The Hierarchy: Supply/Demand Price/Action Time/Sales Volume Technical Indicators Supply and Demand is something that we all wish we knew ahead of time...but will never know...Price/ Action is a result of the Supply and Demand...and is the closest thing to an immediate indicator...Time and Sales is a result of Price/Action...and is the next closest thing to an immediate indicator...Volume is a result of all the above...and is the last closest thing to an immediate indicator....Finally, Technical indicators...Bollinger Bands, MAs, STAOs etc. are all mathematical averages of one kind or another...they serve to smooth out all the above and give a visual reference...because of this they are not an immediate indicator. Many traders get burnt because they do not pay attention to the immediate indicators...although Technical indicators can give a trader the flow and general direction as to where things are heading...they do not give the trader ample time to react when things change suddenly. The trader who uses no technical indicators, has the ability to paint the picture in his head...the only problem he has is not to be distracted to the point of losing his focus. The trader who uses Technical Indicators has a visual reference that he can view at any time...the only problem is that he may not have immediate notification of a change which could hurt him. A blend of both immediate and averaging indicators is best, provided that the Trader has a good understanding of how each one works..... and more importantly...how they can support and and compliment one another...the blend is up to you.
Indicators are like your speedometer and RPM dials in your car. If you cant drive, your gonna crash and burn. They cant help you. If you can drive, and do nothing but stare at them, your gonna crash and burn anyway. Keep your eyes on the road You can drive fine without them, but they are nice to have around to keep you below the speed limit (read patient), or notify you of an issue that needs attention. peace axeman
Every indicator is potentially useful to good trader. But, as Michael Jordan said: "Players make plays - Plays don't make players." Nitro
of course the skill of the participant is important, perhaps even paramount. but this is true in any endeavor. isn't this an obvious truism? we don't need a basketball player to tell us this, do we? but does it also follow from this that "Every indicator is potentially useful to good trader"? NOT if you have a lick of sense! (lol) price & volume are all a great trader needs. everything else is a derivative of these, 2nd order d. 3rd order d. and so on. all MJ needs is a basketball & hoop (price & volume), and going one-on-one he'll beat everyone he plays, no matter how many fancy plays (indicators) his opponent throws at him. why? because MJ is a GREAT "trader"! price & volume - that's all a great trader needs.