When Indicators Don't Lag

Sergio77 said:
There are all sorts of algos that fade indicators. MACD was hit a long ago because it was popular and stochastics too.Now there are not many retail traders and the focus is on things like golden cross and head and shoulders to target longer -term position holders and technical fund trading. Interesting blog about the golden cross in TAN, the solar ETF, last week and how it was faded right away.
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But the golden and death crosses sound so cool. :)
 
dbphoenix said:
No need. I'm not saying that the MACD or any other indicator is not useful. I'm pointing out that whatever the indicator is indicating is in the trader's head, not in the market. This eventually creates problems which are avoided by not using indicators at all. Those 60+ ES points have more likely been earned in spite of the indicator than because of it.
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So are you saying that MACD generated signals, that expose what I treat as weakening or strengthening price action are nothing more than coincidental events?
 
As the only component of this scenario that is indigenous to the market is price, then, yes.

You could also ask yourself if you can perceive weakening or strengthening price action without it.
 
romik said:
I only use MACD, I have tried others, perhaps I didn't dedicate enough research time to others, therefore not going to claim their usefulness or uselessness. IMO MACD is probably the most universal forecasting tool available, again from what I have seen. Also, its simplicity is its strongest point. No need to overthink or re-invent the settings, just lots of screen time and providing you have an open mind and can see patterns and draw parallels you ought to make sense of it. It's really a marvelous FREE tool available to all, it shows potential strength, weakness, it's also a great timing tool and it can also forecast range based targets. Regarding divergences I would say that you gotta treat them making a comparison to a coiled spring, the more it's suppressed and its coils are pressed together tighter and tighter the more the reverse effect. Ok they don't work all of the time (nothing does in trading), but when they do oh boy do they work, look at monthly USDJPY as a quick example, price kept on going down and down, yet MACD was showing weakening selling thrusts and Ok it wouldn't have worked on probably a few entries, but then there came the last thrust down and BANG, it's still going up! Isn't that remarkable? Isn't that simple enough?
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Agreed. MACD is a great and much overlooked and maligned tool. I think though you would agree that it needs to coupled with price in order to forecast properly. I put the following together:Bollinger Bands, MACD, RSI and price. This helps me draw a better picture and shows just how strong or weak price action is. The trader using just price may be able to see weakness or strength, but will not be able to see how weak or strong. Trades do not need planning in advance--what arrogance to think that you could--Rather, you need to be able to think and act in real time. Indicators with price help you in that regard.
 
DB, I don't really see the point in debating this. Indicators lag price action, so you get in into the saddle before me. Is this really the objective in trading? Not as far as I am concerned.
 
romik said:
DB, I don't really see the point in debating this. Indicators lag price action, so you get in into the saddle before me. Is this really the objective in trading? Not as far as I am concerned.
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There is a point in debating it, but not in debating it further. The objective in trading is to make the most of the opportunities that the market makes available.
 
Buy1Sell2 said:
Trades do not need planning in advance--what arrogance to think that you could--
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To me making this statement sounds arrogant. It is not because YOU cannot do it, that it is impossible.
I plan my trades minutes before I open them. So, in advance.
I say: if condition X is fulfilled I initiate a trade, I also know already where my stop is ( entry +/- stop), and I also know already that if condition Y is meet, I will close my trade.
I always trade in this way, NEVER try something else.
But I never know in advance the exact price nor the exact time when these conditions will be fulfilled.
 
How to manage trades and how to read the signals can be known in advance since you would manage the trades and read the signals the same each time. Entries and exits cannot be planned in advance. To say you can, is the utmost example of arrogance.
 
Buy1Sell2 said:
How to manage trades and how to read the signals can be known in advance since you would manage the trades and read the signals the same each time. Entries and exits cannot be planned in advance. To say you can, is the utmost example of arrogance.
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No, because there are patterns in the markets. If you can recognize them and link them to certain scenario's from past, you can already prepare yourself because scenario XYZ will repeat itself soon. I never use actual prices to decide what to do. I use the pattern they make because that tells me what will happen. It is of course essential to know and master these techniques. If not it will sound like chinees for you. What is apparently the case for you.
 
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