Technical Indicators Completely Useless?

Trading Discussion
23

90% of my trades last no more than an hour and are solely based off of anything but fundamentals. In long term trade fundamentals may play an overall subtle role to the outcome of a currency pair. But being a [I]speculator[/I] and day trading most news or events hold very little value to making a drastic price change.

i trade the stock market as well. And when good news comes out on a specific company/stock overreactions quickly get disseminated within the same trading day, and often for whatever reason a stock may go down in value even with good news. News seems to play a larger role on a stock’s daily volume for the next day or so, causing a chaotic environment. Yet, in many cases it doesn’t play a huge role in the direction of a stock by end of day, especially if they were gap ups in after hours and pre-market trading.

Due to stock trading, my opinion on news and fundamentals is maybe altered towards the average Forex trader. Positive fundamentals be correct with an overall trend after running over many hills and through valleys. If fundamentals do not make a very big difference in one tiny specific stock, I highly doubt currency pairs will be affected by fundamentals. Plus fundamentals always change.

Yet, emotions, patterns, indicators, etc. (technical analysis) never changes and is always consistent to the charts, they’re obviously more accurate in the shorter time frames, but still none the less they work for long term investments as well.

The best method though would probably be to utilize both, because they compliment each other. Technical analysis is good for finding a good position in a trade, yes. But, without looking at the fundamentals even technical analysis could be much more than that because without any fundamentals you can easily find trends and trading patterns that exist within the charts. Therefore, those charts basically just show you the overall consensus of how the currency pair’s fundamentals are looking, without knowing any specifics on the fundamentals whatsoever.

Both, fundamentals and technical analysis, reflect one another.

24

Look Lexys, I don’t care what the scientists say, since my personal experiments dictate otherwise. Obviously they are not traders, and obviously they don’t know how to draw the tool correctly and which ratio’s to ignore and focus on. I have explained this to you before. These are also the same people who believe that day trading is gambling (which it is for all noob traders in fact, scientist or not). In reality, listening to a scientist what he has to say about trading is like listening to a book worm about sports. I can give you tons of examples but it doesn’t make any difference because you will just rationalize it as “cherry picking”. In fact, I don’t think you’re gonna go so far as saying support and resistance lines don’t exist either? Cuz I don’t know if you noticed but, they usually are 1.618 times removed from each other. I admit my first thread I made was premature, since I just discovered it and was still drawing it wrong (2.618 extention of pullback instead of last high/low + first (1) and second (1.618) resistance broken, then enter at 2.618). So if if you think the universal golden ratio would somehow be exempt from markets then I don’t know what to say… In fact, it’s completely illogical and a total facepalm. I give you something for free which could change your trading forever. Now if you only opened your mind and backtest my strategy like a REAL SCIENTIST WOULD DO you would stop your stupid rationalization.

Also, your comment about astrology is completely off the mark, you cannot compare a universal mathematical constant like the pi or the golden ratio to an ancient religious belief system. Jesus ****, just go home Lexys, I didn’t know trading could make one so cynical, but I guess that’s what happens when your edge is still so small after so many years…

25

People, people, let us put an end to personal accusations…

Let us call it a difference of opinions… Not everyone can agree all the time on eveeything…

26

It is clearly working for me. I have zero patience with people like this, always trying to take the intellectual higher ground… And no, it is not good because I wish it to be good, it is good because it is backtested.

27

You might not know this, here in baby pips lexy is regarded as a very educated fx trader. So when a new trader who only have 17 post to date . Posts like this. I don’t know what to say.

28

i dont care who lexy is. Think for yourself instead of following some external authority figure.

29

New trader? Am I hearing this correctly? New trader? I have been trading for 3 years straight, an average of 10 trades a day. Just because I just joined a stupid forum doesn’t mean I’m a new trader. The only reason I joined was to share my discovery (my initial post was premature, so I might make a new one in the future, OR I might not, cuz obviously none cares anyway), NOT to join the friend club. I have friends in real life.

30

Just a trade I took just now. (Yes, I even trade in the weekend sometimes.)
1M chart, 5 min. expiry (it’s binary options, but I’m probably going back to spot in the future when I up my capital.)

trade 29 may 12u.jpg700×370 29.5 KB

31

BOOM, another one:

trade 29 may 12u30.jpg700×357 28.2 KB

32

Now, this style of trading is a SKILL and you need practice to determine the right support/resistance levels. It’s not easy money.

33

As rose by any other name would still smell the same.

Like most you think your “discovery” is something new. Hate to tell you bro, nothing new here in how you trade. Not even a hint of an original thought. Like most, we are that naive that we think we can bring something new to the table. Alas, we can’t.

So we learn to trade what we see and move on. No point getting upset because someone more learned "might’ be critical of our methods.

As for skill, whom are you kidding? Skill has nothing to do with it. Experience has. I might have the skill to hit a golf ball 300 yards, experience has taught me it not always the best option. I will agree on the not easy money comment.

My personal view, don’t have much time for technical indicators. They are just mathematical representations of price and time. Even everyone’s beloved candles are nothing more than that. So price and time are the only things I care about and what my work revolves around. And as a day trader, fundamentals have little importance other than what TIME new events will occur.

34

This is a war that nobody will be able to win. Is a fact. Wins would be the skirmishes as a whole. But who are we kidding. This sum up my mood now :wink:

35

Sorry, I apologize, I see now that bad/apprentice traders are unable to distinguish between good and bad systems/strategies. I expect too much of you guys. Good luck on your journey, I thought I could shorten it but it seems that was just naïvety on my part.

36

Sensible comment BBB.

Technicals, whether one wants to call them indicators, tools, predictors or whatever, are precisely what you say - mathematical representations of price and time and nothing more than that. If price movement is random then there is no method that can suggest where price is going next. But we all work on the basis that price is not random, rather that it is going somewhere erratically. The objective then is simply to try and identify the direction of the core underlying movement and to pinpoint where price is likely to pause or reverse.

Price is not random because it is based on changes in supply and demand for the actual product, currencies, shares, etc. Changes in supply and demand are based on changes in economic activity, interest rates, company developments, monetary policies and so on. But the complication is that these changes are often slow and unclear. Economic data is often contradictory, backward looking, crude estimations, and often revised with the next release. For this reason even fundamental analysis can only be an educated calculation of the probable future direction.

When there is a prolonged and/or major structural change in situations it can be a long time before its impact fully filters through in the market price. For example, pension funds do not, indeed cannot, move all their funds during the next candle on a 5m chart! Therefore, it follows that especially short-term trading is primarily speculative and, as a result, disproportionately impacted by technical methods.

Whether we talk of S and R levels, MACD, RSI, MA’s or Fibonnacci retracements or extensions, patterns, candles or any other such method, they are all lagging in that they require at least one reference point prior to the present price. If I were to only say that the price of commodity X is currently 123.45, without some other data there is nothing technical that can predict the future direction.

On the other hand, if we only consider the fundamental economic situation we again only have the latest data to go on which is already history. And we all know that there are maybe as many economic predicitions as there are analysts. And even if our view turns out to be correct, the price may move significantly against us before it finally fulfills our prophecy.

There are, therefore, two things that can be considered: (1) what fundamental changes are occuring and what impact they may have on price, and (2) what is price actually doing right now regardless of the factors that might be moving it.

The shorter our trading horizon the more predominant is option (2). Not because technicals are better in the shorter TF but because fundamentals are less revelant. In addition, because there are so many traders in the shorter TF’s, often using the same mathematical formulas to arrive at the same technical levels, there arises a self-fulfilling tendency due to the concentration of orders around those levels. The more popular and wide-spread the method the more orders will be seen there. This can be equally exploited by short term traders and ignored by positional traders since the self-fulfilment impact is a short-lived hiccup in the long term trend.

Price has been moving for much longer than the existence of technicals and we should always remember that any technical analysis is only a visual representation of what price has been doing and is doing right now. It does not have the power to determine what price must do next or where it must stop.

37

quite entertaining forum thread here

keep it up

sorry i had to add a useless post from my side aswell- couldnt resist

38

Hi,
Is this meant to be humour?

We all have our own ways of doing things, and our own reasons. Doesn’t mean one person is right and anyone else wrong, we’re just different.

Namaste

39

“Namaste”

  • “an ancient Sanskrit greeting. Translated roughly, “The Spirit within me salutes the Spirit in you” - a knowing that we are all made from the same One Divine Consciousness.”

That’s really nice! :slight_smile:

…And kind of appropriate for a community like ours where we should always remember that we are all equal and all on the same side…

40

After all, I’m a astrological LEO. We leo’s are really arrogant, but we’re also really humorous, smart and good lookin. It’s scientifically proven.

We all have our own ways of doing things, and our own reasons. Doesn’t mean one person is right and anyone else wrong, we’re just different.

Exactly…

I don’t think Lexys is a bad trader at all, but I doubt she’s (?) on top of the ladder either.

41

The problem I see with indicators is the shear number of them, I trade on FXCM Marketscope and that platform comes with 56 indicators, and you can download dozens of others and some they charge you for. If you sell your sole to the indicator gods then you will be forever looking for the holy grail of indicators, and as soon as you have a loosing streak with your latest holy grail indicator you will dump it in favor of another. This will likely continue until you deplete your account. If you insist on trading with an indicator then I would suggest you pick one and stick with it for a whole year and become an expert on that indicator. Only then can you make an informed decision of it’s merits. For my own trading I have been indicator free for 3 years and have no reason to ever go back,

42

That’s very good, but I always seem to get in trouble when I go TOTALLY FREE, and by this I mean I always need a moving average to instantly tell me the big trend. Trading with the trend like a dog has always been the biggest challenge to me, ironically, because ye, I like to pick tops and bottoms, but this only works on pullbacks, never against the trend. So often I switch charts and if that MA wasn’t there to tell me BAD TRADE I would often pull the trigger prematurely.