Knowing the values of an indicator in advance

Trading Discussion
1

Hi guys,

I just want to throw a question out there: what kind of system would you use if you’d know the value of an indicator in advance for a few bars, for example RSI, MACD etc.? Could such knowledge be used? How about if you didn’t know the exact future values, but only if the values go up or down?

2

What you’re question basically boils down to is how you would trade if you knew what price was going to do over the next few bars, since all indicators we use in forex are on some level or another derived from price.

3

well it’s not exactly that simple… if you know the RSI values for the next 3 bars, is it possible to find out what the price will be?

4

In my continuing struggle to be profitable, I really don’t see any value in indicators whatsoever. When I tried them, they didn’t make me any richer. I honestly don’t believe indicators offer any edge whatsoever. Consider this:

  1. Indicators are derived from price.
  2. Indicators lag.
  3. Price pretty much makes obvious what indicators are telling you, to a certain extend I think they often serve as psychological placebos.
  4. On different timeframes, indicators are telling you different things.

I have yet to see someone conduct a test where they compare trading with indicators and trading without indicators, and show that trading with indicators has given them a greater hit ratio.

Again, everyone has their way of playing the game, but I’ve seen enough successful consistently profitable traders who don’t use anything outside of a moving average (even if that) to trade with. Only the quant crowd, in my view, needs indicators because they have to use algorithmic decision making and programming is limited to what you can describe in math.

5

If you know how to calcualate RSI you can have a very good idea of where price will go - not precisely, but definitely direction.

8

So here’s the deal: I managed to write an indicator which can predict the MACD fairly accurately through some algorithms (90-92% for the signal line, and 68-75% for the histogram), but for now I seem to be incapable of writing an EA which makes profit based on it, despite the fact that I have some success when I trade manually.

That’s why I was asking on what kind of strategies I could use: I’m having trouble on finding a good stopping criteria (for both cases where the indicator is correct or wrong). If anyone trades based on the MACD only (even the present MACD), I think it’s almost impossible to find a good stopping criteria. You can see these problems even if you don’t know the values in advance…