indicators pretty much never test well under serious studies. As someone above said, it is a derivative of price, not a predictor. The main supporters of indicators are usually the confused, newbies and paper traders. Try and find someone who will provide longterm, solid proof (broker statements, audited returns, etc.) of indicators. Instead you will get beliefs, opinions, and other statistically useless claims.
Gosh not another "Best indicators thread". There's already 9 pages of "best indicator" type threads. There is no best indicator, end of story. If you have a solid trading plan you can make money with any of them. They were all created for a purpose, you just have to know when, and how to use them.
These indicators all utilize historical price for their determinations. Let me ask you this....Do you look in the rear view mirror of your car while driving down the road? Well. Price is a result not a cause.....THINK!
I have RSI on my charts, but the better I learn the markets, the less I seem to glance at it. I usually pay it no attention unless its way, way, way overbought/sold. The only math based indicator that is part of my system is the 21ema, and it is merely an area of interest to me on my chart, I do not use it as a concrete spot to buy, sell, or place stops. I just like seeing what price does relative to it.
Of course you look, a good driver, through experience, knows how to use a rear view mirror. A good driver is also using "historical data" and making decisions from that data all the time when driving. He knows that the car in front is traveling west at 60 mph and "most likely" will continue at that rate and direction. But he is prepared for changes because he knows it will happen. Same deal when trading.
Take a moment and think. Did successful traders exist prior to the invention of the computer and electronic trading? If such individuals existed, and assuming some chose to use charts, they had to hand draw them. What indicators did these old school chart artists add to their charts? Price and Volume. Good enough for me. - Spydertrader
Thx for the above guys - good points made Just to up the discussion a notch maybe I have been experimenting with an indicator of an indicator and have come up with something. Place a Macd on your chart and then put in a stochastic oscillator of the Macd not the price. It is faster than the Macd amazingly
What ive learned over time is to NOT try and be cute and fancy. Stop trying to outsmart the market by attempting to come up with some secret mix of indicators. Use what others have used for generations. Forks, fibs, trend lines, channels, etc... those are the best indicators. kon
Try and find someone who will provide longterm, solid proof (broker statements, audited returns, etc.) of NOT USING indicators. Instead you will get beliefs, opinions, and other statistically useless claims. Ignorance is no excuse for not using indicators.
What matter is not which indicator one uses but how it is interpreted and analyzed within the context of a complete trading strategy. I know of a trader who made millions of $$$ using just moving averages but - from what I gather - in a very ingenious way.