Only indicators?

[Gangman_style]

Hello, Im trading on demo from 1 week, but Im trading only with indicators- MA (simply 20,50), MACD, Momentum and sometimes I on the Bollinger bands. What you think for this combination of indicators, and for them settings? I use them on daily, hour and M5 graphic but the result aren`t very good… What is wrong? I use the rules of crossing lines, but its not working… I realy want to learn trading
I forgot to say that for now I trading only on EUR/USD and GBP/USD, and leverige- 1:100 with 200$.

[Bijoymj]

Try to minimize usage of indicators. It is always lagging. Search in forums and get in touch with action of price at support and resistance levels. Get in touch with the price behavior at channel extremes and on trend lines.Also try to use time frames above 1 hour and avoid lower time frames. 1 week demo trading is nothing in this ocean. Practice more and more. Search on baby pips forums. Here everything is available.
and

[fxsrikanth]

hi friend…welcome…as bijoymj said 1 weed demoing is equal to nothing…but dont worry…k?

my advice is…as bijoymj said…concentrate on trend lines, resistance and support levels, candle patterns, divergence ,

chart patterns, channels, etc…these r the most easy and important basics…in forex trading.

and one more thing is…we also use indicators…but not to trade…only for confluence…

never depend on any indicator… all are lagging…but use them to reference…all the best.

[Gangman_style]

Ok now I show you one pic and will ask you to comment of my research as new in this job.

The trend line is on down direction, the 20 MA cross from up to down 50 MA, the MACD histrogram show down direction also and simply MACD and Momentum… so the conclusion and the logic is that the price will fall? Is it correct my conclusion

Sorry for the small pic, but the rules of the forum are that.

And yes, I trying to find chart patterns but its hard for the moment, that becouse I tryin first to learn how to use correct the indicators and then will steer of chart patterns

[JohnLeonard]

Hello, Im trading on demo from 1 week, but Im trading only with indicators- MA (simply 20,50), MACD, Momentum and sometimes I on the Bollinger bands. What you think for this combination of indicators, and for them settings? I use them on daily, hour and M5 graphic but the result aren`t very good… What is wrong? I use the rules of crossing lines, but its not working… I realy want to learn trading
I forgot to say that for now I trading only on EUR/USD and GBP/USD, and leverige- 1:100 with 200$.

Relying on indicators as you have described is like driving at a high speed down the highway while only looking in your review mirror. It’s great if you want to see where you were but doesn’t help a great deal to see where you are going which means, eventually, you will crash, just like your results.

Let’s take moving averages for example. What are they? An average of past prices. Nothing more, nothing less. You will find systems that use the 200, 75, 50 12, 36, 3, 49 or any other period (sma, ema or any other kind) and the inventor of the system will say, “See, price repeatedly bounces of the 32 ema!!! THIS is best indicator to use!!!”

I hate to break it to these folks but price is simply regressing to the mean. Apply ANY moving average and price will do the same thing on all of them, just at different points. It simply doesn’t matter what moving average you use or what kind. The regression to shorter mva’s will occur more frequently than on longer mva’s. The so-called “bounces” from longer mva’s will generally be larger than those found on shorter mva’s. Why? They are simply averaging past price data. It is the rear view mirror on your car.

It is not to say that mva’s have no value, they can certainly tell you where you are in relation to the overall market, serving as a compass, if you will, and can be used effectively in various trading methodologies but there is no magic to them or when price returns to them.

Moving average crosses act the same way. They always cross AFTER price has moved in a new direction. Again, a rear view mirror. That is why trading moving average crosses will obliterate any account in a ranging market. By the time the cross occurs and you jump in it is too late. You are trading PAST price action, looking in your rear view mirror, and there are dangerous curves on the road ahead.

Now, think about MACD. What is it? [B]Moving Average [/B]Convergence Divergence. It is also based on past price action. Now you are going down the highway looking in a side view mirror. MACD is one of the best indicators out there to tell you what the market has already done. Again, like moving averages, MACD can be used effectively in trading (such as pointing out divergences) but even then it should serve as nothing more than a heads up of what MIGHT happen if price action acts a certain way or if you are approaching a suspected support or resistance level, not what will happen. It has no real predictive power because it is based on PAST price data.

Bollingers tell you when price has moved a certain number of standard deviations from the mean – in other words, when price has moved a certain distance from PAST price data. Again, it has a place for some profitable traders but they realize it is only showing them where they currently are in relation to the past, not where the market is heading.

The settings used on any indicator are basically irrelevant. The shorter the settings the shorter the lookback period, so the more “signals.”. The longer the setting the longer the lookback period so the fewer the “signals” but the larger the movement (time period) you are interested in.

Nothing wrong with using indicators. Just remember to use them as a compass to tell you where you are, not where you are going. Unless you like to drive at 70mph down the highway while looking backwards. You have already seen the end results of doing that.

Best of luck!

[Gangman_style]

Relying on indicators as you have described is like driving at a high speed down the highway while only looking in your review mirror. It’s great if you want to see where you were but doesn’t help a great deal to see where you are going which means, eventually, you will crash, just like your results.

Let’s take moving averages for example. What are they? An average of past prices. Nothing more, nothing less. You will find systems that use the 200, 75, 50 12, 36, 3, 49 or any other period (sma, ema or any other kind) and the inventor of the system will say, “See, price repeatedly bounces of the 32 ema!!! THIS is best indicator to use!!!”

I hate to break it to these folks but price is simply regressing to the mean. Apply ANY moving average and price will do the same thing on all of them, just at different points. It simply doesn’t matter what moving average you use or what kind. The regression to shorter mva’s will occur more frequently than on longer mva’s. The so-called “bounces” from longer mva’s will generally be larger than those found on shorter mva’s. Why? They are simply averaging past price data. It is the rear view mirror on your car.

It is not to say that mva’s have no value, they can certainly tell you where you are in relation to the overall market, serving as a compass, if you will, and can be used effectively in various trading methodologies but there is no magic to them or when price returns to them.

Moving average crosses act the same way. They always cross AFTER price has moved in a new direction. Again, a rear view mirror. That is why trading moving average crosses will obliterate any account in a ranging market. By the time the cross occurs and you jump in it is too late. You are trading PAST price action, looking in your rear view mirror, and there are dangerous curves on the road ahead.

Now, think about MACD. What is it? [B]Moving Average [/B]Convergence Divergence. It is also based on past price action. Now you are going down the highway looking in a side view mirror. MACD is one of the best indicators out there to tell you what the market has already done. Again, like moving averages, MACD can be used effectively in trading (such as pointing out divergences) but even then it should serve as nothing more than a heads up of what MIGHT happen if price action acts a certain way or if you are approaching a suspected support or resistance level, not what will happen. It has no real predictive power because it is based on PAST price data.

Bollingers tell you when price has moved a certain number of standard deviations from the mean – in other words, when price has moved a certain distance from PAST price data. Again, it has a place for some profitable traders but they realize it is only showing them where they currently are in relation to the past, not where the market is heading.

The settings used on any indicator are basically irrelevant. The shorter the settings the shorter the lookback period, so the more “signals.”. The longer the setting the longer the lookback period so the fewer the “signals” but the larger the movement (time period) you are interested in.

Nothing wrong with using indicators. Just remember to use them as a compass to tell you where you are, not where you are going. Unless you like to drive at 70mph down the highway while looking backwards. You have already seen the end results of doing that.

Best of luck!

I read your post very carefully and I saw what you meen, I use system for the past of the price, not for predicting. Ok so, can you tell me what tools I have to use to predict (of course its havn`t nothing sure) the price?

[JohnLeonard]

I read your post very carefully and I saw what you meen, I use system for the past of the price, not for predicting. Ok so, can you tell me what tools I have to use to predict (of course its havn`t nothing sure) the price?

Learn how supply and demand work.

Learn where support and resistance levels are likely to be, not will be mind you, but are likely to be.

Learn some very basic candlestick patterns that show a reaction to these levels and indicate what the supply/demand at those levels most likely are (pin bars, outside bars).

So far, I haven’t mentioned indicators… hmmmmm… I wonder why? You don’t really need them.

If you are new to trading and insist on using indicators, pick one (RSI, CCI, MACD, Stochastics, it doesn’t matter which one) and only one. Then use it to spot divergences. A divergence is when the indicator and price action disagree. One is making higher highs, for example, while the other is making lower highs. If the price is at a support or demand level or the candlestick pattern shows a reaction at the point of divergence, you have a high probablitiy trade.

This is, in my opinion, the easiest way for a new trader to trade profitably using an indicator. Waiting for this line to cross that line and this level to be here while that level is there and this thingamajig is moving that way… it is a recipe for frustration and disaster.

Keep it as simple as possible when using indicators and practice, practice, practice. When you can trade divergences profitably, you can branch out into other areas and methods of trading.

[Gangman_style]

Learn how supply and demand work.

Learn where support and resistance levels are likely to be, not will be mind you, but are likely to be.

Learn some very basic candlestick patterns that show a reaction to these levels and indicate what the supply/demand at those levels most likely are (pin bars, outside bars).

So far, I haven’t mentioned indicators… hmmmmm… I wonder why? You don’t really need them.

If you are new to trading and insist on using indicators, pick one (RSI, CCI, MACD, Stochastics, it doesn’t matter which one) and only one. Then use it to spot divergences. A divergence is when the indicator and price action disagree. One is making higher highs, for example, while the other is making lower highs. If the price is at a support or demand level or the candlestick pattern shows a reaction at the point of divergence, you have a high probablitiy trade.

This is, in my opinion, the easiest way for a new trader to trade profitably using an indicator. Waiting for this line to cross that line and this level to be here while that level is there and this thingamajig is moving that way… it is a recipe for frustration and disaster.

Keep it as simple as possible when using indicators and practice, practice, practice. When you can trade divergences profitably, you can branch out into other areas and methods of trading.

Thanks a lot I will listen you from now I will leave the indicators, and will pay attention of patterns I know that they are very important, in begining I tried to find them on the graphic but was hard, that becouse i try with indicators, but… this way dont work.