In my experience, there is no real difference between indicators since they use the same historical data. You can dress up the data in a bunch of different ways, but fundamentally it's the same data.
If you could trade off indicators alone, it would be trivial to automate such a system, which implies that this doesn't work or else it would already be automated but then all the bots would fight each other which would change the market and break the automation.
Indicators are only useful as support for whatever trading hypothesis you've developed.
The following 4 users say Thank You to skellington for this post:
I dont use indicators other than an EMA and even that just summarizes what I am already seeing with price movement. When I started many years ago I "believed" in stochastics, then I "believed" in MACD and found all of that was just reassurance that something other than my own eyes and reasoning can "read" the market.
The following user says Thank You to richardrgayton for this post:
There is not much edge in setups based purely on price. I wouldn't say that makes such indicators useless though. They can still provide information that might supplement real edge. Or at the very least remind you of things.
- SpeculatorSeth
The following user says Thank You to TWDsje for this post:
TBH I struggle with reading through data from the DOM to make any trades, any resources that can help with that? I do watch it but I haven't figured out how to make it any more useful than what I see on the chart with price and volume.
I use moving averages and VWAP more or less to help confirm my bias for a trade, but especially in trending markets they can not give reliable entries. But I do see patterns especially on the hourly and 15m charts that will at least give me confirmation I need for a trade.
The following user says Thank You to bobbybones for this post:
Indicators are just math based off of price action and/or volume. Nothing more, nothing less, and certainly nothing "magic". Enough hours of screen time and you'll learn to see what half of them show you just by glancing at a chart. They are just their to help answer these three questions imo "does this thing I'm trying to trade look cheap, expensive, and how is it trending". The follow up question to that being, "realtive to what". That's up to the trader, it could be different timeframes other instruments etc. I'm gonna throw in a link to this tweet, think about how an indicator could help you (or not help you) answer the question it poses. Personally, I'm a fan of anchored VWAPs to help me visualize how cheap or expensive something is relative to previous price action or key economic events (Fed speak or earnings reports for example). Nothing crazy, just the way I like aid in trying to find if something looks "mispriced". I.E
the markets are wrong and my dumbass is right and I'm convicted enough in that notion to bet on it. That's my rant I guess. Hope it helps this conversation.
The following 2 users say Thank You to Stone78 for this post:
I use indicators. Most standard, 1 custom and 1 modified (Linear Regression channel). The custom basically gives my entry signals and is realtime not lagging, the rest are for context like EMA for trend or range, Prev High/Low,Close and Pivot points for prior S/R. Much of the setups are based on PAT's system which I started futures with.
Don't think I'm talented enough to trade only the DOM
Adding my charts from today for clarity, much said about indi's being not much help, I disagree. I trade ES/MES 2000/1500 tick charts and watch a 3X HTF 6000/4500 tick. No wavy lines just a leading indi and some that show the previous S/R.
To each his own rings true! Good Trading all!
The following 4 users say Thank You to Tripken for this post:
I really think indicators can be invaluable visualization aids dependent on the trader and their style. A useless indicator to one person can absolutely help another with their trades. When it comes to indicators I've found it helps to think along the lines of, "what do I want the market to show me" then find an indicator to fit that or build it yourself.
The following user says Thank You to Stone78 for this post:
To me that is like saying you don't need a speedometer to drive. Correct you really don't need it but it can be nice to have one or a gas gauge or engine temp etc.
I have created so many indicators over the years (decades now) based on other indicators and also just making them if some idea pops into my head that I want to explore.
I trade mainly /es and I fade intraday in direction of the longer term trend (looking at the last 8 hours vs the last 3 months). I use atr/vix for position sizing, bollinger/moving average/internals to determine if I should be buying or selling, $tick and bollinger for entry and previous high/low/ohlc4 for exit. A simple example entry would be if price is moving up daily but is also at the bottom of shorter term bollinger and tick hits -1000 go long one unit when tick comes closes back below -500. Then for exit I get out at previous day high or ohlc4 or more often go do something else letting the trade sit for a few hours.
The following 4 users say Thank You to three86 for this post:
It's refreshing to see someone catching on to the fact that price based indicators are essentially the history of the market. The market couldn't care less about history. The market moves at all because big money uses market orders to drive the market and icebergs to stop or manipulate market until they get their whole position on or distribute their size to get out. I challenge anyone to find a successful hedge fund that uses price based indicators. There are many tools to measure order flow- the dom among them. Congratulations on your success....
The following 3 users say Thank You to dan1957 for this post:
