Hmmmm, First of all let me preface this by stating I wouldn't even consider myself a rookie when it comes to using technical indicators. I really haven't ever done a whole lot of it, just toyed around with it in a very informal way. When I decide I'm going to hit a stock I do go through the trouble of spending 15 minutes charting with various tools to see if there's an obvious pattern, but that's about it. But my point, well I suppose it's more of a question, is aren't the only useful indicators those which the other traders in the stock are using? If you decide you are going to use your favorite indicator but none of the other players in that stock are using it, what use is it? Aren't we all trying to figure out the other money is doing and reading? Say your in the stock long and your indicator says there will probably be a swing at 27.65, but the other money is using an indicator that is predicting a swing at 27.53 and get out at 27.50 and pushing the stock lower don't you screw yourself by using your indicator and not theirs? The only thing that has ever made me money consistantly in the stock market is getting in the head of the other investors. It doesn't matter one bit what I think the stock should do. It only matters what everyone else thinks it should do and therefore an indicator is only useful if someone else is using it, or if their trading patterns accidentally mimic one. Am I off base?
Your ideas about trying to get in the head of big money and what they are doing is great, but really only applies when you are tape reading. Technical indicators lag a bit behind the market. Dont get me wrong, I still like them. But there is no one indicator that a group of large institutional traders are using on a particular stock as the de facto standard. Institutional traders have a job to do whether it be to buy and or sell a large quantity. Day traders (retail, prop, etc.) are all playing the price action game to get in front or meet the big money head on so to speak. As for those of us who use and find useful the "art" of technical analysis, well, we all probably look at different things. But one thing is for certain, none of us, including myself, is nearly as good as the trader who trades based on price action, because that guy knows what to read as its happening, without some technicals telling him. Furthermore he probably doesnt care. So, to recap: 1) Big money (Large Institutionals) doesnt trade based on technicals, if they have to buy 1,000,000 shares of ABC, then they have to buy 1,000,000 of ABC. If they have to sell likewise, then they have to sell likewise. Period. There is no "technical analysis" or what have you that comes into play. IF anything, those traders who are responsible for these large buys and sells probably look at price action and talk to the market makers and such and such. In essense they make the market. 2) Really good traders, watch price action to see what people in point number one are doing. This is a skill, and in order for a person to become a truly good trader, that skill will eventually have to be learned. This person can use technicals as well as price action to make their entries that much more solid. 3) The rest of us rely on technicals because we dont have the experience and furthermore, there is no one technical that anyone uses. Hope that helps.