I’ve seen what’s going on the other thread as to your legitimacy or not. And do not wish to get involved in that debate.
Life’s far too short.
However, I don’t wholly agree that the more indicators you add to a system the higher the probability of it succeeding.
I think the higher failure rate of traders has less up to do with method, more to do with heuristics and biases that make us poor traders
Hi @Johnscott31
I won’t disagree on that the tape never lies equally nor does price on a chart.
But you then have to work out your odds with
‘Just the tape info’ and trendlines or Price and trend lines much in the same.
My point is in the educational space newbies are at a huge disadvantage in building their odds in such a manner of analysis because information to build the odds are limited. In fact the fewest amount of data points to do so and by default I believe they are the weakest hands.
A) how many pure price action education services include tape reading?
B) still severely limited in terms of information to build odds to increase probability of price hitting take profit before stop loss
When there is a bunch of speculators at a table the weakest hands are the ones with least odds of winning because they haven’t got enough info to consistently build the odds to increase their probability of winning more than they lose, and the next word is often forgotten ‘sustainably’
This is a visual sequence of odds building towards the market heading to a price target before your stoploss. If you know how to use indicators for this purpose and for probability You can visually map the market in favour of your odds.
I get all that and see your point
But breakout systems for example may not be the best but they do work.
Inside bar patterns do work.
The highest high of the last week, month year or whatever do work.
None of them require indicators.
I’ve done ok from price action systems, I cannot see how an indicator derived from price action can add to the probability.
Particular when you have ten of them all giving off different signals
Now, if you are talking sentiment, flow or breadth indicators I do believe there is merit in their use.
Much depends on the indicators you are talking off I guess.
My preferencd for stocks (CFDs) over forex is there is a wealth of non price based indicators to choose - although I say that I believe that the is no better way a market than from pure price.
If they work consistently why are there not hundreds of thousands of successful traders? They work some of the time…
It comes down to sustainable consistency in profitability
You cannot see it because you are unaware of how to undertake it.
Indicators signal a change that has happened. Visually this can be confirmed. When you have a sequence of changes in the market represented by binary signals and you know what sequence you are looking for (the core strategy conditions) you can build your odds and probability of price heading to your target more often than your stop loss.
Again, you have to know how to use them.
The common misconception is indicators are supposed to indicate a winning trade. Indicators are used to map the market in a traders favour using probability.
Hell if breakouts worked all of the time, I wouldn’t be on this forum.
Are you suggesting that indicator based strategies do?
Maybe I don’t know how to use indicators - I was only aware of them as overbought oversold, or for divergences.
But admit my ignorance is colossal.
As for mapping the market, it can be done with short term highs, medium term, and long term highs.
To say there is only one way to make money in the market is IMO a bit naughty
And that those using price action are somehow weak hands is a bit insulting.
With that said, price action has most definitely become a marketing term over the last few years.
I was using price action, years before I ever heard the name. And traders like Larry Williams have been talking about it since this 80’s.
As I said before, I think there are so many losers, because trading is hard - especially emotionally.
And not because they chose the wrong Holy Grail.
The more rules you add the more you will produce an overfit, if you are lucky the overfit could wok also live for some months.
I never said that at all.
Who has the least data / info to work with?
Probability is the core metric that runs through speculation on an uncertain outcome.
It is common sense and maths that the more data points you use to build your odds the better chance you will have of increasing your probability (if you know how too) of price hitting your price target before your stop loss.
Do not disagree.
And that makes no sense at all. You can’t just use rules as you see fit each rule (i think you mean condition) must sequentially be aligned with another building the odds towards an increased probability.
Don’t dismiss something because you don’t understand it or you will never learn anything
I always predict the price movement!
@Johnscott31 I was disappointed you didn’t reply with an answer to my question on the list.
I think it is reasonable to see when it’s laid out like that it reaffirms my point very clearly.
My apologies @Richard_Able-Trading I did not realise you required a response.
If you are referring to ‘Who has the least data / info to work with?’, totally agree naked price action has the least to work with.
But you could take this whole data thing to extremes such as requiring all the indicators on every possible timeframe, all fundamental analysis from all market participants, all sentiment surveys, COT, PCR, every bank liquidity ratio, all the Fed chairman speeches for the last ten years.
Are we going to include Dow theory, Elliot wave, the Kondratieff wave? Sun spots? Full and half moon cycles? Bradley turn dates?
I mean, where does it all end?
I do agree, one of the reasons I was attracted to technical analysis in the first place (maybe wrongly) was because it summed up all the data there within the price itself.
Making things simple.
I’m a simple person, requiring simple answers - if that means I’m a weak hand or dumb money I can live with that.
I’ve been called much worse.
These days I am more aware of the limits of TA (most of which I think is voodoo), but it’s still a great place to start.
As for indicators I don’t ever recall Jesse Livermore talking about MACD/RSI divergences on multiple timeframes (granted he did commit suicide).
I don’t recall Darvas doing so either or for that matter Ed Seykota, Richard Dennis, the whole turtle crew etc
There are IMO as many ways to analyse price as there are participants and ultimately the successful trader will stumble across one that suits him or her.
It may be your way, it may be mine, it may be a combination of the two.
It wasn’t a right or wrong way of trading point I was making.
Quite simply put the reduction in data limits you on stacking your odds and therefore pure price action is the weakest hand at the table
The traders you speak of didn’t deal with algos and the level of volatility and central bank intervention.
To be clear I’ve never said there is a right way to trade.
However for a newbie learning to become consistently profitable trading pure price action is the most inefficient and difficult way for them to learn.
That’s all I’m saying. Couple that with the fact their odds against other speculators is severely reduced they become the weak hand. I’m sure you are aware FX is a zero sum game. You win some poor soul loses and vice versa. The consistent winner has better odds clearly and consistently. Have reduced data you are quite simply at a massive disadvantage.
Now everyone is entitled to their opinion.
But, I have data to back up what I’m saying otherwise I wouldn’t say it and therefore it becomes more of a fact than an opinion.
Truth is I’m actually trying to dispel the myth that pure price action it is simplified trading.
It is anything but…
Predict and forecast are synonymous to me. But, I don’t predict/forecast anything. I’m realising that I prepare for a likely outcome. That’s the best I can do.
An educated guess. It’s a game of probability.
If I’m doing it correctly, when I’m wrong I’m losing a little; when I’m right I win a lot.
Same thing isn’t it? I’m predicting where the markets are going and then entering where I feel I have the best probability of success.
Yeah, maybe it’s about semantics. Do I know where price is going? No. Can I make a prediction? Yes. Am I willing to bet 2% of my account that price will to 1.2345? Sure.
I suppose we actually are making predictions. We’re playing the game of probablility. That’s it. I agree with you @cashisking86
I always trade based on solid facts and then I predict that it can happen. So you can give it any name, predict or forecast.
I stay updated to the news and then trade accordingly.
I have tried using several charts but none of them worked that great for me. But yes, candlestick charts are easy to read and can be used to make the decisions. But of course, they are also not always right. I think that’s okay because you cannot become a knowledgeable forex trader if you don’t lose money.
Agree that there is no better way than pure price.
We rely on possibilities when trading. Because I will never be able to make a profit with a 100% guarantee in trading. I have to analyze the market and trade above the possibilities.