Please help newbies- How to trade w. indicastors

To make a buck in a zero-sum game, it's really important that most of the other players remain believers in a lot of nonsense :) so it's probably a bit much to ask that any of us reveal the details of what we've learned over months or years. However, many of us have learned (and will continue to learn) much about trading from ET, so IMHO we should be giving something back.

So here's my contribution to your quest: Read the first half of the anti-trading classic "A Random Walk Down Wall Street" by Burton G. Malkiel, and find all the places where he grudgingly admits that you could indeed make a profit trading "if it wasn't for commissions and other fees". That will pinpoint what even the academics admit are profitable trading strategies (i.e., why it is that the market is not a random walk). Then build up a strategy from there, adding insights from other traders, but only if those insights make sense and mean something to your trading. An awful lot of what we hear is closer to Astrology (i.e., finding patterns and relationships where none exist) than to Science. And successful traders can be the worst culprits in spreading disinformation, since any success they have will get associated with all the weird things they do, not just those that they are doing right.
 
Look you "gut feel" enthusiasts...either you make your choices knowingly ie CONSCIOUSLY

Or you make them without a conscious awareness of the reasons underlying your choices ie BLIND to your underlying basis.

Now you tell me...

What makes more sense? Making choices with awareness and a conscious understanding of why you're in the trade or whatever,

Or cause it just feels good? :p

I think the answer is obvious. You don't make important choices based on a "feeling." You use your rational mind to critcally examine the data then act on that rational assessment.

Why should you NOT use your intellect? And don't give me this lagging indicator junk... do you think your gut feel is a leading indicator? (Well, for some it may be. LOL)

Bucky Lee
 
Nicodemus: “There are so many veriables that they can only be computed at the moment of the trade and only the human brain can do that.”

Quite the opposite in my view. I could not possibly calculate and compare some data I use quickly enough for it to serve any useful purpose to me.

If you were alluding to the difficulty in programming the correct interpretation of the cumulative determination of a collection of different indicators, I’d agree. That is extremely difficult, if not impossible, at the present time.

“If anyone can show me a profitable system that works off indicators alone I will humbly bend over and kiss your assets.”

You’d be doin’ some puckerin’ as I’m aware of a number of simple systems that return a profit. They don’t work in all environments but that doesn’t invalidate their usefulness within a given context.

I am not a big fan of current “popular” indicators and I understand the general distrust that many seasoned vets feel for them. Their assertions are not altogether unwarranted. I don’t care to defend the use of them but I think that, given the right circumstances, some of these concepts, upon which they are based, can be effective tools.

Somehow, I have this feeling that if I were to discuss the “indicators” that I use, someone would be saying; “I’m not talkin’ about that type of indicator, I’m talkin’ about this type.” But then again, maybe not. We can go round and round about this forever, but for those traders curious about the use of indicators and trading, all I can say is that I use my own profitably.
 
"You’d be doin’ some puckerin’ as I’m aware of a number of simple systems that return a profit. They don’t work in all environments but that doesn’t invalidate their usefulness within a given context. "
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tymjr, mind sharing some with us just to get us started? I mean, I started this thread for all the ones trying to make it in trading to have something concrete and all we have done here is started debating if they work or dont!

If like millions of traders use them, then there must be something behind them! Anyone wanna start sharing some setups and systems cos im really lost here...

THX and keep up the good work!

Alex
 
neo_hr: “mind sharing some with us just to get us started?”

Publicly? Yes. I saw your post last night and I wanted to respond but it was just too late. I’ve spoken with you via email briefly before so at some point maybe I’ll send you another. What I do is great for me, but to what degree it resonates with other traders is difficult to say.

“I started this thread for all the ones trying to make it in trading to have something concrete and all we have done here is started debating”

I know and I am really sorry for stepping in and opening my big mouth. I know this sucks for traders that are struggling, but all I can say is that I only care to provide "clues" on a public forum.

My thoughts on this matter are very similar to dkamp's, who provided an excellent post which is much more useful for newer traders than mine have been on this thread.
 
Indicators work great ... in hindsight in a (expensive) book. ahah
I agree with those trusting their gut feeling, it comes from watching the market day in and day out. Maybe I would try to papertrade your gut feeling at first though to see if they are reliable. Otherwise there maybe some great proprietary indicators out there that actually give timely and accurate signals( usually popular indicators lag too much or then give too many false signals right?) but most of us don't have access to them.
If you are really interested in indicators there is a book called "TA for the trading professional" that goes in depth into their flaws and new ways to use them (for what it's worth). Funny how people are touchy about their favorite indicators.:p
 
What you are all missing is...

If you wish to make that leading indicator argument.

Then, YOUR GUT IS NOT LEADING INDICATOR EITHER!

Do you really believe you transcend known laws of physics and develop a prophetic gut from watching the market???

What do you think your gut is using to make these brilliant choices....

HUH?

Some sixth sense to tell the future?

C'mon guys...get real. Use your heads.

Bucky Lee
 
Originally posted by Kicking
Indicators work great ... in hindsight in a (expensive) book. ahah...usually popular indicators lag too much or then give too many false signals right?
More...

OK there is a misconception by many newer traders about tools such as RSI. It is fairly obvious that RSI gives many false/lagging signals, so many new traders discard it as a tool and convince themselves that they should rely on trading instinct. This is the common mistake.

<b>RSI should only be used AS A GUIDE, and only on the general market (not individual stocks!)</b>. It is NOT there to tell you when to enter and exit trades...but it will help you get a feeling for if a trade is safe or not. Eg: The market is strong...possible breakout...you want to go long. Without RSI you have no idea how extended the market is. With RSI you can see whether there is sufficient reward left in the trade to justify the risk. RSI is not a trading system by itself! That is why you cannot backtest RSI with positive results, and why so many people fail to see the value in it.
 
IMHO

the answer to this question can be simple. Time and experience can be your guide. Whether studying indicators, chart patterns or price action. You should learn enough about the market you plan to trade and learn how it reacts to technical points or just plain old order flow. Then you judge or use your gut to determine how to make a low risk entry. You look for spots that tell you hey this is a good spot to risk this much because I should be able to make more than I am risking.

If you spend enough time learning about the futures market or even your stock you get a feel for what is just a bounce or reversal. Now if you know why the market bounced you can read more into the significance of the move and whether you want to fade it or not.

You are frequently wrong because Fidelity or Soros may have just decided that they want to buy or sell for fundamental reasons and they will just run over technicals and the traders using them. That is why you have cut your losses and start all over again.
 
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