Reverse engineering why indicators don't work

[lcranston]

no they are not

you actually missed very important points

1. what exactly indicator indicate

2. how to choose at which periods the indicators to be set

3. how to choose in which time-period(s) one should be looking at indicators

Though if he's trading price rather than indicators, there's no reason for him to care about any of this.

 

[qxr1011]

price is an indicator in itself, so he should care about all of this
trend-lines are indicators too, so do the S/R

 

[bone]

When you realize that all technical indicators have weaknesses, then set to work to deconstruct the design limitations inherent in each particular technical indicator - you will be able to refine your TA approach. The next step is to dissect the time duration elements of said data sampling. It's no secret that time frames and indicators effective on one product might not work so well for another product depending upon vol and trading range.

 

[lcranston]

price is an indicator in itself, so he should care about all of this
trend-lines are indicators too, so do the S/R

A price print indicates that a trade has taken place. It is far more immediate than a moving average, which indicates something else entirely.

Trendlines aren't indicators. They only track trend. "Do the S/R?"

What did your indicators indicate regarding the 140pt drop in the NQ this morning? Where did they tell you to enter? To exit?

 

[lcranston]

When you realize that all technical indicators have weaknesses, then set to work to deconstruct the design limitations inherent in each particular technical indicator - you will be able to refine your TA approach. The next step is to dissect the time duration elements of said data sampling. It's no secret that time frames and indicators effective on one product might not work so well for another product depending upon vol and trading range.

In order to do this, one would most likely require some sort of evidence that the work is worth the doing. Hence the first post.

 

[lovethetrade]

If you are asking in terms of a simple question, this may be a simple answer.
There is a common myth imo that trends (lines) are straight. Not so, trends often curve.
My method of calculating a trend mathmatically is use a MA28 and the calc is today's MA28 is > or < than yesterday's MA28, depending if you wish to calc a rising or falling trend.
Or you may wish todays MA28 > or < than 3 days ago.

A moving average of price is a valuable tool but not for defining trends. By using an MA of price to define a trend you're making some pretty big assumptions about how the market works which are erroneous IMO.

 

[tomorton]

A moving average of price is a valuable tool but not for defining trends. By using a MA of price to define a trend you're making some pretty big assumptions about how the market works which are erroneous IMO.

This is bold. Confirming and evaluating trends is surely what MA's are all about? themickey seems to be saying if the slope of the MA is upwards or downwards (its value increasing or decreasing) this indicates a continuation of trend.

Why do you say the MA's slope doesn't define trend?

 

[themickey]

A moving average of price is a valuable tool but not for defining trends. By using an MA of price to define a trend you're making some pretty big assumptions about how the market works which are erroneous IMO.

Keeping things very simple, a rising or falling MA28 is good enough to ascertain a rising or falling trend.
The question had been, how do you mathmatically calculate a rising trend?
That was my answer for a rough rule of thumb.
For me it works, others may wish to use several lines of code, doubt it would improve much on my one liner.

 

[lovethetrade]

Keeping things very simple, a rising or falling MA28 is good enough to ascertain a rising or falling trend.

Not in the context of trading with variable market conditions.

 

[lcranston]

Keeping things very simple, a rising or falling MA28 is good enough to ascertain a rising or falling trend.
The question had been, how do you mathmatically calculate a rising trend?
That was my answer for a rough rule of thumb.
For me it works, others may wish to use several lines of code, doubt it would improve much on my one liner.

And that was a fine answer for the question. However, someone who trades price would want to know why it was/is necessary to mathematically calculate a rising trend. Computerized backtesting would most likely be one reason, but those who trade price don't do that. Or one might not know how to recognize higher highs and lower lows. But, again, those who trade price have no difficulty with that. The more pertinent question in the context of the thread, then, would be why seek to mathematically calculate a rising trend in the first place?