When Indicators Don't Lag

[dbphoenix]

Think maybe the thread should have been titled "Both Price and Indicators Lag". --This is because those who profess using price action for entries are also recommending entering once price has retraced or pulled back and then taking the entry when price has continued again in the direction of our trade.

True, though it has nothing to do with "price lagging". If your price is lagging, get a better data feed.

One waits for the market to tell him what to do via its behavior. This is the antithesis of the "guess and hope" strategy employed by those who just jump in for unexplained reasons, generally "feel".

 

[Buy1Sell2]

They lag price action, but they do forecast.

This is correct. But I would like to add that the combo of price and indicators forecast. I think that's what you meant from reading your other postings. Please correct if wrong.

 

[romik]

Yes, of course.

 

[i am nobody]

I meant forecast direction, as prices constantly update changing trend lines/fibs one can't forecast price levels in advance, markets move and whatever rear view mirror stats you may hold I simply do not believe they can be of any real value in the future. I am not referring to fundamentals, I am assuming we are discussing TA only.

The fact that you don't believe me is normal, because you use the most simple and basic kind of trading. With that trading it is indeed impossible to do these trades.

Why is Medallion (Gene Simmons) using powerful computers and PHD's to trade? Probably not because trading is easy and can be done like you do. Or do you think Simmons is an idiot. There is a reason why he does what he does. And his results are "not bad at all".

 

[i am nobody]

But if lagging indicators (which all are) are used the forecast is lagging as well.

That's why indicators are useless. Past should be used to analyze behavior of the market. If the analysis is successful it is possible to predict what the market will do in future with high probability.

I compare it with weather forecasts. By analyzing a number of parameters forecasts can be made which are fairly correct in general. The behavior of the weather in past can help to predict the future. Just like the behavior of the market in the past can help predict the future
.

 

[romik]

Divergences do front run price, but you don't know how to trade them. People's decisions move markets and since you can't calculate outcome without inside info you simply can't have a statistical edge based on events that haven't taken place. You can back test all you like, future is an unknown variable. You aren't trying to calculate actions of 1 person, but of millions of participants.

 

[SunTrader]

Divergences do front run price, but you don't know how to trade them. People's decisions move markets and since you can't calculate outcome without inside info you simply can't have a statistical edge based on events that haven't taken place. You can back test all you like, future is an unknown variable. You aren't trying to calculate actions of 1 person, but of millions of participants.

Completely ridiculous.

Nothing front runs price but a fictitious Delorean Time Machine.

 

[i am nobody]

You aren't trying to calculate actions of 1 person, but of millions of participants.

In statistics you should have a statistically representative quantity of data to have a valid result. Millions of participants make the value stronger, so big numbers make results more reliable.
On top of that millions of participants move the market, a single person cannot.

 

[romik]

Completely ridiculous.

Nothing front runs price but a fictitious Delorean Time Machine.

Divergences that work out do forecast direction of a turn before price reverses, hence I said they front run price. Some don't work out, buy than again nothing ever works 100%. Trendline breaks don't work all of the time, you get peanuts on lots of them. And since one of you mentioned indicators on various time frames suggest different things, well, trade one chart or wait for confluence on various time frames. After all, a trendline on varius time frames will also look differently.

 

[SunTrader]

For every divergence that does work there are at least two others that don't. At least.

Weatherman do better than 1 out of 3.