indicators

[Attila the trader]

What are your thoughts about price action vs indicators ?

 

[tomorton]

Price action shows what the market thinks, indicators show a mathematician's opinion of the market's opinion.

Indicators can be useful for confirming market conditions and the relative energy in price moves. They should never be trusted to generate good entry signals.

 

[Attila the trader]

Price action shows what the market thinks, indicators show a mathematician's opinion of the market's opinion.

Indicators can be useful for confirming market conditions and the relative energy in price moves. They should never be trusted to generate good entry signals.

thanks, but isnt price action more subjective like support and res triangles , flags chart patters, trend lines etc every interprets it differently

 

[tomorton]

thanks, but isnt price action more subjective like support and res triangles , flags chart patters, trend lines etc every interprets it differently

Every feature that we draw on a price chart is subjective and you will never find two traders who mark up the same chart in the exact same way. In any case, we are constantly short of reliable statistical data on the efficacy of features like chart patterns, candlestick patterns and trendline violations, and even on the meaning of objective features like EMA's. Reversal levels and patterns in particular are high risk - so often they are no more than projection of a trader's aspirations.

But a rising price in an uptrend is not subjective.

 

[Attila the trader]

And ive also heard that traders formulate a bias (long or short ) and then when they look at the charts they subconsciously filter it through that lens distorting the reality and cherry picks evidence that supports their belife about the future market direction .

 

[tomorton]

And ive also heard that traders formulate a bias (long or short ) and then when they look at the charts they subconsciously filter it through that lens distorting the reality and cherry picks evidence that supports their belife about the future market direction .

This is true, but price action itself is objective: a trend is a trend. What you do about it is an individual decision.

Taking a trend-following position is usually right but the gains are not usually dramatic per trade: the consolations are that you can often make several trades on the same trend and timing is not so critical.

Trading a trend reversal or taking a position in the direction of a breakout is usually wrong but the gains on trades that are right can be very large: but not many trends reverse into new opposite trends and normally there is just one opportunity so timing is critically important.

 

[Attila the trader]