Quote from Thunderdog:
Years ago, a salesman came to my home hoping to sell me a high-end vacuum cleaner. Among other things, this nifty gadget could be used to dry my hair. The machine could legitimately be used to dry hair! However, if I had to dry my hair in a hurry, I would prefer to use a conventional hair dryer. It is just a personal bias. The idea of using a vacuum cleaner to do so seems a bit contrived. In my biased opinion, using indicators is a bit like using a vacuum cleaner to dry your hair. I'm not suggesting it is impossible. Rather, in my view, it is suboptimal.
I think that newcomers value indicators more than they are worth. That was certainly true in my case. I remember thinking how much more glamorous it would be to use modern, "scientific" indicators as compared to the old fuddy duddies who only relied on price and volume. What a leg up I had on those old timers! However, as time progressed, I found that, at least in my case, looking at the source itself was more useful than using a smoothed and arguably arbitrarily manipulated derivative of that source.
To each his own. However, consider this. If I told a user of say, RSI, that I do not find RSI useful at all (which is a true statement for me), he would counter with the argument that I am not using it in an optimal way. He would surely suggest that I familiarize myself with it until I own it and can use it in a way that is profitable. This manner of use may not necessarily coincide with the "conventional wisdom" in regards to that indicator. But can I not use the same argument in respect of price, volume and, say, breadth? Perhaps the person who feels the need to use indicators has not studied the price, volume and such in a sufficient manner. Beyond that, it is a matter of preference.
For me, I prefer the source. If I wanted to know that a woman liked me, I would prefer to ask her directly (going to the source) rather than using an indirect method such as asking her friends who may or may not be on good terms with her at the moment (indicators). But that's just me.
I agree with you that putting dust bags on hair dryers is not optimal. I would not trust putting my long hair in a vaccuum cleaner to dry it either; it is a length issue for me since my hair is dusty grey. Women on the other hand, I monitor by my personal indicators.
Personnally, Welles' indicator came along too late for me to follow your path. I am mostly a pre-indicator person age wise, so I did focus on just Dow and the P,V relation in the absence of indicators when I started. By inking a 6 months blank chart on vellum, I could make brown lines to, daily, pencil in HLC bar charts and volume bars. It was an osmosis thing and back plotting from the saved last page of the WSJ.
How does a person reason through making money in a setting where an IBM engineering weekly salary is much less than trerading commissions. The edge of the P, V relation when charting was unknown was just inconceivable to brokers even.
My broker (he was coattail trading me) personally caused T. J Watson and Tang of Tang Industries to have to publically state that they were not in negotiations. (I traded Tang from 4 to 22 by calling from IBM in Poughkeepsie over a matter of days using charts).
Obviously the P, V relation is THE fundamental market foundation; it always has been.
As time passed from the 50's there were many inventions that occurred for trading. Some were: computers, copiers, software, webs and networks. And lots of indicators.
To make a lot of money, people adapt their ways. Gosh, it is fun to invent trading stuff. If I were to list 10 things I came up with to help myself make money, I would say that that they all came back to market data. That is a priori.
I liked their utility, however. Before the PC it was realitively easy simply because everyone else was lasier than I. Early PC meant I could sort like crazy. I had a wall with 33 slots for pages. It was an add/delete world then. Stocks appeared to make money with and then they dissappeared for the exit time. That was all Boolean equations, etc.
Many markets got invented too. Old people could do new markets easier than new people could. Leveraging comes and goes. Some markets demand us to trade them because of the continuing leverage.
I went through years of "getting caught" by the SEC. Now they have decided I am not catchable since they have deleted me as a mistake they were making. I trade ahead of the market in multiple accounts (under 15 usually) so this concentration of being pushed shows up. Someone said paradigms and indicators are the same class. If you use leading indicators as a paradigm, then it is like a "clone" of insider trading. Only a small portion of the technical crowd are doing leading stuff. It mostly falls under the heading: "What wasn't that?" type stuff.
Living in AZ makes for a hair drying problem. It is very difficult to keep hair wet here. Like cleaning vaccuums is difficult too; there isn't much to clean.
I do not think it is possible to put too much emphasis on anything that makes money. for indicators, since the PC invention, you have to cahnge all the defaults. Not doing that makes the original default not very useful. Welles excepted.
