Anyone using indicators successfully for day trading?
- Thread starter Howard
- Start date
Indicators may have worked in the 1970's, 80's maybe even 90's. Traders were using them successfully make money (eg. turtle trading rules) markets were trending. The first guys in 70s who applied computers for the first time and moving average crossovers made like billions 
Then they stopped working because of computerization and algos generating too much noise and these old school traders went and started making money by writing books about them. These books were read by new people who could't make money by trading so they started teaching about these indicators instead. But today indicators on top of historical price are pretty much worthless no matter what the guru is trying to tell you. I tested the shit out of them and my conclusion is whatever you see in the past is an illusion.
Then they stopped working because of computerization and algos generating too much noise and these old school traders went and started making money by writing books about them. These books were read by new people who could't make money by trading so they started teaching about these indicators instead. But today indicators on top of historical price are pretty much worthless no matter what the guru is trying to tell you. I tested the shit out of them and my conclusion is whatever you see in the past is an illusion.
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So in other words tradeable instruments which in the historical past indicated a tendency to bounce on support is not worthy information?
And instruments which some displayed high volatility and others low volatility - no good?
What about breakouts - useless?
Whadabout correlations - throw that idea in garbage?
Whadabout how penny dreadfuls behave compared to blue chips - nothing to see here, move on.
Hehe
I know a few more but that would be showing too much info at the card table.
I usually want to use only price action (formations etc) however, I do find some indicators useful to confirm either price action or estimates. I think there is an art in how one applies ones favorite indicator(s) as there is an art in chart reading.
The hindsight nature of reviewing charts and indicators can be misleading - and yet to confirm things they can be of help.
I use formulae and estimation, so indicators give me a second confirmation.
As an example, if I have computed the HOD at 2780 then I want to see a topping of my favorite indicators to confirm my estimate.
Naturally the difficulty of doing this (using indicators to confirm) is the lagging aspect of indicators. Yet if I am selling the HOD and the indicators are really strong - I'd rather stand aside than try and sell the HOD to the tick.
Why? well my estimate can be wrong and to me "no trade when I'm not sure" is better than trading in doubt.
All this said I am trading for big swings only
This effects my approach.
The hindsight nature of reviewing charts and indicators can be misleading - and yet to confirm things they can be of help.
I use formulae and estimation, so indicators give me a second confirmation.
As an example, if I have computed the HOD at 2780 then I want to see a topping of my favorite indicators to confirm my estimate.
Naturally the difficulty of doing this (using indicators to confirm) is the lagging aspect of indicators. Yet if I am selling the HOD and the indicators are really strong - I'd rather stand aside than try and sell the HOD to the tick.
Why? well my estimate can be wrong and to me "no trade when I'm not sure" is better than trading in doubt.
All this said I am trading for big swings only
This effects my approach.
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So in other words tradeable instruments which in the historical past indicated a tendency to bounce on support is not worthy information?
And instruments which some displayed high volatility and others low volatility - no good?
What about breakouts - useless?
Whadabout correlations - throw that idea in garbage?
Whadabout how penny dreadfuls behave compared to blue chips - nothing to see here, move on.
Hehe
I know a few more but that would be showing too much info at the card table.
Yes, correct, all garbage
Do this: Generate a chart using using Gaussian distribution random generator. It's gonna look exactly as any stock or forex price chart.
You will see resistance and support levels, head and shoulders, flags, bounces, break outs... etc.. you can draw lines, overlay indicators and say: I can buy here, sell here, it's gonna look beautiful and it all will make sense on the chart. The only problem is... it is a random walk. So any pattern you see has 0 predictive power and is illusion just like a grandma seeing a Jesus in a piece of toasted bread.
There are only 2 ways to make money consistently:
1) Investing Warren Buffet style, based on fundamentals and value and holding for years.
2) Scalp it like a pro trader trading at a bank without looking at the chart. Just looking at order flow or news.
Everything else is illusion overlaid on a random walk. Of course you can get lucky and make it work for a while using charts and indicators, but don't expect it will last.
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Hmmm, I've heard that theory on previous occasions about randomness and coin flicks etc having same qualities as market charts and I don't buy into it, not for a moment.Yes, correct, all garbage
Do this: Generate a chart using using Gaussian distribution random generator. It's gonna look exactly as any stock or forex price chart.
You will see resistance and support levels, head and shoulders, flags, bounces, break outs... etc.. you can draw lines, overlay indicators and say: I can buy here, sell here, it's gonna look beautiful and it all will make sense on the chart. The only problem is... it is a random walk.....
Maybe once in a blue moon random generated numbers may appear as a market chart for a short period of time because nothing is impossible.
If market charts gave no clues, how come we have traders pulling in profits?
Granted, there are losses, often from errors or bad trading which dilute profits at times, but to say indicators stopped working or are useless.....I'll agree to disagree with you on that point.
Now to clarify, I'm not a fan of using technical indicators to eyeball charts as a means of trading, but one can number crunch market data to give a heads up on conditions which speeds up decisions on what and when to trade and providing better clarity.
I guarantee you, that if I generate random number chart with Gaussian distribution, dress it up with indicators & trend lines you will not be able to tell it apart from a real stock chart. I did this exercise myself and was shocked how my brain was recognizing all the patterns guru's books tough me to see.
The ones who are pulling profits are not looking at indicators based on price and charts. Mostly very short momentum based strategy based on immediate price action and some kind of catalist like news or something. Traders are not pulling $$$ because MDAC gave and Stochastic them green light.... If they do, they won't do that for much longer...
The ones who are pulling profits are not looking at indicators based on price and charts. Mostly very short momentum based strategy based on immediate price action and some kind of catalist like news or something. Traders are not pulling $$$ because MDAC gave and Stochastic them green light.... If they do, they won't do that for much longer...
Indicators may have worked in the 1970's, 80's maybe even 90's. Traders were using them successfully make money (eg. turtle trading rules) markets were trending. The first guys in 70s who applied computers for the first time and moving average crossovers made like billions
I started experimenting with trading around 1984 when the first IBM XT's were sold with programs that could be used for trading. Things were fairly simple at that time. But over the years the market became more professional resulting in the elimination of a lot of "traders" who could not adapt to the markets that became more professional.
My indicators always worked and are still working (the basic logic at least as the rest improved over the years). It was a continuous struggle to improve as the markets became more professional. The number of failing traders grew fast as only the strong survive (like in any competition). If I compare my actual trading with what I did 20 years ago, there is a huge difference. What I did 20 years ago was too simple to make it work today. My actual system is many times more complicated then it was; and the improvement was necessary to survive. I never started to write books, but neither did I read them as the real knowledge is not explained in these books. The only books I ever read were Market Wizards, but just for entertainment.
Every day when I trade, the opposite of what you say is confirmed over and over again in REAL trading. The fact that you tested the shit out of them only confirms that you cannot make any money with it. But that does not mean that nobody else can make money. Or do you really think that you are the best and only person on earth that can make such a statement with 100% certainty?
One of the most important things a trader need is being humble (just the opposite of arrogance) and not say: I know everything that can be done, and also everything that cannot be done.
The only proof that is valid is somebody who shows something can be done. Because he proofs that it works. Proving something is impossible does only proof that the person who made the attempt is not able to do it, but does not say anything about any other person. Your statement is an illusion.
I many times in past had the feeling that indeed "the sky is the limit" as I managed to overcome a problem on the way to profitability in trading. We see proof of that almost on a daily basis.
Read this article:This boy might be able to do what no scientist could till today:
http://time.com/5429621/rishab-jain-young-scientist-challenge/
"This 13-Year-Old's Tool Could Change Pancreatic Cancer Treatment"
PS: All I need for trading is each tick and the exact time the tick was generated. From there on I build a complete system.
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Especially the part "quant" in his alias tells me a lot about him...