You should be aware that this is one of the questions you can ask ten traders and get at least 12 answers!
Personally I'm in the PA corner. I believe in some indicators being a kind of self fulfilling prophecy.
Though most indicators I find completely useless if not damaging to my trading.
But the important point is that this is my personal opinion.
Some people trade with indicators I find useless and some trade with a lot of them. I am convinced that out of that group some are making an awful lot of money. There is not one indicator that generally works or doesn't work. It all comes down to preference.... If it works for you, it works, you don't have to ask why.
So the right question would perhaps be, what do indicators tell YOU personally that YOU personally don't see that clearly or easily in pure price action itself?
Indicators can be a useful shortcut. If you can find an indicator that correlates with the kind of price action you're looking for, that is.
For instance, I use an RSI for a swing trading method that I've been trading lately. I can use a stock scanner to search for stocks that meet these RSI characteristics on the daily chart. This gives me a short list of stocks to look at. Saves me a ton of time and I'm not sure how I could scan for stocks based on price action alone.
@vvhg_ I knew what was coming when I listed this,lol but I wanted to see if I had missed something thats the great thing with a forum. If you watch you might learn something different I try to learn everyday, I'm a people watcher when I travel, you'll be amazed what you see!
@worldwary-I AGREE this does work I used same back in stocks days but now Ive been in the ES for 4 mths so with this leverage I only watch 1. I used to Love AAPL and Cat
Typically indicators reduce price action, so they will show you less than price. If you are lucky redundant information is eliminated.
Time-Frame Transfer: Taking into account prior price action not shown on the chart
(2) An indicator may show you something that you cannot see on your chart. If you have a 5 minute chart for today, it does not show what happened yesterday or last week. If you display last weeks value area on today's chart, there is some value added.
(3) You can display statistical information. Price does not show you a volume-weighted average and standard deviation bands. The indicator can process lots of data, and inform you, when price exceeds certain statistical levels, which are associated with a probability.
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