Why do traders still use lagging indicators?

[romik]

If you don't find something useful, then why participate?

The question was asked, why use something that the OP has no value in using (kinda silly and provocative question) assuming he makes money without indicators.

The answer is simple, some use it to help them make money and others use indicators to lose money as they are still on the learning curve.

 

[El OchoCinco]

The answer is simple, some use it to help them make money and others use indicators to lose money as they are still on the learning curve.

Exactly! mucho back and forth to say that some people use them and some people don't. But no trader worth their salt is going to use something based on being convinced of it by other people debating about it IMHO.

 

[profitlocker]

The market will tell you your approach is suffering when it rapes your wallet.

Put softly. More like gang-banging in reality

 

[dartmus]

no trader worth their salt is going to use something based on being convinced of it by other people debating

signal.leading=correlation(independentvar[1],dependentvar,length);
signal.lagging=correlation(independentvar,dependentvar[1],length);

In the end the dependentvar must aways be current price after concluding all interim calculations so it's technically not feasible to b considering offsetting it's index unless your broker allows tampering with the timestamp of your trades.

It amaze's me nearly everyone fails to recognize the value of defining lag in a way which makes it helpful rather than harmful.

Without correctly defining lag... there can't be ***ANY*** leading indicators.

 

[dartmus]

btw, in case it's not obvious ^^^
the world is full of leading indicators.



ohyeah, technical analysis!

 

[Trader13]

I think my point is that semantics and debates of theory do not achieve the goals.

Most traders use some form of TA and most forms of TA are based on lagging indicators making this topic quite relevant to traders. Semantics and theory are the foundation for execution strategies, and are therefore very appropriate for discussion by people who want to understand the basis for their trades and not just take chart signals from a squiggly line that came with their trading platform.

The market will tell you your approach is suffering when it rapes your wallet.

Yes, indeed it will. But I would advocate some modeling or backtesting to avoid this calamity.

But no trader worth their salt is going to use something based on being convinced of it by other people debating about it IMHO.

This is a discussion forum where ideas are exchanged and debated. If you are open to influence, and you know how to separate the signal from the noise, you may realize great value from these threads. Don't be cynical. Lighten up and enjoy the dialogue!

 

[El OchoCinco]

Ha ha...if someone needs to be told to backtest or do some modeling then...

as for me I use TA for future and option positions in addition to studying volatility so I am not against anything presented...

 

[K-Pia]

What can be cool, about indicators like we now them, is their capacity to filter instead of their capacity to generate signals. They can turn on / off signals. For exemple, you can filter breakout strategy to buy only if it occurs above a 200 periods moving average and sell only it's opposite. What's dangerous about TA is the tendency for the newbie to look backward instead of forward. I mean, it's two different worlds. One is about clear cut and abolished patterns and the other is about fuzzy, beings. One becomes overconfident with its overfitted and fallacious paintings to dare with success the dark and coming side. It's not because they are laggard that they don't work. We can be late to the party and still get fun.

 

[Mysteron]

I can't see why they're not useful...it's like monitoring current conditions of a car.
The one who ignores TA tools are bound to screw up in trading. You will find out in the near future and will soon start a thread on how to use MACD, RSI, MA...

So you think that using a MACD to indicate the fuel level in the tank would be a good idea then?

 

[K-Pia]

So you think that using a MACD to indicate the fuel level in the tank would be a good idea then?

Or it's a bit like trying to forecast tomorrow temperature looking at a thermometer's derivative...