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What are the indicators that need special attention?
- Thread starter Raidear
- Start date
It's a common question and I'm not criticising it, and I'm not criticising you for asking it.
But it's also true that when people ask this question, it's almost always because they've set out to learn how to trade with a mistaken belief (namely that indicators have "predictive powers"), and the reality is that changing their overall perspective on that question, at least until they have a little more knowledge and experience, would be much more helpful to them than the answers they want and expect.
Apologies for not answering your specific question as you wanted, but I'm going to risk offering you this post instead, because long experience has taught me that it might actually be more helpful to you than the answers you expected.
But it's also true that when people ask this question, it's almost always because they've set out to learn how to trade with a mistaken belief (namely that indicators have "predictive powers"), and the reality is that changing their overall perspective on that question, at least until they have a little more knowledge and experience, would be much more helpful to them than the answers they want and expect.
Apologies for not answering your specific question as you wanted, but I'm going to risk offering you this post instead, because long experience has taught me that it might actually be more helpful to you than the answers you expected.
I include MA's as "indicators" (so, yes, I don't actually use those. I see that for some people a couple of moving averages and their relationship/relative gradients can be a useful way of defining whether or not there's a "current trend" within a specific timeframe, of course: I just despair a little of people trying to use them to time their trade entries and exits).
I don't count "volume" as an indicator, and I do use it, myself (actually in the form of "constant volume bars", so it's "being taken into account in the way my price-chart is constructed" rather than "being displayed").
I'm not "anti-indicator", like some people in the forum, and I acknowledge that some traders use them well and profitably.
On the other hand, I think that approaching the "learning stages" with the "tacit expectation" that they have some magic predictive powers and that they're the "main way to learn to trade" is hugely misguided, and I wish I'd known that much earlier than I did.
I'm biased, of course, as we all are, one way or another, on such subjects: personally, I became profitable after several years only when I abandoned indicators, so that's my biased perspective.
However, I do notice that all the people I know (in the industry and home/independent/retail traders) who trade successfully with indicators are (a) using them in conjunction with a decent understanding of price action parameters, and (b) typically not using them to time their trade entries and exits.
in other words...PA with, or without, a MA or two (for slope visualization) and with, or without volume is really all one needs IF THEY have a good grip on understanding PA and can execute trades within a PA framework? Bottom line, indicators are not needed for successful trading?I include MA's as "indicators" (so, yes, I don't actually use those. I see that for some people a couple of moving averages and their relationship/relative gradients can be a useful way of defining whether or not there's a "current trend" within a specific timeframe, of course: I just despair a little of people trying to use them to time their trade entries and exits).
I don't count "volume" as an indicator, and I do use it, myself (actually in the form of "constant volume bars", so it's "being taken into account in the way my price-chart is constructed" rather than "being displayed").
I'm not "anti-indicator", like some people in the forum, and I acknowledge that some traders use them well and profitably.
On the other hand, I think that approaching the "learning stages" with the "tacit expectation" that they have some magic predictive powers and that they're the "main way to learn to trade" is hugely misguided, and I wish I'd known that much earlier than I did.
I'm biased, of course, as we all are, one way or another, on such subjects: personally, I became profitable after several years only when I abandoned indicators, so that's my biased perspective.
However, I do notice that all the people I know (in the industry and home/independent/retail traders) who trade successfully with indicators are (a) using them in conjunction with a decent understanding of price action parameters, and (b) typically not using them to time their trade entries and exits.
Bottom line, indicators are not needed for successful trading?
Clearly they're not "needed" for successful trading, in that many people are trading successfully without them.
I'm just acknowledging that there are also people trading successfully with them ... but (in my opinion) those are all or almost all people using price action as well, whether they admit it openly or not!
Volume is my favorite indicator. I like OBV, which makes it easier to visualize volume action. I also like the ATR, which tells me which stocks are more likely to have worthwhile trades. A $60 stock with 0.1 ATR would be a waste of time to try to trade. A $10 with 2.5 ATR would be too volatile for my comfort zone. I've tried popular indicators like Stochastics, MACD, Pivot Points, but I can't get them to work better than random. Use Stochastics for ranges and DMI for trends, etc., work well for certain market conditions, but the rules and strategies inevitably fall apart with larger sample sizes (100,000+ trades on backtest).
Volume is my favorite indicator.
Mine also.
Well, I don't think of it as an "indicator", but I agree with you, anyway.
I've never traded a stock in my life, so I can't comment much on the rest of your post.
I think that an MACD that has very long/slow settings can perhaps be used with something else, as an overall "longer trend indicator" ... for example, an MACD set to something like 30-45-25 can successfully be used as a directional bias, in that when the MACD line is above both its midline and its signal line - and rising - one would try to identify only potential long entries from price action, and when it's below both - and falling - only potential short entries. I don't use it myself, but I can see how that would work and it's logical and reasonable.
I never found a way of using stochastics successfully at all (that doesn't mean there aren't any, obviously).
Pivot points I regard as being in exactly the same category as Fibonacci levels, homeopathy, astrology, phases of the moon, Elliott waves, randomly drawn lines, dowsing, and all the other things that thousands of people believe in without there ever having been anything more than anecdotal, carefully selected evidence for them produced by their own enthusiasts. (See, I told you I was biased?!).
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I've never traded a stock in my life
what do you trade?