The "Holy Grail"
- Thread starter aphexcoil
- Start date
I think you've made an important discovery...that indicators don't mean much. And chances are that sooner or later you'll discover that moving averages don't mean much either.
A moving average is great...every big move that comes along you will be in. On the other hand, you'll also be in and out of every little move that whips across the moving average during those choppy periods. Each to his own.
There is no substitute for using your head to pick the trade, and then managing the trade once you have it on. Unfortunately, you can't backtest that.
Good luck to you.
A moving average is great...every big move that comes along you will be in. On the other hand, you'll also be in and out of every little move that whips across the moving average during those choppy periods. Each to his own.
There is no substitute for using your head to pick the trade, and then managing the trade once you have it on. Unfortunately, you can't backtest that.
Good luck to you.
Oldtrader,
Thanks. As far as backtesting goes, I would throw that out along with the TA. If any backtesting is worth doing, it should be done manually in my opinion -- preferably in a fashion where you can't see the entire graph.
I like to play back the previous week's activity and just sketch down my observations about what happens, what patterns occur on a frequent basis -- what candle patterns have higher statistical outcomes, etc etc.
I hate these systems that say, "When you get an MA crossover, you buy, sell, etc." After you put it into a computer, the computer spits out this number that has no relation to your emotions or mental psych while trading.
What boggles my mind most is that people would rather trust a computer to come up with a system analysis rather than use their own brain to interpret price data as it happens.
It would be like me going up to someone and saying, "Hey, I'll swap your Pentium IV computer for an 8086 machine -- it has great graphics and the candles are always green!" Well, the human brain is the best computer we have -- and it is very good at adapting fuzzy-logic to certain situations.
If you were going to catch a football, you wouldn't stop, pick up a piece of paper and calculate the calculus required to control vectors of your muscle motions. You look at the ball, estimate where it will be at point X and catch it. Why shouldn't the same philosophy apply to trading?
The reason I got fed-up so quickly with TA is because I was doing a lot of investigation of moving averages and then I'd look at the charts -- lots of them -- and suddenly my brain said, "There is a pattern here, and you can trade it with high success, why are you messing with wavelets?" That's a good question! Why do I need a momentum indicator when the momentum is on my tick charts? The faster the ticks are created, the more momentum -- and if they are going up, I should be long. How does it NOT get any simpler?
If I go long and it doesn't act the way I thought it was, it is a scratch trade and I go on to the next signal -- but all this TA BS is just going to get a trader thinking about things other than the most important -- price, volume and direction.
Bollinger Bands are great for an academic study in price movements, but do I want to make money or do research on the fly with real money? No! I want to make money and the only way I ever consistently make money on simulated trading is by sticking to a simple system, getting with the market and accepting losses when I am wrong. I do that, and I make money -- every damn time.
TA might prove better for longer trading techniques, where you have time to think about your trade before you make it -- but on the fly daytrading? You don't have time to look at anything else except the ticker, chart and price movements -- spend any more time on anything else and you're cutting into your edge.
aphie
Thanks. As far as backtesting goes, I would throw that out along with the TA. If any backtesting is worth doing, it should be done manually in my opinion -- preferably in a fashion where you can't see the entire graph.
I like to play back the previous week's activity and just sketch down my observations about what happens, what patterns occur on a frequent basis -- what candle patterns have higher statistical outcomes, etc etc.
I hate these systems that say, "When you get an MA crossover, you buy, sell, etc." After you put it into a computer, the computer spits out this number that has no relation to your emotions or mental psych while trading.
What boggles my mind most is that people would rather trust a computer to come up with a system analysis rather than use their own brain to interpret price data as it happens.
It would be like me going up to someone and saying, "Hey, I'll swap your Pentium IV computer for an 8086 machine -- it has great graphics and the candles are always green!" Well, the human brain is the best computer we have -- and it is very good at adapting fuzzy-logic to certain situations.
If you were going to catch a football, you wouldn't stop, pick up a piece of paper and calculate the calculus required to control vectors of your muscle motions. You look at the ball, estimate where it will be at point X and catch it. Why shouldn't the same philosophy apply to trading?
The reason I got fed-up so quickly with TA is because I was doing a lot of investigation of moving averages and then I'd look at the charts -- lots of them -- and suddenly my brain said, "There is a pattern here, and you can trade it with high success, why are you messing with wavelets?" That's a good question! Why do I need a momentum indicator when the momentum is on my tick charts? The faster the ticks are created, the more momentum -- and if they are going up, I should be long. How does it NOT get any simpler?
If I go long and it doesn't act the way I thought it was, it is a scratch trade and I go on to the next signal -- but all this TA BS is just going to get a trader thinking about things other than the most important -- price, volume and direction.
Bollinger Bands are great for an academic study in price movements, but do I want to make money or do research on the fly with real money? No! I want to make money and the only way I ever consistently make money on simulated trading is by sticking to a simple system, getting with the market and accepting losses when I am wrong. I do that, and I make money -- every damn time.
TA might prove better for longer trading techniques, where you have time to think about your trade before you make it -- but on the fly daytrading? You don't have time to look at anything else except the ticker, chart and price movements -- spend any more time on anything else and you're cutting into your edge.
aphie
you're off to a good start oldtrader. that's your first post here! now, i'm not necessarily raking in the money yet, so i can't say if you're right or not. however, the more i play this game, the more i agree with what you just said. i just hope you're a profitable trader that knows the above to be true.
if that was true, why don't you just short every stock that breaks the 200ma? everyone here has probably already looked at such a strategy. as with everything else, sometimes it works, sometimes it doesn't. now i'm not saying all indicators are 100% worthless, but i think oldtrader is on to something when he says indicators alone don't mean "much."
Gordon, I'm not trying to get into trading 101 here but, it's a fact that alot of people are looking at these indicators and act on them like all these book gurus told them. That's what makes them work. I'm a techie and I admit it. Trading is something that develops and you have to have confidence in what you're doing.
If you don't have confidence in TA then it want work for you. Some traders trade by instinct, and make great calls. It's all personal and time is what sorts out the crap.
aphie...you got it! Price - The Ultimate Indicator.
Now go hook yourself up to the BrainWave Generator and mellow out! http://www.bwgen.com/
Now go hook yourself up to the BrainWave Generator and mellow out! http://www.bwgen.com/
Hi Guys:
Hope you're all able to read this...can't figure out how to respond directly to someone.
I didn't choose my name lightly..."OldTrader". I made my first trade in about 1965...an odd lot of Studebaker at an account at Merrill Lynch opened with a phoney ID to show I was 21. LOL. Didn't even drink at the time.
About 10 years later I became a stockbroker...the Dow was about 600 back then.
When the Value Line stock index future first started trading in the 80's...I traded it. Later when the SP futures started trading, I traded them. Ultimately I quit my job as a broker to trade futures from home...later on the floor.
These days I trade the futures and stocks from home. I've been trading for about 35 years, leaving out a couple of years for VietNam.
Most of you guys are probably using intraday charts to scalp. It might interest you to know that at one time pre computers back in the 80's, I had a quotron in my house that I paid $1K per month just for quotes....I drew a little hand chart while I watched prices on the Quotron.
I suppose you know that the big traders and the floor traders know that when they push prices in certain directions they can cause all the guys watching machines and intraday charts to act. And I know you know that they consistently run stops above the highs and lows of the day(s), or other logical points.
Anyone here who believes they can watch a couple of intraday indicators and/or moving averages and become independently wealthy is smoking dope IMHO.
That 200 day average that you refer to works when it works. But you know and I know that sometimes it doesn't.
How many head and shoulders formations have you seen where it breaks down just far enough to trap everyone, then reverses straight up?
How many times have you seen the days high or low taken out just before a big move took place?
I'm not trying to discourage using charts or anything else necessarily. I'm just trying to say there's no substitute for thought. Indicators are man's attempt to pretend that the markets are somehow controllable. They aren't. You use your head, you manage your trade.
My intent here is not to offend anyone...just to express an opinion.
Hope you're all able to read this...can't figure out how to respond directly to someone.
I didn't choose my name lightly..."OldTrader". I made my first trade in about 1965...an odd lot of Studebaker at an account at Merrill Lynch opened with a phoney ID to show I was 21. LOL. Didn't even drink at the time.
About 10 years later I became a stockbroker...the Dow was about 600 back then.
When the Value Line stock index future first started trading in the 80's...I traded it. Later when the SP futures started trading, I traded them. Ultimately I quit my job as a broker to trade futures from home...later on the floor.
These days I trade the futures and stocks from home. I've been trading for about 35 years, leaving out a couple of years for VietNam.
Most of you guys are probably using intraday charts to scalp. It might interest you to know that at one time pre computers back in the 80's, I had a quotron in my house that I paid $1K per month just for quotes....I drew a little hand chart while I watched prices on the Quotron.
I suppose you know that the big traders and the floor traders know that when they push prices in certain directions they can cause all the guys watching machines and intraday charts to act. And I know you know that they consistently run stops above the highs and lows of the day(s), or other logical points.
Anyone here who believes they can watch a couple of intraday indicators and/or moving averages and become independently wealthy is smoking dope IMHO.
That 200 day average that you refer to works when it works. But you know and I know that sometimes it doesn't.
How many head and shoulders formations have you seen where it breaks down just far enough to trap everyone, then reverses straight up?
How many times have you seen the days high or low taken out just before a big move took place?
I'm not trying to discourage using charts or anything else necessarily. I'm just trying to say there's no substitute for thought. Indicators are man's attempt to pretend that the markets are somehow controllable. They aren't. You use your head, you manage your trade.
My intent here is not to offend anyone...just to express an opinion.