When Indicators Don't Lag

So divergences forecast the direction of a turn if they do but if they don't they don't?

You may want to rethink this.

 

The main reason you guys are so afraid of consecutive losses and require a high winning ratio is due to small targets, that would otherwise be 'eaten up' by the losing trades. Increase your targets vs your average stop and you can forget about theoretical high win systems.

 

Correct. Nothing in life is 100%, your price based trades also don't always forecast as you would want them to.

 

That's not what you're saying. What you're saying is that the alleged forecasts are the result of chance. One would have to be a fool to increase targets, widen stops, and increase size based on a system that relies solely on chance.

 

Oh boy.

Is that true you wrote a book about trading?

 

I don't know of any professional traders who would trade on that basis. Unless of course they were trading OPM. In which case, anything goes.

 

You must only know traders that take crumbs of the table.

 

They have thoroughly-tested and consistently-profitable trading plans and the discipline to follow them. Their trading plans are not based on chance.

 

So are you saying there is no chance of them wiping their account? Bullet proof huh?

 

If it has been thoroughly tested and it is and has been consistently profitable and they have the discipline to follow it, then there is no chance that they will "wipe" their accounts.

Given that so few "traders" have plans to begin with, and given how many fewer have plans that are thoroughly tested (something more than buy if it looks like it's going to go up), the above may seem incomprehensible to someone who has not gone through this process. But it's how one makes a living at this trading his own money (if he's trading OPM, he can come up with just about anything that sounds good, whether it actually works or not).

Even a system based on indicators can work if the above criteria are met. A system based on planetary alignment can work. But, getting back to the subject of the thread, the lag inherent in indicators must be accounted for through extensive testing. One may believe that indicators forecast or predict or whatever, but unless that belief is supported by more than anecdotal data, the system will eventually fail.