hi all (beginner here)
not sure how to ask this without sounding strange, but are indicators really that helpful? I’ve read a lot about them and a lot of people use them, so I guess they are helpful, but I cant seem to find any other info which is not obviously stated by the candles on screen. I mean, like after some bearish candles, the moving averages/macd/rsi etc will cross over… Isn’t it like a repetitve info from the candles? Also its not uncommon to have something outside a bollinger band, or in rsi overbought/sold area and remaining there for several more candles.
So i’m like am i’m missing something and maybe i’m interpreting them wrongly but how and why should such indicators by used?
All indicators lag behind current price because all take into account historic prices in calculating their current value. You can shorten the indicator’s time-frame but you cannot completely eliminate the lag - so a 8-bar RSI reacts earlier to price change than a 14-bar RSI - but it still lags behind price.
The conclusion is that an indicator cannot be an accurate trigger for action - it will always be late. But it can be a useful guide as to what sort of market set-up price is currently moving in.
So if you have just one MA, and price is above it and the MA is sloping upwards, that indicates that the market is bullish over the time-frame of interest. It cannot deliver a buy signal, but it can suggest you should be looking for a long entry point.
Hi, the indicators work on the basis of mathematical calculations, so from time to time, you may find divergences on the chart. The most important is to use the indicators to find a statistical advantage on the market. Combined with good money management, you can achieve a positive return on investment. Regards Greg
thank you all for the input.
but what kind of suggestions can they hint?
I did come across divergences examples on the internet but when I spotted them they didnt work out well for me.
I personally mostly use moving averages when its not clear where its going, just to confirm if the price is in a trend or not, but thats about it. I’m sure more experienced traders can easily tell that at a glance with no averages.
It’s not possible to explain the interdependencies of the common indicators and in which situation what kind of indicator provides good information about the future price move just in some sentences.This is really a very complex theme. My advice is, go through the school of pipsology here, the most important indicators are explained in a very good way, and you really learn when and how to use them. If you don’t use them in the correct way, you will wonder why your trades always head in the opposite direction…
Also its not uncommon to have something outside a bollinger band, or in rsi overbought/sold area and remaining there for several more candles.