Trading Indicators Are Useless

[stink]

HI All,

First i would like to say thanks to Soul for starting this thread. I started my trades based on a ridiculous combination of indicators which ended up just confusing me. Thanks to the sound logical advice on this forum i have a very basic system now that i am very happy with.

Although i would argue as others have that indicators are not useless, its just in the way you use them. Which you did say Soultrader. I find that if an indicator is telling me something different i like to go and see if i can find out why.

Anyway thanks again.

Stink

 

[MichaelD]

Understanding how to read the tape has its advantaqes. How onerous it may become is up to the individual trader. Would argue that it doesn't need to be as onerous as it sounds.

As I said, I find it intrinsically interesting watching the tape on occasion, but one thing I decided quite a while ago was that in the long term, I did not want to earn my income from the market this way. Therefore, all my system development and work is geared towards systems which aim to meet this goal and which basically have minimal market contact time.

This is in no way a criticism of anyone who chooses to trade the tape, merely a reflection of my personal goals.

You should find tech/a's thread on Discretionary Trading interesting as it develops, including how he uses the scanning software he has.

Indeed I am, particularly since the setups (and trades) are pretty much identical to what I'm already trading short term, so I'm watching the exit strategy with great interest.

 

[soultrader]

I would like to thank the members of this forum as well too. There are alot of trading related forums out there geared strictly at fooling newbies and taking advertisement money.

I personally found this forum very interesting and its because of the forum participants. Everyone seems to respect one anothers view/opinion and the comments are always interesting. Perhaps its an Aussie thing?

 

[sydneysider]

As a professional futures trader, I have spent my early days of my career making every possible newbie mistake in trading. This involved relying on rookie indicators such as the stochastics and moving average crosses, from relying on candlestick patterns, and newbie chart patterns such as head-n-shoulders and triangles.

As a new trader I lost 2 trading accounts without cleary understanding the pure action of price. The day my trading career turned around was the day I took all my indicators off and relied soley on price action. I then studied market profile to understand price acceptance vs rejection; market balance vs market imbalance.

Now, my core methodology is based on market profile, pivots, and tape reading. Indicators in my opinion are useless. A new trader who relies on indicators will never learn the true art of trading. Market conditions change everyday and indicators and systems must be tweaked constantly. Yet, newbies look for indicators as the holy grail.

Indicators indicate. They are lagging signals. Profitable trading requires understanding market concept and understanding the language of the markets. Every trader must be in sync/zone with the markets. Just listen to it carefully... and you will be able to hear what the markets are telling you.

I always recommend new traders to stare at price and tape until they are able to understand price action. Rely on proven strategies using market internals and support & resistance levels. Tape reading offers a significant edge in short term trading. Combine strategy, knowledge, and money management and you will be light years ahead of other traders.

Good luck

I agree, but I trade from outside of Australia so it is nearly impossible to get an online broker and I am reduced to using delayed data coming from the ASX and not seeing any depth. What/where is the best place for an individual to get a live data feed with market depth and reporting on the heaviest trades in the resources sector. Who sells the software and what does it cost?

 

[soultrader]

I agree, but I trade from outside of Australia so it is nearly impossible to get an online broker and I am reduced to using delayed data coming from the ASX and not seeing any depth. What/where is the best place for an individual to get a live data feed with market depth and reporting on the heaviest trades in the resources sector. Who sells the software and what does it cost?

Not too sure what you mean sydneysider... getting a direct access brokerage account is as easy as getting a Big Mac. Whos your broker now? I use Tradestation for my charting software but clear through a different firm.

As long as you have a decent internet connection you shouldnt have any trouble trading online. Where are you located?

 

[sydneysider]

I use a regular broker and pay full commission. I am based in the U.S. and all of the on-line brokers that I have approached such as Commsec, Etrade etc refuse to open accounts for US residents. That reduces me to pay full brokerage fees on all trades. Do you know of any on-line brokers who accept US residents?

I do an a lot of fundamental research which is extremely time consuming. I am thinking of getting a decent charting platform that can allow me to scan a large number of stocks quickly for various types of activity such as steep jumps in volume. Which software package is reasonably priced and easy to use?

 

[Hopeful]

Most standard indicators are lagging ones. Doesn't anyone use a leading indicator? The lagging ones like MAs and EMAs are pretty useless IMHO. Swing trading with a leading indicator to time your entry and exits works well (on paper). I'm a great paper trader!

Can anyone suggest the best way to learn tape reading? Is it just a matter of watching the mkt depth all day and learning through osmosis that a certain action leads to a certain result? Or is there a better way? Cheers.

 

[wayneL]

Which software package is reasonably priced and easy to use?

Try www.amibroker.com

 

[soultrader]

Most standard indicators are lagging ones. Doesn't anyone use a leading indicator? The lagging ones like MAs and EMAs are pretty useless IMHO. Swing trading with a leading indicator to time your entry and exits works well (on paper). I'm a great paper trader!

Interesting.. I am from Japan also.

Leading indicator? PRICE

 

[Hopeful]

Interesting.. I am from Japan also.

Leading indicator? PRICE

I'm not from Japan, I'm in Japan, BTW.

Thanks for your post, I clicked on your sig and found the book on tape reading!

 

[swingstar]

Try www.amibroker.com

I'm a big fan of AmiBroker. Excellent software, and very responsive and efficient email support.

I use with http://www.premiumdata.net (also recommended by Wayne)

You won't get live data or depth, but that suits me.

 

[Bobby]

Indicators can be used as a confirmation of price. But I would never put indicators before price action. A simple RSI and price divergence is backtested and known to make money. However, most traders do not design any rules for a simple setup. If a trader goes long on a trading signal off a mechanical system, why do they trail a stop? Their exit should be when their mechanical system tells them to exit. I say this because the entry point was not based on price action.


Price is king.

Soultrader ,

Nice to see truth stated so accuratly, with no extra poo-bar crap at all ! .

Bob.

 

[nizar]

I'm a big fan of AmiBroker. Excellent software, and very responsive and efficient email support.

I use with http://www.premiumdata.net (also recommended by Wayne)

You won't get live data or depth, but that suits me.

Does any1 know any cheaper EOD data + historical?
Premiumdata is about $550/year
$35/month EOD and historical 12 years $90 once off

 

[wayneL]

Does any1 know any cheaper EOD data + historical?
Premiumdata is about $550/year
$35/month EOD and historical 12 years $90 once off

You can do yahoo data for free if you have AB. But you'll only get about 10 months of history and it's a bit of donkey work to set it up.

 

[soultrader]

I'm not from Japan, I'm in Japan, BTW.

Thanks for your post, I clicked on your sig and found the book on tape reading!

Study Wyckoff, Humphrey Neill, and Vadym Graifer. Good teachers on tape reading and volume analysis.

 

[sails]

Does any1 know any cheaper EOD data + historical?
Premiumdata is about $550/year
$35/month EOD and historical 12 years $90 once off

Hi Nizar,

I purchased a downloader about three years ago from http://hquotes.com/ which downloads free EOD from Yahoo. They currently have about five years of historical data. I believe they allow a free trial period before registering.

Cheers,
Margaret.

 

[soultrader]

Stick with a solid platform and data. There is no need trying to be cheap on data fees when trading.

Thats something I dont understand... if you are risking a large sum of money in trading, why dont you want the best equipment, connection, and data? You are risking alot of money just to save a few bucks?

 

[lesm]

Does any1 know any cheaper EOD data + historical?
Premiumdata is about $550/year
$35/month EOD and historical 12 years $90 once off

Nizar,

You could always try www.downloadquotes.com, need to register. They have data for a range of markets, including the ASX, and historical data.

Cheers.

 

[Bobby]

Try this for live free quotes, you need to link it to your provider EG: Commsec, Westpac etc.
Google ( Quotetraker ).
Now I don,t use it, so your on your own.

Good Luck
Bob.

 

[nizar]

Stick with a solid platform and data. There is no need trying to be cheap on data fees when trading.

Thats something I dont understand... if you are risking a large sum of money in trading, why dont you want the best equipment, connection, and data? You are risking alot of money just to save a few bucks?

Im talking about data. IMO the bulk of the money spent in trading is for TIME and EDUCATION. Data is data. Speed maybe the only differentiating factor.

Oh thats right the expensive is always the best??
Ok then tell me whats the most expensive equipment for trading?
Maybe what Brian Hunter used? How much does that cost?