Why do traders still use lagging indicators?

TSLexi said:
Why do traders still use lagging indicators? MACD, RSI, MA, I can't see why they're useful; it's like driving your car using the rear-view mirror instead of the windshield. How is anyone supposed to be profitable doing that?

Analyzing the order book is the only way you can trade, because the order book generally shows you what's going on and what probably will happen.
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The OP and hundreds others may have adopted this belief from a rare (5% ) trader who truly walked the miles from profitabbly trading with indicators to MORE profitably trading without them. And, it may be only a fraction of that 5% that decide to walk that way.
Why is trading without indicators such a lofty objective?
Could it be a function of volatility being low today compared to the 90s?
Put a lagging indicator on a dotcom chart and the "meat" of the move it catches is huge.
Not so these days . Overall, signal/noise is lower these days and lag is not acceptable.
I would prefer to believe this rather than some Zen, self actaulization, superiorfukinority
qualities of no indicator trading. Around and around we go.
 
vicirek said:
So you are saying that TA for markets is what card counting is for casino: to attract people who would hope that applying numbers and math will help them to beat the house.
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Actually, card counting will give you a positive expectancy (thank you, Ed Thorp). That's why casinos use multiple decks to reduce/extinguish the advantage. A better analogy might be reliance on astrology to make important decisions in your life.
 
Trader13 said:
Actually, card counting will give you a positive expectancy (thank you, Ed Thorp). That's why casinos use multiple decks to reduce/extinguish the advantage. A better analogy might be reliance on astrology to make important decisions in your life.
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The same applies to markets then but maybe without the astrology part.
 
Maverick74 said:
I have never read a thread in 14 years that I have been on ET full of more total and utter crap. Did someone actually say moving averages are forward looking? OMFG. Go ahead and bash away. Do you guys actually read the stuff that you post?
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Nigel Tufnel/Spinal Tap on the length he prefers his MA's to be set to - "these go to eleven".
 
Maverick74 said:
Did someone actually say moving averages are forward looking?
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No, not forward looking.

I defined a simple correlation formula which enables everything in the world which has a timestamp to LEAD PRICE. Even a 200 bar backwards looking moving average is automatically a LEADING INDICATOR when viewed in this manner. If people don't get this because it's too innovative for them or they're pushing an agenda then that's their loss. In your case it's not clear what your agenda is because obviously a backwards displaced index on an independent variable is all that's necessary to define a leading var in a correlation analysis.

To quote a famous troll, what's your problem? Anyone with reasonable skills can work out the rest on their own. I did mention substituting APPL for the moving average in an earlier post. What's not forward looking about that? Using current price of APPL to determine if there's a correlation with the future price of ES. The way to determine if APPL or a 200 bar backwards looking average can be used to predict the next bar of ES is by simply OFFSETTING the index of the independent var.

Everyone that's ever tried correlation analysis and failed because they didn't think thru what was wrong with the default index values should b able to take this info and run with it ...with a new smile on their face knowing the precise nature of the problem it solves.



:=)
 
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vicirek said:
The same applies to markets then but maybe without the astrology part.
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Card games like blackjack are a purely random system (assuming the cards are properly shuffled) and follow a normal probability distribution upon which card counting relies. It becomes more difficult to maintain the count with more card decks, which then requires a mechanical device hidden in your shoe and an ability to sprint quickly to the door when a couple lugs wearing red jackets come your way :)

By contrast, the markets are semi-random and exhibit adaptive behavior, which makes the probability distribution indeterminate.
 
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dratsum said:
No, not forward looking.

I defined a simple correlation formula ...
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I would say that correlation, even your modified formula with a displaced time series, falls into the category of statistical methods and not traditional TA indicators. While both are imperfect, I have much higher regard for statistical techniques.
 
dratsum said:
No, not forward looking.

I defined a simple correlation formula which enables everything in the world which has a timestamp to LEAD PRICE. Even a 200 bar backwards looking moving average is automatically a LEADING INDICATOR when viewed in this manner. If people don't get this because it's too innovative for them or they're pushing an agenda then that's their loss. In your case it's not clear what your agenda is because obviously a backwards displaced index on an independent variable is all that's necessary to define a leading var in a correlation analysis.

To quote a famous troll, what's your problem? Anyone with reasonable skills can work out the rest on their own. I did mention substituting APPL for the moving average in an earlier post. What's not forward looking about that? Using current price of APPL to determine if there's a correlation with the future price of ES. The way to determine if APPL or a 200 bar backwards looking average can be used to predict the next bar of ES is by simply OFFSETTING the index of the independent var.

Everyone that's ever tried correlation analysis and failed because they didn't think thru what was wrong with the default index values should b able to take this info and run with it ...with a new smile on their face knowing the precise nature of the problem it solves.



:=)
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Take the stick out of your ass. Its not that complicated. You are lumping a very valid test of lead/lag relationships between AAPL and an Index with nonsense. Displaced Ma's ?
 
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