Hi all, Searching around on this forum one tends to find a variety of opinions on the subject. A popular theme on ET seems to be that indicators are useless, lag the market and are otherwise of no value since they're derived from price. On the other hand, there seems to be some competent market players who have had success with and even endorse indicators. Let's try to avoid a debate here, but I'd be very curious to hear if anyone is using indicators succesfully in day trading to generate signals or otherwise read the day. For what it's worth, I currently don't use anyone myself, but have been playing around a bit with MACD and MAMA (mesa adaptive) and have found some interesting results, although nothing that's consistently profitable yet. I might even be interested in coding a new one from scratch. I just need to put my mind to it. But generally, I think an indicator can be useful in providing a framework or rules to trade from and not just rely on discretion (this looks like a short/long entry). Thanks in advance. Howard
I successfully deleted all my indicators from my memory and computers and and I am successful in day trading. I learnt about those indicators from trading coaches (who were unsuccessful traders). took me quite a long time to realise how useless, how hopeless those indicators and coaches were. If you find indicators useful, then my all means go use it.
Yes. Even though the indicator lags, it helps determine direction or trend. So as long as we are in a strong trend, the lag does not matter. So the benefit of the indicators is determining the trend when the market is trending. Obviously, if the market is ranging we don't want to take a trend trade. So for example if price is moving above and below the moving average, then why take a trend trade. However, if price is respecting a MA, then maybe you will see a trade setup that you can take.
Interesting. Mind me asking you which indicators you are using? Proprietary custom indicators that will remain secret or anything you could share? Thankful for any pointers in the right direction.
Yet lots of people swear by MACD... which is a 2nd derivative of price. Go figure. Range indicators like RSI, Stochastic, CCI, and %R have their usefulness. People who disdain them haven't taken the time to study and learn how to use properly*. (There's more to their proper use than simply "buy oversold, sell overbought".) *The late George Lane made a career around trading commodities and teaching others how to use Stochastics. Doesn't it make sense that if it were "completely useless" Lane would have figured that out at some point and moved onto something else?
I use a double stochastic which is a stochastic of a stochastic, off the shelf stock Ninja. I use it to filter signals and as a signal if I get divergences across time frames. I've used others similarity, including custom MACD and Sto. For my purposes it's not as important what as how. Incidentally, knowing what others use is not likely to do you a bit of good without your doing your own observation, study and testing. My derivative tools are an adjunct of observing and understanding price action and not a substitute.
T/A -- whether tick scalping, intraday, 2-3day, or longer, is like having additional eyeballs on a subject of interest. It doesn't guarantee what you're seeing, and too much can certainly cloud your vision. But I'd no more trade without T/A tools -- properly tuned and focused -- than I would trade with a finger in one eye.
Every trader uses "indicators", as indicators are "things in any appearance" that give an indication of something. Can be a graphical representation( lines, colors,...), a mathematical one (ciphers) or any other imaginable thing.
Indicators mainly (primarily) promoted by charting software as bells & whistles packages and forums by traders that say they are useful...follow by other traders wanting to know how that trader is using them successfully. Books are secondary promotion of indicators and then followed by trading coaches. Simply, even if you wipe the trading coaches from your memory, you're still going to be bombarded by promotions of indicators by charting software and any forum you're a member. Its like walking outside on a sunny day and you just can't get rid of your shadow that's following you around. wrbtrader