Importance of Indicators

Beginner Questions
1

Hello everyone,

this is my first post in the forum, i ve been reading it though for about 14 months, went through the school of Pipsology etc.
Well, as mentioned, i deal with Forex for around 14 months, blowing several demo accounts, testing systems and experimenting.
One thing i consider confirmed after this time, is that Indicators SUCK! I mean, they might be necessery for EAs, but in my eyes this leads EAs to suck too, since they re based on them. Their signals suck, are 50% right, according to coin flip.
They only tell you what happened before, but you see that on your charts right?

I need some advice of experienced traders, if i should keep indicators in mind, or just trade based on Pivots, S/R lines, channels, candlestick patterns, correlations and Elliot Waves.
Do experienced traders really make profit using this crap called indicators? Am i just uncapable of using them properly?

Thanks for your time.

2

Personally I don’t use indicators, I know traders who do use indicators and algos to create bots and have done very very well for themselves. But these are custom programmed algos and bots and are sold for 7 figures. Anything you pick up on the net and are not paying that much, i doubt will be worth anything. I think S/R pivots and other classical tech analysis will be fine and able to create profitable systems. I don’t use Elliot waves because there is no confluence between experts as in if you give it to 2 different experts you get 2 different answers. This decreases the chance of ‘self fulfilling prophecy’. I personally believe the best set ups pop off the chart and are blatantly obvious. if your spending time searching for the needle in the haystack its probably just best to sit on your hands.

3

As you suggested, if you understand how any given indicator is derived, you can basically look at a chart and have a pretty good idea of what that indicator will be saying at any given point in time. The one time having a plotted indicator can tell you more than you can eyeball on the chart is when you’re looking at historical comparisons. For example, ATR plots volatility and it can be useful to see where that is relative to historical standards.

4

Thank you very much for your answers!
I guess i ll keep trying to understand classical analysis first and keep my hands off of indicators to keep it simple, until i get the hang of it…

5

Hey Bud, yes, MOST indicators do stink. But it depends on how you interpt them, really…

Its all history, but when you get a few differant one coorilating, things happen as you expect them to.

When the price is rangein, at that time, some work very well, but YOU need to adjust to the Price action and voltility at that given time… First, you need to know the averages of times of day when things range, or things have a tendency to getting wild.

Ea’s work, if they can adjust themselves, or have certain times of day, to act appending to the Price action, just as you Manually have to do, right?

Like Stoch, is Horrible for a wide price action setting, and MA’s are great, JMO, this is what I have found thru my 1000’s of hours of chart time. Sure, many said, " Indicators are trash" but I had to find out why, myself, but I learned them well.

Now I use MA’s and ASI ( accumilative Swing Index ) and Stoch, 14-3-3 with 50 Level, and thats for basicly to get a Center of the action, to use with my ASI…

MA"s For Oanda Java Set-up

WMA-14-green
WMA-20-yellow
WMA-25-purple
WMA-30-purple
WMA-35-yellow
WMA-40-red
SMA-14-white

Rules, Check in 5M TF, or have both 1M & 5M side-by-side,
Rules apply to both, same strat, just 5M gives " Clues" to whats to come, more less, and you can even cycle up further, its all the same story…

To Long,

Entry-White < All
Exit- White/Yellow cross ( upper MA)

To Short,

Entry-White > All
Exit- White/Yellow cross ( Lower MA )

6



7



8



9



10



11

If you want o use this on MT4, Here are the settings I came up with,

LW 14 Median,
LW 20 Median
LW-25 Median
LW-30 Median
LW-35 Median
LW-40 Median
S-14-close

12

This is the system I have used this entire wek, and put it together last Friday, thru Sunday,… Did alot of manually backtesting. And I am now making a consistant 10% + daily on this. You really have to ge the feels, plus of course know your S/R, which, I , personally use the " 00 "'s and “50”'s

Not saying your results will be the same, as Im a very fast and " In the Game " when Im scalping, But looking for a larger pip take per trade, and this seems to work prety well…

The guildlines are my personal feeling, because when they break those lines, its usually over, or can knife ya in an instant.

When I scalp this system, I try to always go with the 5M TM trend, and measuring the strenth by the postition of the white line. small scalps, can set TP a pip beyond the MA,s in favored direction… Meaning, you go Short, you TP should be on the bottom end of ALL the MA’s…

Or, Fibs, or whatever, but this gives a pretty good indication of what COULD be coming,

If your patiant, this could be a very good strat, and this is what I will be using when I deposit here in a week or so…

Great profits to all,

13

Hay Money - great chatting last night , or early this morning in Aus. Thanks for posting this and the run thru on the chat
Cheers Ray

14

LOL! All that inventing, and it winds up looking like Daryl Guppy’s MA rainbows.

Lovely thing this trading game… Nothing really new under the sun, now is there?

15

No Problem Ray,

Master, never heard of it, it works pretty well if used properly…

Running EA right now i made, just simple backtest, 4H, and its doing prety well also… Almost done,

16

Ok I skipped most of this thread so no comment I say is directed to any poster. I will say one thing price action dont mean crap. Indicators mean even less. The key is how you use the cards you hold. I can only speak for florida in the USA but I will say any man that has seen the inside of a florida jail can tell you. You will learn to play the game spades (jail house style) now you can win with the crapiest hand and loose with the best hand. Its how you use what you got. I dont mean to compair this to gambling (do I dare say that word on here). An indicator is only as good as the operator. Price action is only as good as the person reading it. You can combine the 2 but if you suck at using both you doubled you chances to lose. If you know one but not other and you combine the 2 You cut your profits in half. If you know one but not the other good for you make your money. If you can decide what tool to use to get the job done. Now you are talking.

I am a strong believer in price action. I will also use indicators now but I dont use them as most teachings will teach you (not going into that way to much to explain) I use them for what I see in them. Some work well for me some not so good. Its all up to how you play the hand you got. Different markets require different tools. I dont care what others say if they got the one fits all strat good I am happy for you. Me I am in the real world and understand different things work for different situations. THats as far as I am going right now. I have been drinking markets are closed and my drumset is calling me. We are going to make some noise and piss off my neighbors. You all have a good night. Read what I said I might of had alot to drink but there is more I forgot than I remember here and if you listen to it and do your homework (your homework not someone elses that already done) you will be amazed. Grab ideas from people and use them for you and only you. Dont worry whats on babypips and what they are doing or forex factory its about you and your account thats it. Get ideas and take them for that. Dont discredit even the newest newb. They have the biggest ideas. If you listen you might know how to tweak that to something great. If not then it didnt hurt you anyway. I wont sit here and tell you what works and what dont or I would have a thread on that. Instead I will say read them all learn them all. Use what works for you and remember the ones that dont. Others use that so it may come in handy.

17

Great Post Bob. Your absolutely correct.

My EA finished backtest, for the strat above, 4H, 996 trades, $10,000 start, $2,300,000 in profit, Gross profit was almost $8 Mill, 65 loses.

I know it means really nothing tho, quality is crapp… Strike rate was 96%, thats what Im after.

Hey, its a learning thing, I learned something about my Strat…

Its all fun… Getting ready to roll Live here in 9 days or so… And, I have a couple folks with me, so its going to be a great adventure watching us get wealthy.

In the end, I Like this strat, it works very well. To be able to get 70-100 pips daily, and be confident to reach the goals, is a breath of freshair… Its like searching for the X on the map, I have the map, now, its just all digging from here…

Everyone, have a great Wekend, and find 1 thing before Sunday open to study, and learn something you might be weak at up to this point.

BET

18

Im going to look into this. Should I, or shouldnt I? What I have works, and quite frankly, works very good.

So, if you say its like Mr. Guppy’s, Whom I have never heard of, Is he successfull? Should I maybe look at his Strat to see If Im missing something?

Im curious, kinda… Im sure my strat is nothing new, is it fair to asume that I might have made a strat, that I spent time puting together, watching these MA’s thru highspeed strat tester, FOR HOURS, and making tiny adjustments, ) hundreds) of them, on my very own?

I do, give myself a pat on the back, for finally coming to the conclusion, of what works, and what dont, just thru personal treasure hunts for information, and testing them myself, and making personal conclusions to my findings.

I have to admit tho, for the first weekend in a longgggggggggggggggg time, I can relax. Leg 1 is done, now its time to Think Like a Millionaire, and switch gears in my personal life, to set the tone for the years to come.

BUT, keep in mind, its not waistful time to learn the indicators, because they do mean things, just not interpeted as they should be by most traders.

As a newbie, you just focus on the movement, like judgin a book by its cover, when if you dig deep into it, the keys to the standards pop out at you. Then its putting 2 and 2 together, and building the strat…

Remember, Indicators are a story, not the ink its printed with. ( Or pixels ) lol

OK, well, sorry for the rant, Im in a great mood today… That dont happen Much…

BET

19

ok Tang, so I decided to look into this Guppy guy…

And you my friend, have helped me become wealthy. This is exactly what I was aiming for. Everything I concluded in my brain, is just as Im hearing it right now… Its a tad differant, I dont use 2 sets, but i was using the 5m, but Im likeing this method, with my added twist to it, For entry, Like Mr. Guppy said, Find YOUR own way to enter. This might be a great link in the chain…

Like I said, my method is great, I hit 30% real account today, using just mine, but this added benifit even shows me more of a Investor/Trader stand point, which is important, seeing, investors mainly drive the market in cruise control.

Man o man, this is brilliant… I have butterflies, might be able to pull that 25% daily now, Forget the 5% crap, LOL,

Ok, Im off to test and watch,

Tang, I owe ya one Bud,

20

How do you know that automated indicator systems don’t just seem profitable due to survivorship bias?

EG, if a million people day trade, you’d expect a few thousand to be consistently profitable just out of pure chance. You’d expect some number of these to continue to be profitable by chance and a lot of them to crash and burn as time goes on.

There would be a few traders making millions on millions… just on chance. 99% would lose.

The only way to separate that number from pure chance would be to measure statistical significance. And don’t most academic studies on technical indicators prove that no known technical indicators can cause statistically significant performance?