Useless indicators

Discussion in 'Trading' started by wxytrader, Apr 5, 2024.

  1. BAT31

    BAT31

    Is that a trick question? I say that, because I thought they were all useless.
     
    #31     Apr 7, 2024
    wxytrader likes this.
  2. In defense of indicators... carefully chosen combinations can work.

    I have used indicators for trend, momentum and volatility in strategies with defined rules for many years. I value them for the objectivity they have provided to my trading since my initial efforts as a subjective price action/price pattern trader were unsuccessful.

    I've posted several charts in the past showing how I use them for swing trading and here are a couple of recent ones. Basically, the slopes of medium-term MAs show trend direction, the high and low regions of oscillators show momentum extremes, and candle structure/context determines whether it's okay to enter or not. Losses are kept small using relatively close trailing stops.

    My performance metrics were really boosted when I decided to only trade in the same direction as the slope of a medium-term MA (best results I got were with EMA and WMA). IMHO many trading systems could be improved if the entry signals were only acted on when consistent with the slope/direction of a carefully tested MA.


    CL + ZC charts 4-7-24snip.png
     
    #32     Apr 7, 2024
  3. BAT31

    BAT31

    Hmm, I'm not attacking the veracity of your charts when I ask the following: Does the typical trader, here, trade the four year, daily time frame? I suspect that you have to be highly capitalized to position trade that time frame.
     
    #33     Apr 7, 2024
  4. Thon1960

    Thon1960

    Good point.
     
    #34     Apr 8, 2024
  5. Thon1960

    Thon1960

    Overtrading refers to excessive buying and selling of financial assets within a short period, often driven by emotions like greed or fear. It can lead to increased transaction costs, higher taxes, and diminished returns due to frequent trades. Overtrading often results from a lack of discipline, failure to adhere to a trading plan, or seeking instant gratification. It can also lead to increased exposure to market volatility and higher risk of losses. Effective risk management strategies and sticking to a well-defined trading strategy can help mitigate the negative impacts of overtrading.
     
    #35     Apr 8, 2024