Technical Indicators Completely Useless?

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.

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

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.

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.)


BOOM, another one:


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

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.

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:

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.

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.

quite entertaining forum thread here

keep it up

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

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

“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…

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.

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,

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.

I think these are very wise words, Dennis3450. Not only are there many indicators but each parameter in each one of them can be altered in a great number of ways that the combinations become almost infinite. Even a simple thing like a MA can be calculated in many different ways (exp, simple, smoothed, etc), based on high,low, close, median, typical, etc etc etc. and for periods from 1 to many hundreds.

The danger, as you infer, is that you can fit almost any indicator to any particular section of a chart and it will look really promising - then the following week the market moves entirely differently and results in losses, so we refit or change to something else and try again. This does not work so we try putting lots of indicators together that should all confirm the same thing and wait for them to all line up - trouble is they rarely do and one is left wondering which to believe…

Whilst I admit to enjoying playing with various new ideas that crop up here and elsewhere, I have remained with my same basic combination of a few basic indicators that form a whole for many years now and have never had cause to dump any part of it. I only apply it to one currency pair and I now know it backwards and have seen it through so many movements that I can almost intuitively anticipate what comes next. The key for me is that I always watch the price action underlying the indicators and then look what the indicators are, well, “indicating”! - that is all they are supposed to do! If one gives those lines an authority of their own and ignore the real price action then it is not likely to work for very long.

let me clarify, I do not see a moving average as an indicator, for my trading I have the 200 moving average on 4 time frames, Weekly, daily, 4hr and 1hr, this lets me quickly see if the short term trends are in line with long term trades, I only trade in direction of the long term trend ( Weekly, daily) but will not fight a short term ( 4hr or 1hr chart) trend reversal, let the reversal play out and catch it as the long term trend resumes, again for me candle stick reversals at support or resistance makes for good entry points, support or resistance can be the 200 ma on one of my 4 time frames or a previous high or low.

I do like the way you are using Fibs. 1.618 and 2.618 , these are fib levels most traders do not use, and the first rule of trading is to not follow the crowd

Right on the button yet again Dennis. I agree, the bigger problem is the number of indicators and the misunderstanding of them. People forget most indicators can only show us what had already happened, useful if you’re looking for trends or channels, but they certainly cannot predict future movement.
I get dismayed whenever new traders post about different indicators they use giving conflicting predictions, then they post a chart showing 8 or 9 different indicators in every colout of the rainbow.

[QUOTE=Manxx;768206]I think these are very wise words, Dennis3450. Not only are there many indicators but each parameter in each one of them can be altered in a great number of ways that the combinations become almost infinite. Even a simple thing like a MA can be calculated in many different ways (exp, simple, smoothed, etc), based on high,low, close, median, typical, etc etc etc. and for periods from 1 to many hundreds.

The danger, as you infer, is that you can fit almost any indicator to any particular section of a chart and it will look really promising (QUOTE)

+1 on everything you said Manxx,

What kills most traders is not sticking with what they are doing long enough to really get good at it, I am sure most indicators have merit but you have really got to immerse yourself in the indicator to understand all it’s strength and weakness, this is why most loose at this game as they want the easy score. I have been down that road, now I am not looking at any new ways of trading, just becoming more proficient at my current approach.