I feel like indicators were invented by old time trading gurus so they can publish a book and make money off of it.
For example “Elliott published his theory of market behavior in the book The Wave Principle in 1938”
John Bollinger also published a few books.
Are these guys the same as todays youtube/instagram trading gurus?
Ralph Nelson Elliott is one of the 5 Titans of Technical Analysis, including Charles Dow, William Gann, Richard Wyckoff, and Arthur Merrill.
Elliott Wave’s are a theory, not an indicator, and Ralph Nelson Elliott can’t be compared to the influencer traders you see online today.
No.
They’re their forerunners, though. The climate, the audience, the techniques and lots of other things have all evolved and changed almost out of recognition, over the intervening generations.
The question you’re asking in the title is a totally different one from what you’re asking in your post.
There are hundreds of threads here (and in every trading forum) addressing the question of whether indicators “work”.
My answer is that they work in the sense that they display exactly what their programming instructions instruct them to display. Whether their doing so is of any value to you is a different matter altogether. How could it not be?
There are as many opinions as there are people (and indicators).
You link to something about Elliott waves (not really an “indicator”!), for example: personally, I’ve never seen anything other than anecdotal evidence that these have any value at all.
And I would say the same about many other, similar things, too.
But there are also some indicators that “work for me” in the sense that I probably wouldn’t be trading profitably without them.
I speak only for myself, but I would imagine that’s also true of “many of the very few” people who are trading profitably.
Indicators certainly get a lot of bad publicity from people who habitually hope they’re going to be some kind of universal trading panacea, only to discover that they can’t trade profitably any more with them than they could without them.
Personally, I find a few indicators very highly useful for the very limited range of purposes to which I’m putting them (but I wouldn’t, myself, dream of trying to use them to tell me when to enter into a trade!).
I do think, in principle, that you’re completely right to be skeptical about people - past and present - finding it far easier to make money through providing trading-related information, services, goods and education than to earn their livings through trading.
But let’s not forget that there are some good things out there, as well.
There are some consistently profitable hedge funds using indicators, after all. And a few consistently profitable retail traders, too.
For all that, though, there are also many groups of people posting in forums who dislike indicators a lot. There are people doing no research or backtesting and relying on “information” from Youtube; there are people trying to use indicators (e.g. PSAR, Ichimoku) for purposes totally different to what they were invented to do; people who believe in what they call “confluence” and/or “confirmation” who apparently think that if they use multiple indicators they’ll have a higher probability of “predicting correctly” (this is really ill-informed!); people using them on much faster charts than they were created for (most were built from and for daily charts); people using stock-price indicators to try to trade forex, etc. etc. All of these people eventually end up disillusioned, and of course many blame their “tools”.
Just be careful whom you choose to believe and trust, before drawing your conclusions! 
Do you think “indicators work,” @Mato85 ?
I do not like most indicators. They are too confusing. I only use moving average and volume. All other indicators are not good. Price is best.
Hi, I personally don’t see how an indicator could work. It’s just a simple math function with some input from the market.
I’m more inclined to believe that AI models could work because they have memory and can learn from data.
What makes you think hedge funds are using indicators?
My guess is that they use much more sophisticated and proprietary tools.
That’s exactly why I think it couldn’t NOT work.
But we mean different things by “work”.
I think you’re saying that you don’t think you could profit from using indicators, and I agree with you about that.
The “memory” and “data-learning” components have been done manually, in the case of indicator design. The process was similar.
Everyone I’ve ever known who has worked for one has told me so.
Some former hedge fund and investment bank traders and risk managers have written text-books in which they describe (in broad terms, without disclosing settings) some of the indicators used on their trading-floors.
Many of the professional “hedgies” interviewed by Jack Schwager in his “Market Wizards” series of books have said so and described and discussed some of the indicators used in hedge funds, some of them even pretty openly - so it’s not exactly a “secret”!
That, too. :).
And in addition to all the points made above - you’ve perhaps heard of the standard “French settings” for the MACD indicator, @Mato85 ?
What you might not know is that they became known under that name after the publication of a book called “Dynamic Technical Analysis” written by the former trading floor risk manager of a huge French hedge fund which (like many of them) used the MACD indicator, among others.
Also, you can see for yourself that all the authority websites like Investopedia state that indicators are very widely used by hedge funds and other institutional traders. I wouldn’t imagine you really think they’re all mistaken about that?
I don’t trust any indicators but they can be useful to give confidence when to enter/exit a trade.
That’s an interesting insight! I’ve heard about the ‘French settings’ for MACD, but how exactly do they differ from standard ones?
That’s an interesting take. Do you think MACD works better in certain market conditions over others?
I don’t trust them either but at times they are useful. So do you often use it?
Depends on which strategy I am using, sometimes I refer to them a lot, other times not at all.
Oh, I really look at them very differently from you, then!
I think they can be useful to give confidence of overall direction, but I wouldn’t ever want to use the to time entries or exits at all.
The standard ones are based on daily charts and the 6-day week (for stock-trading).
12 and 26: 12 represented two weeks, and 26 was the number of trading days in the (average) month of 4.3 weeks.
These 12 and 26 numbers have the same basis as those used in the original version of Ichimoku Kinko Hyo, 9 and 26, of course, because that was also based on daily charts, stock-trading and a 6-day week. 9 was a week and a half, and 26 was a month again.
I don’t want to offend anyone, but people using these original settings to trade forex from faster than daily charts - and especially people “recommending” them in PDFs and on Youtube and so on - really are living on a different trading planet from anyone actually making a living. And it shows.
The “French settings” for MACD, used on the trading floor of Crédit Lyonnais and Crédit Agricole and later by various European hedge funds, were 9-19-7, eventually arrived at by trail and error, and overwhelming institutional backtesting and forward-testing, although the third figure’s by far the least important and significant.
I don’t use it, myself, but I think that like most indicators derived from MAs, it’s generally going to work best in trending markets and less well in ranging ones.
Indicators are just a derivative of historical prices. Price itself is on a random walk. If indicators are used for trade actions, derivative of randomized historical pricing of such only help randomize the outcome.
When the indicator formula is learned, we should be able to get a basic idea what the Moving Average C/D is doing, if RSI is Overbought/Oversold, Fractals, ect.
Thanks for explaining, based on my conclusion, French-based are more appropriate for short-term price movements. As for Ichimoku, it works best when analyzing trades with the Japanese calendar year in mind.
I’d agree with this, certainly.
It’s surprising, actually, what a wide range of different settings people use in different places for that MACD indicator.
The lowest numbers I’ve seen routinely used for its settings are 3-10-16 (Linda Raschke - she wrote a lot about it). The highest were 35-85-35 (that was a little group of math/comp-sci academics in a university). They were certainly all people who found it vauable.