I have seen and read tons of videos and books about TA indicators and other techniques (Fib , GANN, Eliott,..etc) I didn't get convinced as for example in Fib it relies on a magical number !! and Elliott is very subjective and relies on the idea that market repeating itself! but what about indicators like MA,stoch,MACD . are they reliable with price action or do I just stick with naked price action and dig deeper into it? I really need some advice.
Most people I believe get wrong idea of indicators, it is easier to understand them "after" you have become very good with charting and want to expand one's knowledge or you want to make it easier to use automation, very tough to program charting patterns, and not talking about seven or eleven labels most give them like triangles or wedges, but what has happened one bar or past three hours, patterns of patterns of patterns. Or as simple as six points from a low, which low, the strength of that low from where? Whereas you can find an oscillator or unique moving average that can mimic six points. Let's take "RSI's", I have used them since 1980s, so for a solid 25 years they were on my charts and they are not on my charts, I know what the RSI is doing in regards to the chart, I can see divergences even when I add volume to the mix. Oscillators are a bit different as I have added Quantum Physics to get final indicator, this is not to get an edge on retail, but Hedge funds, am more interested in outfoxing the fox. An trying to find how low is low or how high is high within waves, and fibs/Gann don't seem to come close and price itself doesn't give a clue, and trendlines are like anything else-sometimes. Indicators are tools to give you understanding if they are giving you percentage edges or not, back testing will never be the same results in actual trading however, can be better or worse, but should come out near. And when you back test, have to include reductions of one tick and fees, if this seems too much, then you need to change the system and making too little return. And farther back you can back test using tick data, more reliable the data coming out of the test. Am friends with a very good "Fib" trader, she been using them since 1980s, but uses them differently than most, much more conservatively, far less trades as she waits for multitude of different timeframes to have same area line up. She says by waiting you have several different groups all entering at same time, and I believe what she says as when price hits these key areas, price seldom comes back. Unless your really gifted and your account shows this to keep scores, you have to have well developed trading plan, as entries means the least unless you scalping for ticks. So what you asking is all TA good for entries? That is where being able to read price comes in for managing the trade, using MAE/MFE helps, but overall entries is least of your concern, entries will do one of three events, get in early, get in late, get in right. I been playing too long at the game, almost all that I started trading have taken their dough and fully retired to play golf or piddle in garden. I can't stand to do either, so I am developing less systems than a year ago and those already developed, finding way to make them better. The only way you can make something better is knowing an area is not your best work or happy enough to let it be. If I was starting out, learn price well, learn it so well you no longer have to think about it, like how do you tie your shoe. Good luck.
The maximum number of off-chart indicators to use is 1. Only use that one if it tells you something you absolutely cannot already see by looking at the chart. What the indicator says should be just confirmation of what you thought you could already see happening on the chart - ideally, use the indicator to give a reason to NOT enter the trade.
I agree with you completely about those "other indicators": they seem to me to be a mixture of witchcraft, numerological nonsense, hindsight, selection-bias and bullshit - sometimes quite amusing, actually: there just isn't a single chart or event that their adherents can't explain away within their own frames of reference, if necessary by inventing new terminology ("extensions"/"truncations"/"interpretations"???) to do so. But objective, duplicable, proven, non-cherry-picked evidence? Not so much! Yes, I think they can be, actually - in conjunction with a good understanding of price action first, anyway. I don't use any of them myself, but I have colleagues who do (not as "trade entries" in themselves, of course). MA and MACD, anyway, I think can genuinely have some value in expert hands (Stochastics I'm far from convinced about - personal opinion only). I wouldn't necessarily reject indicators totally (though eventually I did decide against using them, myself, admittedly), but digging more deeply into price action must be a good idea and a good starting-point?
unfortunately, all people I have seen or read in their books are using indicators as part of a trading system to define a trade entry not as a tool beside price action . if you can recommend a source to learn about them correcly, it'd be appreciated
I hear you; I'm admittedly a notorious skepchick but can't help wondering whether that's partly because it's much easier for most people to make income as a vendor (directly or indirectly) than as a trader. My own experience is very different from that, anyway. Volman and Brooks mention and use MA's ... but this probably isn't really what you meant. I think Ross writes about indicators, too. I don't have his books here at the moment, but I suspect that they're in Trading the Ross Hook and in Daytrading, too. It seems to me that a viable purpose for MA's is trend-determination, with a view to directional bias for looking at price action for entries. (Example: if the 15-period SMA is above the 50-period SMA of any given time-frame, and both are rising, then there's currently an uptrend within that time-frame ... though of course it's also common for that to happen at the same time that there's either no trend or even a downtrend in other, different, time-frames.) I believe there's probably some merit in MACD divergence, too, but am no expert at all on this subject.
The best advice...backtest whatever TA you're planning to use and you will not need to listen to any anonymous people at a trading forum. By the way, you don't need to be a programmer / coder to backtest any TA method. You can do it manually without codes but you need to have a strong understanding of the TA and be honest at what you're seeing on you charts along with having excellent documentation. Something else, two different people using the exact same TA on the exact same price action will apply the TA differently...producing different results. That's the art aspect of TA due to using the exact same TA in a different trading plan. Simply, do not be a lazy trader and rely on opinions of others...it works...it does not work. Do the work and get your own answers. If you trade (simulator or real money) before doing your own backtesting on historical data of your trading instrument...don't blame the designer of the TA method. Thus, its your sole responsibility to be properly prepared to trade. wrbtrader
That's the essential problem on ET. First of all, there is the problem about defining what is TA and what are indicators. Second problem is that some are smarter or more creative (out of the box thinking) in using them. Third problem is that, because of the different outcomes of problem number two, the conclusions can be different, and all conclusions can be right. But only for personal use. Is a hammer a useful tool? "unhandy andy's" will say no as the only thing they can do is hit their own fingers. carpenters will say yes as they can build a wooden house with it. Both are right, based on their personal experience and abilities, so only valid for their personal situation. Whether TA indicators are useful or not depends on YOU. You make the difference. That explains why some traders make money and some always lose. The trader himself makes the difference.
you are absolutely right. However, I need to study these indicators first IN A RIGHT WAY then i can test them to see whether i can use them or not. As I told Xela , most people who explain indicators do it as entry signals within a specific system they use not the indicator itself and its usage.