Most people don't know how to use indicators

Discussion in 'Trading' started by traderkay, Sep 18, 2001.

  1. Most people don't know how to use indicators and assume they're worthless. I don't really buy the publicly available vs. magic holy grail private indicators theory. Indicators can only be so good. And they can only get so much better than the public ones. So if you can't cut it with the public ones I doubt searching for the holy grail indicators will do much justice. Regarding pretorian's style.. I'm sure he's a great trader, but I cannot learn anything from him because he trades from the gut. And I don't have his gut. I have my own gut and I do not trust it. It's surprising to me how many traders on this board subscribe to the gut style. I'd expect more emphasis on objective methods here. But anyway neo asked a question. A good question. And all he got was 1) indicators suck, i use my gut 2) publicly available indicators suck, i use my own and of course i won't disclose them to you. ;)
  2. Traders are not necessarily very smart people. You don't have to be smart to make money.
  3. tymjr


    traderkay: “all he got was... publicly available indicators suck, i use my own and of course i won't disclose them to you.”

    I don’t think that “publicly available” indicators suck. I think that, given a context sensitive set of rules, they can be employed effectively. Dustin appears to use RSI in a profitable manner.

    Regarding the second part of your sentence, I cannot understand why any trader would honestly expect someone who has worked very hard, for many years to simply hand over those precious concepts on a public forum, thus potentially crippling the fragile edge one may or may not have.

    Just a short list of nays:

    1) lack of appreciation
    2) lack of understanding
    3) lack of compensation
    4) potential handicapping of future income
  4. m_c_a98


    It seems to me that indicators are just abstracts and ways of easily correlated various information that the markets generate and which you might not percieve just by looking at the Time/sales. Just like candlestick charts are simple indicators of price action, other indicators get more complex incorporating moving averages, standard deviations, volume, etc. in almost anyway you can think up.

    Ideally I would like an indicator to accurately predict future price movement. But, I don't believe that such an indicator exists. So, I try to concentrate from the ground up, starting with the prints then on to the candlesticks and volume, then support and resistance areas that have arisen in the past. But, my brain can only handle so much information at one time so other indicators like moving average, macd, rsi help filter some of the noise to get quick survey of the landscape.

    Basing a system on just indicator signals might work if you have the right risk management and discipline to follow it. I'm sure systems that use moving average crossovers on 1min charts can be fairly successful providing you follow the system. But ultimately I find the less concentration on complex indicators and more concentration on trade management, you can probably pick any indicator(edge) out of a hat and make it work if you REALLY know how to trade. I'm not at that point yet however:(
  5. NKNY


    M C A98,

    I couldn't agree with you more....

    There is no indicator that will predict the future. No holy grail...

    People should ask themselves if they believe the above statement is true....answer honestly.

    If you believe the statement not to be true and you believe that your success or failure has more to do with the indicators you choose to trade with rather then the trade management that goes on after you enter a trade then you are still evolving in the "trader evolution process". This could take years and many may never get to the other side.

    For me trading is 80 % trade management...20% my gut, and market environment. Also ...I need volatility....I realized I can not trade in the kind of market that we have had this summer....I got killed in the past two months because I could not adapt to the markets low volatility quick enough resulting in a huge drawdown............. But I managed to survive and am now 3 % away from a new equity high.

    You can grab any indicator out of a hat and will notice that some signals work and some don't. The indicator won't make you money, proper risk management after entering the trade will.

    If an indicator is correct half the time, controlling your losses when it's wrong is the single most important part of the trading equation.

  6. That's the secret! Smartness doesn't win ... discipline wins.
  7. NKNY



    Well said.

    Discipline is the key....plan your trade and trade you plan.

    If you enter a trade because you anticipate it going higher(you can not predict) and it doesn't you must exit because the trade is not doing what you planed. If you start the "Oh , let me hold it a little longer... it might come back stuff" (did this for years) you are guaranteeing failure.

    However, please understand that just because you do remain disciplined and follow your plan by exiting your trades that do not act as expected you are NOT guaranteeing success, you are simply "Almost guaranteeing" survivial. And this is a very important factor. I believe that one actually needs to lower expectations and simply focus on survivial, focus on not losing alot when you are wrong as opposed to focusing on profit.

    The less you expect the better you do.

  8. virgin


    Take care of your losses and your profits
    will take care of themselves..
    The best indicator is intuition
  9. tymjr


    NKNY: "However, please understand that just because you do remain disciplined and follow your plan by exiting your trades that do not act as expected you are NOT guaranteeing success, you are simply "Almost guaranteeing" survivial."

    Great observation. I agree.