I listen to a professional forex trader today and he said something that I don’t really understand,he said that indicators don’t work( Bollinger bands, keltner Channels, MCAD indicators etc). So I want to ask a question is it true that indicators doesn’t work in the market?
Different indicators/price action/patterns work for different people. I focus more on finding market inefficiencies as that is what works best for me.
Would you care to give the name of this “professional forex trader”?
Is name is Dapo Willis. He is a very popular forex trader in Nigeria. But i don’t know if i should listen to is advice or not, Because I want to avoid my major mistakes in the market.
Indicators do not work well as entry signals, which is mostly how they are used. for similar inherent structural reasons, they also don’t work well as exit signals.
But they can be useful to illustrate the general condition of the market you’re looking at, highlighting aspects of what price action is already showing and possibly making it more apparent. Used in this way they can also help in distinguishing between a good opportunity in one market and a very good opportunity in another.
Indicators can work but you should back test them to see how often they work. In my experience 95% of indicators are useless alone. Using them in combination with other indicators or techniques can increase reliability.
(I have not started trading yet so get others opinions as well)
they can be tools but not the complete answers,a child uses water wings to learn to swim then takes them off
it depends what you use them for
a hammer will work to knock in a nail; if you need a button sewing onto your shirt it’s no good
indicators are the same
if you use them to appraise market conditions (e.g. “is there a trend”?) they can help you a lot
if you try to use them to signal trade entries, then no: you almost certainly won’t make that work or become profitable, that way
(it would be brilliant if you could, wouldn’t it? but then 95% of traders would be winning, instead of losing, of course)
IMO, one indicator on its own is not good enough to correlate a market movement, but a few selected ones could give a better consensus - albeit market sentiment could be contrarian, and that’s frustrating.
I use Ichimoku 8-22-44 and MACD histogram 3-10-16, which put me in the ballpark picture, and also PSAR 0.1-0.4 to indicate a change in direction - bearing in mind it’s a lagging indicator.
I also consider that relying solely on indicators is lazy trading, and if you could recognise and learn how to utilise candle chart patterns that repeat themselves, you’re on your way to becoming a profitable trader - or a trader that doesn’t lose as much…
What that professional forex trader think it works?
Good question. The answer is YES and NO. If you use the appropriate strategy for the indicator, YES it works. Otherwise, NO.
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He said indicators doesn’t work ( moving average etc) but he said price action works. Is he right? I don’t know whether I should learn more about indicators or price action.
And the question of all questions in the trading world these days: What is Price Action?
Price action is the study of price movement in the market.
This is probably the “best” reply…however, I’d take the other side of the coin that
I disagree with this and would say MOST indicators do not work well as entry or exit signals simply b/c they are lagging. IMO, there is only 1 indicator which is not lagging and is pretty powerful/consistent in predicting order flow-- stochastics. Certain patterns lend themselves to reliable price action entry/exit signals.
Nothing is black and white in trading which is why so many people fail. They’re looking for a definition of “how to trade”- when they would be much better off approaching it as an art. Literally. Is there a definition as to how an artist must paint their picture? No- so, that is how price action analysis and overall trading must be managed - to an extent, as there are hard and fast rules, leverage, trading exit/entry plans, capital commitments etc
@ore123 That definition of Price Action is also valid for technical indicators. Isn’t it?
Indicators can work to give confidence about a trade as they can add confluence but taken in isolation I don’t think they will help
I’d suggest you search NoNonsenseForex on youtube. I’ve watched a lot of his video’s recently and they make a lot sense to me! He trades with an alogoritm of 5-7 indicators.
He has tested over 2000 indicators and he says he trades for a company.
But why would you use an indicator from the 50’s that was made for trading stocks? Isn’t it better to use indicators that are made more recently for the FX market?
I’ve watched a few of them, I like his delivery style and his thought processes. I’ve watched enough to understand I don’t need to watch many more.