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Indicators are liars
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Indicators are liars

  #21 (permalink)
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Its all about comfort in my opinion. If you make money and have indicators "confirming" your actions, then thats awesome. Whatever helps you execute and manage trades smoothly. However I tend to think of all other inputs besides price as bull. But I still yearn for something extra to help me with my decisions, maybe one day

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  #22 (permalink)
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Fat Tails,

I was also feeling kind of jerked around today. This evening I looked at a scrunched together chart with a few trend lines and it became very clear that we formed a perfect wedge today. I expect a breakout, either up or down tomorrow.

Do you have any experience with Andrews' Pitchfork or Median Lines? I just came across some materials - both video and print - by Timothy Morge. It looks like it may have some potential. He calls it a "leading" tool as opposed to a "lagging" indicator. He makes it look so easy. I did use it a little bit today.

Good trading to you,

Mahlon

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  #23 (permalink)
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There is a thread of the same title at ET which was started by the guy from Pivot Farm. It gave stats on SR, but he stopped posting after the beginning of 2010. I now see he's selling what was once free. Worth checking out if you like this sort of thing.

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  #24 (permalink)
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I am fairly skeptical of most indicators and in fact most technical analysis. (Although I am convinced some of it is valid to an extent)

In my opinion the things that move markets are transparent to indicators. Indicators show what IS going on, but not WHY. Indicators will help you confirm your thoughts on price action, but IMO you should have another reason to align your position with what the indicator is suggesting.

I am still new to this, but I think things like market profile and volume would be ways to get the other reason.

For example If I see a market trading extremely high, much higher than it's usual range and I see the beginnings of a reversal in the price action, a Lower high confirmed with a lower low for example, I would be much more inclined to take the short, because in my mind there is not only the confirmation that the price action is changing, but also the added reason that sentiment as a whole may be thinking the price is overextended.

I think the sentiment behind the markets is probably the most important thing, whether or not some type of indicator could capture that other than just telling you what is going on in that instant is debatable.

Take for example recently the news out of Greece and the subsequent dropping of the Euro. Many people using fundamentals would have made a lot of money on shorts during that time, no indicators needed. Indicators would show the market dropping, and would be correct, but only during the fact. What happens when the panic has passed - an indicator might give a sign of reversal, but how would you know if this is a true reversal with a proper move to the upside without any other confirmation?

Anyway, these are just my thoughts at this stage as a newbie.

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  #25 (permalink)
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Twiddle View Post
I think the sentiment behind the markets is probably the most important thing, whether or not some type of indicator could capture that other than just telling you what is going on in that instant is debatable.

Quite true. The sentiment of the market is revealed by how the market reacts to news or to technical barriers.

Markets suffer by design - half of the crowd is buying, the other half is selling - from bipolar disorder. It is permanently trying to validate or invalidate one of the two scenarios, and the sentiment of market participants has a considerable impact on the result.

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  #26 (permalink)
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Over-use of indicators does not help. There are simple (like MA) and useful indicators that help in trading. It also depends of the type of charts (minute Vs daily/weekly) used.

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  #27 (permalink)
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joe11 View Post
Over-use of indicators does not help. There are simple (like MA) and useful indicators that help in trading. It also depends of the type of charts (minute Vs daily/weekly) used.

Each indicator seems to carry a useful information. So you put lots of them on your chart. The chart becomes clustered and the indicators contradict each other. There is more information than can be reasonably digested.

Which indicators do I scrap? All of them are so useful. If I take them away, I will certainly lose an edge. If I scrap the linear regression indicator, it will only take a few setups, and I will make a mistake that can be attributed to the missing indicator. So if I take it away, it will result in a loss.

So I still have too many on my chart and do not know which ones to delete. I have by now created a sub-directory of NinjaTrader called Cemetery, where I put all the indicators that I do not intend to use anymore. Never touch them again, or they will return as zombies and plague me again.

Also I have put some indicators off my chart and created sound alerts. I do not need to watch the chart, the sound will alert me even during periods where I suffer from an attention deficit.

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  #28 (permalink)
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mahlonhersh View Post
Fat Tails,

I was also feeling kind of jerked around today. This evening I looked at a scrunched together chart with a few trend lines and it became very clear that we formed a perfect wedge today. I expect a breakout, either up or down tomorrow.

Do you have any experience with Andrews' Pitchfork or Median Lines? I just came across some materials - both video and print - by Timothy Morge. It looks like it may have some potential. He calls it a "leading" tool as opposed to a "lagging" indicator. He makes it look so easy. I did use it a little bit today.

Good trading to you,

Mahlon

Hi Mahlon
which are the 2 indicators in panel 2 in this chart

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  #29 (permalink)
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I believe in fibs. Natural order type stuff. Universal laws. Underlying principals that all nature moves to. A little esoteric I know but it seems to work.

Most indicators seem to complicated for me. I cannot follow a MACD, bollinger, RSI, ADX, etc all at the same time.

So I looked for something that would frame my believe in fibs in real time and give me a bit of confirmation on my though process. I have found that, at least for now.

Really its three things: Dynamic Fib Lines. futures.io (formerly BMT)CMA for a bit of confimation and a keltner channel with the outside bands set to transparent. I use this for potential reversal signals only.

Chart ends up pretty clean, I have a frame of reference for price in terms of the fib areas its trading in and I generally know what to do with price depending on where in the fib landscape price happens to be.

Still working on executing this of course but my research has shown this to be a valid method of looking at price. I also use a daily chart to determine the current day's potential movement and if price shows itself to be validating my hypothesis, then in theory anyway, that day's trading should be somewhat simple.

Simplicity is the ultimate sophistication, Leonardo da Vinci


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  #30 (permalink)
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rajafx1 View Post
Hi Mahlon
which are the 2 indicators in panel 2 in this chart

Rajafx1,

Panel 2 has a momentum indicator overlaid on top of the derivative oscillator. The derivative oscillator is available on NT support forum.

Panel 3 is bid/ask delta with the gom recorder.

I don't use these 2 panels very much. I pretty much watch price action in the main panel. I like what I have seen with the pitchfork so far and am planning to pursue that to see if I can make it work for me.

Good trading,

Mahlon


Last edited by mahlonhersh; August 8th, 2010 at 01:01 AM. Reason: spelling
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