Site Administrator Swing Trader Data Scientist & DevOps
Manta, Ecuador
Experience: Advanced
Platform: Custom solution
Trading: Futures & Crypto
Posts: 49,975 since Jun 2009
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The majority of people in the forum will not agree with what I am about to say. Does this make them wrong? My answer is both a yes, and a no.
Yes, I think they are wrong if they disagree. Am I entitled to my opinion? Sure, and I also respect people that disagree with me. But, I also believe what I am saying to be absolutely true, and I think if you disagree with me, and you think indicators are the answer, then you are wrong.
But -- also a "no", because if you had come to me years ago and beat me over the head nonstop and tried your best with nothing but the best intentions to shove this information down my throat, it would not have worked. I would not have listened. I may have even agreed with you, I may have tried to copy you, but in the end I would not have listened. Maybe my lack of listening was not my intent, but it is what would have happened.
Human beings need to learn for themselves. Copying only gets us so far, we must do it for ourselves to truly understand it and appreciate it. It is the experience that counts more than anything else. And by that is my final answer, which is that people are not right or wrong in a black or white kind of way. There is a lot of gray.
Let me put this another way. How many of you have "learned your lessons" when it comes to debt, like credit card debt. Ok, how many of you tried your best to instill this into your children, your friends, and family members -- to please, please not repeat your mistakes but learn from them. Ok, how many learned vs. how many went right on and made all the same mistakes you did. Now, I hope you see my point.
Indicators are not the answer.
Indicators are not the solution.
Indicators are not the holy grail.
Indicators are not the reason you lose money.
Indicators are not the reason you make money.
Indicators are not why you got stopped out.
Indicators are not why you hit your target.
Indicators are not what told you to enter a trade.
Indicators are not what told you to exit a trade.
Indicators are not the answer.
Don't believe me? Disagree with me? No problem. Trading is not being right or wrong. Trading is about developing your own method, your own "system". And more than anything else, trading is about knowing yourself.
So if indicators are not all of these things, then what is?
You are the answer.
You are the solution.
You are the holy grail.
You are the reason you lose money.
You are the reason you make money.
You are why you got stopped out.
You are why you hit your target.
You are what told you to enter a trade.
You are what told you to exit a trade.
You are the answer.
Does this make sense to you? Does it kind of make sense? Does it make no sense at all? Do you believe it, do you question it? Are you having an "ah-ha!" moment, are you cursing my name?
The point I am trying to reveal to you is that you are controlling what is happening, not an indicator.
Are indicators valuable? Do I use indicators? Do professional floor traders who make millions of dollars a day use indicators? Yes. But the indicators are being used only as a small supplement to you -- your mind -- and that is what is so difficult to learn. Indicators can be useful, but only when used in the right context and by the right person with the right experience.
If you are questioning whether or not you are the right person with the right experience to be able to use indicators to help your trading, and not hurt it -- then the answer is no, you aren't. You will know it when you are. It will be one of the greatest moments of your entire trading career when you realize this, everything will change, everything will be so clear.
i think that YOU have to learn what the indicator is tellin YOU and i think YOU have to learn what the chart is telling YOU,i know some traders that can trade with a blank chart and i know some traders that need indicators but both parties have to know what they are looking at and how to read and interprit what they see...sharky
I agree with you 100%. In the past 7 years i have spent thousands of hard earned dollars on all kind of trading books and systems. I have had charts that looked liked they should be in an art gallery. I kept jumping from one to the other thinking they were no good. Then I made a discovery that it wern't all those systems that were the problem.
IT WAS ME .
Since then I have been working on my mind using meditation. My charts are now much cleaner and I dont get a headache looking at them. My trading has improved and i dont have to think too much.
To anyone about to go and purchase that holy grail , I would say take that money and invest in some self improvement method that will help you discover yourself. You will save yourself a fortune.
The following 3 users say Thank You to yiman for this post:
I agree, I have been confronted with the fact that, since the market is always changing, indicators will only work to a certain point, after which theyll become obsolete, and traders will need to change or review all their systems from scratch..
Price action, on the other hand, is allways there.
There are always double tops, breakouts, trendlines, etc..
I believe indicators are very useful to spot divergence and trend strenght.
But that price action will ultimately give us the purest confirmation our analysis.
So we should pay more atention to price action and look for certain points that alert us to what we should do.
I love this aproach, but then again i have to thank to indicators to alert us to a trend loosing strenght, to prevent us from a bad trade...
Are there any threads regarding this? I mean in a practical aproach?
I have been reading maney psychology and money management threads as well as some "indicators are not the answer", but all with very theoretical points of view of why it should work...
Isnt there any thread that we can discuss techniques, alerts and our personal discoveries?
Im thinking about starting this thread but i didnt want to be repeating if it already existed (to maintain order in the forum, and not fill it with unecessary threads...)
best regards,
Fredy
The following user says Thank You to FredyMegaG for this post:
The legendary trader Joe Ross would agree with you. I own two of his best books, Trading by the Minute and and Trading by the Book. A pure price-action guy. Loads of examples and he walks you through tons of trades, bar by bar. Books were $150 each, but great chart reading stuff.
The following 2 users say Thank You to hotdog for this post:
Same Joe Ross - but the "hook" is just one of his techniques. Not really enough for a whole book, IMO.
The other books were actually written for his family to take over his trading business when he was sick. They were originally to be only inside info for the family to teach them his methodology and tricks. He later decided to release them to the public. I paid $150 each.
indicator can help if you know the basics of trading (Price action)
we always been told "the trend is your friend " so why not use an indicator like (Trend_bar 2 by bigmike) and join the trend .
with todays markets you want to trade trending markets like CL , 6E , 6B and with even 1 indicator and simple Trend lines you get the job done
Especially for beginners, Indicators can help as milestones on the highway. For intermediate and master traders they help as confirmation of their analysis of trend direction or counter trend, entry and exit strategies.
For each trader, based on their trading style, 2 to 3 indicators of their liking which are profitable takehome dollars every trading day with win/loss ratio > 1 (more than 50%) are good enough.
For wannabe or new traders, from the lessons I learnt, No need to overload indicators on a chart. Either Win or loose, max 2 or 3 trades or scalps per day.
The Yes and No answer. Price alone by itself on a chart is an indicator.
i have attached my my settings also the hollow bars were "paint on close" by Big mike (thanks mike) which i played with but its not in my template any more.
as for the buy/sell marker this is a system that i got it from my friend.
I tried many indicator and its just waste when i am losing my confident and then again the horror of the markets haunt me .So i have these theory . small tf indicator should accompany with the longer one. and the longer tf indicator just wont work better with small tf indicator. but that just an added feature of ninja. The important thing is I MUST SEE THE RANGE hope it helps
Manage the ONLY thing that you can control: your losses.
Trade to trade well; do not focus on the profits. The market determines the profits: the only that that you determine is the size of your losses.
i agree with you ...
It's got all the ingredients of a masterpiece... discretionary, focus on S/R and a distinct lack of the devil's work (indicators) in combination of good money management.
Causality is the relationship between an event (the cause) and a second event (the effect), where the second event is a consequence of the first.
my 2 cents
Everybody knows that indicators are price derivatives, but those who actually knows in details who work certain indicators definitely will use it with profit.
However others prefer something "pure", i.e. price or volume or range and in details knowing how it works will profit from that too.
The key, seems, is to know in details how works what you use and whether it fits your personality, because spending a lot of time with something better to have it comfortable.
P.s. but all that like on show, if you are sitting faraway from stage you are seeing less than those who are just a few steps/meters away.
RANGE - what I mean is chart that use a VALUE based like range bar or renko. so examine ONLY the range that u trust much!
Why Value based- like range bar or renko. Because that's how I define my RISK e.g. I use 20 renko for gbp/usd and my possible losses is 20+20 PIP minus or 40 PIP
There are two types of indicators: those which you personally choose that help you to view the market optimally and/or make your own personal trading decisions, and those that are "common" to a large group of traders and are essentially self-fulfilling prophecies.
The first types of indicators are optional, because nobody else is really reacting to them, and so it's just your personal preference whether you like to use them or not. The second type, however, are important for everybody to be looking at, even if you don't use them in your personal trading decisions.
For example, anyone who is daytrading without having at least the following 2 EMAs on their charts is at somewhat of a disadvantage:
20 period EMA on the 5 minute
20 period EMA on the 15 minute
You don't have to have a 5 minute chart or a 15 minute chart open, but if you don't have these lines drawn on whatever time frame you are looking at, it's like not being aware of important resistance and support levels that 80% of the rest of the market is using. Sure, you can always detect that a trend is slowing down at these levels using price action or other measures, but knowing where these lines are ahead of time and how other traders will typically react to them is a big advantage.
Now personally, if I was designing a trading system from scratch, I probably wouldn't have chosen these particular periods as being very important, as I think that there are probably better ways to view the market... but my personal opinion in this case is irrelevant, because so many other traders look at these things. Since tons of traders follow these averages and place their orders around them, if you don't have them on your charts you are missing some valuable information about support/resistance areas in the market.
There are other well-known MAs on different time frames that are also used by a number of traders, which become self-fulfilling prophecies as resistance/support areas as well.
So I would say that while many indicators are not really necessary, the more common ones like the two I mentioned are very useful for "spying" on what other traders are looking at and taking advantage of them.
The following 2 users say Thank You to FBJS for this post:
What if you had positive expectancy without these indicators? If anything you'd have less to worry about if all you had was price and volume and thats it.
Alot of people claim to trade without indicators on this forum but then they through in a couple moving averages here and there... Moving averages are still indicators!
Well, that can be interpreted as you like. I use no indicators to trade. But I use some averages as support to my eyes, because the actual price is a fraud.
Causality is the relationship between an event (the cause) and a second event (the effect), where the second event is a consequence of the first.
I never said that you "needed" these things to trade. You could always just trade with a completely bare chart, as I have in the past. Technically, you could just trade with nothing but a price ticker if you knew how to do it.
My point was that these MAs are not just any old indicators that you might choose to use, simply to frame price action for yourself. They are actual, real areas of support and resistance that thousands of other traders are reacting to, so not knowing where they are is exactly the same as not knowing where other areas of support or resistance are in the market. Regardless of whether you use them as part of your criteria for entering/exiting trades (and I don't, personally), it usually helps to know where they are, just like it helps to know where the previous day's high is.
You don't need to know this stuff to make money, it's just an advantage if you are able to process that additional S/R information without getting too confused from information overload.
The following 3 users say Thank You to FBJS for this post:
I've tried to get across the simple point, on other forums, that focusing on data representations diverts attention from the far more important issue, which is that they have no idea how to trade. A proficient trader could take just about any charting setup, and after an adaptation period trade it. Meanwhile a newbie trader will lose money, indicators or not.
It's just like a pro tennis player can do ok with just about any racket, while a newbie still sucks with the best racket available. You see? It's about the skill and not the window-dressing. Looking for the chart setup that will lead to success is like looking for the shoes that will make you an awesome basketball player. Good luck with that. You'd be far better off practicing with some comfortable shoes rather than shoe shopping all the time (or shoe evangelizing... "why would you mess with reebok when nike air is the original and most reliable"...)
The following 3 users say Thank You to Richard for this post:
Thank you, great post as always.
I'm not sure, whether I know complete list of EMAs better to have on chart, I will call it : just to see general direction of the market, but it seems apart from mentioned 2 EMAs there should be more 2 or maximum 3 EMAs.
However I stopped to look what retailers do, as it's really noise, not to offend them and not to tell something bad, I really feel sorry when they got problems, as I'm, in principle amongst them, but retailers never know exactly what is going on market, they always "in between" that's why so much pain, so much losses, a lot of emotions, little certainty and almost complete fear about all that stuff.
I want to repeat I really feel sorry that a lot of retailers falls into trouble, but that is different issue.
So, I just keep 1 eye on their activity or even part of 1 eye - it's not making market
What I'm really trying to do is to find out how to see correctly activity of big money, big money who really trades intraday, I'm not talking about most of institutions with deep pockets, they win mostly due to size of their pockets and some insider info, but in principle most of institutions are in fact quite the same retailers, so it's not worth anything to see their activity, they are loosing money as all others do.
But who's play and games I really want to learn to see, as I've mentioned above, big players who trade intraday or manage their positions intraday as they are those who making all that game, after them go big smart guys like GC, which move and reverse market on more long term basis.
Of course idea is not new and a lot of guys trying to do that, but big money also not so stupid to make show of their activity a lot of their entries and exits hidden inside retailers activity and just sometimes, not always, so price/volume behavior could show what they did or planing to do. That is really how market is working.
They are not feel hysteria, they are not feel greed, fear, because they just trading.
Again, they are not trading against market, they are trading against crowd, "they are selling to crowd what it buys".
I saw their "work" a few times, when all other market enter or exit positions they already did it and often they are at another side of bid/ask.
Of course, seems that pro has their "groups of interest" : bulls, bears, neutral, very big money who do what they need.
Sometimes they fight, i.e. well know bulls and bears, but anyway they has "consensus points" where they are agree with each other so no any fight, of course, seems they are not always bulls or bears, they are not standing as last hero in front of freight train, so they quickly can change their "nature" to make money. Also seems, they has territory which belongs say to bulls and to bears, however again I would not define them just like that.
So, understand their principles and at least some part of their thinking will be really interesting.
I think that this statement goes directly to the heart of the matter, but the problem here is that some people are using different definitions for the same set of words.
When some people say "I think that you can/should trade with indicators", what they are saying is that you should use indicators for your buy/sell signals. Meaning, when one line crosses another line or some such thing, then you enter/exit your position. It is this type of "indicator trading" that people like Lynx21 (and myself) would say is not very useful, especially in intraday trading. As he points out, things move too fast for that type of trading to be very successful, and order flow/price action is what it's really all about.
However:
That doesn't mean that indicators are useless. This is where we get into the second definition of "trading with indicators", which is how I do it. I use a couple of moving averages and bollinger bands to help me to frame the price action / order flow that I am seeing. 9 times out of 10 I will see/feel price turning before an indicator has given an official signal, just by watching the price action itself along with market structure.... but this doesn't mean that the indicator itself is of no use. If used correctly, it can give you a framework in which to interpret the price action, and that can help in certain situations, especially when markets are moving very quickly.
For example, if you have a long and a short moving average, their relative angles and positioning can tell you a lot about where the market currently is, and so when you start to see a certain type of price action occurring, those moving averages can help you to interpret it in context. Do you need them? No. Do they help in any way in generating trade signals? No. But they can help in giving you a kind of "visual shorthand", that at a glance, can tell you what type of state/position the market is in. It is especially useful on a visual level if you have multiple time frame charts up with the same moving average plotted on all of them, as this can visually help to "sync" things up between the charts. Of course, some people find this type of thing confusing because they find that it interferes with their ability to read price action, so if you are one of those people then you should definitely just clear your chart completely and look at only price, because that is by far the most important thing.
Each person has individual preferences for what looks and works best for them. So if you want to use indicators to help you to "frame" price action, then go ahead. But as Lynx21 says, if you use them for your trading signals and try to trade mechanically in some manner, especially intraday, you are going to be in trouble. Even if you somehow could make money this way, you would never be anywhere near as good as if you learned how to read order flow and learned to detect changes in supply and demand.
The following 2 users say Thank You to FBJS for this post:
Lynx,
Thank you !
That exactly I've stated above and that exactly I'm trying to learn.
I did already some steps, which shows that, seems, I'm on the right road, but I've not yet structured that stuff and still have some blank spaces.
I've just watched market and noted that when retailers starting to do anything pro already did that and retailers just jumping from on wall to another, pity, but we are doing that.
I've also noted that pro keeps in mind certain levels and ranges, but they are not exactly those what retailers used to think and/or pro often using that in another way.
It would be just great to see you staying here for some time.
P.s. I use a few "multi" MAs just as "indication" of "common" market picture/levels.
If I want to be a buyer of a market I like to wait until there has been more than normal selling activity. If I want to be a seller of a market I like to wait until there has been more than normal buying activity. It doesn't take much on my trading platform these days to keep me happy.
The following user says Thank You to ArtCole for this post:
I have spent many years using many indicators, and I'm now down to just a few. I won't go so far as to say they aren't the answer, but you really have to figure out which ones work best for what you want to achieve.
That I'm trying to learn now to see correctly.
How you determine or measure when more than normal selling activity or more than normal buying activity.
Trade 7am-10am cst only. 30 m chart with avg vol and pay attention to open price of bar, 5 m chart with auto trend and better vol, t&s, and many hours of screen time. My first entry may not always be the right one but I don't give up on my trade until the market tells me I am wrong. Learn to use a 30 m chart correctly because I believe it can tell you a lot about your market.
Thank you for advice !
Seems that time is used most of all by pro to manage their positions for next day, thus main volume is usually there.
As far as I understand you are doing 1-2 max 3 trades on 1 instrument per day.
If not secret are you using fixed stops/profit target ? and what stop/profit target ratio you are using ?
I will look more deeply in 30 min chart !
hope it helps
