Indicator's: Price, Price and did I mention Price? Confirmation: Volume Oh, and sometimes I use a trendline or two....
MACD and Stochastics (when used on EOD Equities trading) still provides helpful advice to the Beginning Trader looking for the 'sequences' of these two indicators to unfold (See 'Bruno R' set up). However, Price and Volume tell the entire story (without the lagging effects of the indicators). Jack has traded for going on 50 some odd years. Back in the day, he did not 'hand draw' indicators on his charts. Out of convention, I still have the MACD and the two Stochastics (5,2,3 & 14,1,3) on my Equities (even though I no longer use them), but on Futures Charts, I only have Price and Volume. Good Trading to you. - Spydertrader
There was a good discussion of a few pages a few years ago at ET about how/why traders traverse from using indicators (ex. Macd, Cci, Stoch et cetera) to price action only (no indicators). Basically, most newbie traders will use what's available in their new charting programs... Indicators. Also, indicators is what is marketed by data vendors...it's what brings clients to their doorsteps. However, after a few years of trading (if still trading)... These traders begin to gain some market experience along with having a better understanding of the price action of what they are trading. Next, as they become more confident in their understanding of the price action... They begin to push aside the use of indicators and concentrate more on price action only. Simply, most veteran traders use price action only while most newbie traders tend to concentrate on indicators that came with that new charting program. However, I don't think it has anything to do with profitability to why most traders switch from indicators to price action only. It's more to do with naturally developing an understanding of the price action after being involved in the markets on a consistent basis after several years of monitoring the markets. Also, I have met some newbie traders that are price action only traders right out of the gate. These particular traders tend to be getting some guidance from veteran traders. Mark
Use indicators as forewarners or even predictors and act on price and EMA. The attached screen clearly shows entry and exit points and leaves enough time (often 4 - 6 hours) to trade. Times shown are GMT. Happy trading, Felix
Mark you are very correct. I am a newbie trader, my experience being long term investing, relying on fundamentals and diversification. Desiring to increase my exposure and actively trade in the market, I too was initially lured to indicators by marketing strategies. I started with reviewing Investools, the mighty MACD, Stochastics and Moving Averages, enter and exit on crossings (green and red arrows) (***note: For anyone interested in Investools, think very seriously against it. Not only will you be wasting your money, but more importantly your time. Learning to rely on a magic indicator will only lead to failure. Learn what is driving the indicators and you will master the markets. there is no easy road to success other than that of hard work and education.) To my saviour, I never proceed in any endeavor without thorough research. I read many books related to trading, most notably those authored by John Murphy, Bulkowski and Steve Nison, (currently I am reading surinotes trade chart patterns and Thomas Dorsey's Point and Figure charting). I began to doubt the validity of indicators as they were all premised on past performance. I chanced upon this website during my research and was most impressed by the generous insight of Stealth Trader, Anekdoten and yourself (NihabaAshi) to name a few. Upon reviewing historic posts I determined for myself the virtue of utilizing pure price action, simple and yet effective. For my position and swing trades I use volume as additional confirmation. For scalping and day trading, I believe that volume is not as critical, however, it has its place in some strategies. IMHO, any other newbie traders who truly desires to be successful, seriously consider learning about price action before relying on lagging indicators which only reflect what HAS happened, no indicator nor person can predict what will happen in the future, current price is the closest to current sentiment. If not convinced the indicators are always available, but then at least you made an informed decision. In this regard, I thank Stealth, Anek and Mark for their contributions to this forum. Without their willingness to share their knowledge, I may have travelled the wrong path.... Health, success and safe trading to all...