Indicators

[Joe Ross]

The “strength of a trend” should be obvious to anyone who can see a chart. Does an indicator tell you the “strength of a trend?” Just how does it do that, and which indicator will you use to reveal this to you?

Either prices are trending strongly or they are not. I can see that with the naked eye. However, the way I trade, I have never had a need to know the strength of a trend. I just want to know if I’m making money or not. If I am, why do I need to know the “strength of a trend?” In fact, I am wondering why anyone would need that kind of information.

[darmasdt]

Originally posted by Joe Ross
However, the way I trade, I have never had a need to know the strength of a trend. I just want to know if I’m making money or not. If I am, why do I need to know the “strength of a trend?” In fact, I am wondering why anyone would need that kind of information.

Yes, (perhaps) especially when you trade counter trend, buying support, selling resistence ??
Please elaborate, Thank you

[eternalfuture]

Joe Ross,

Obviously some people just need to know the strength a trend has. I, for example, must know if a trend still has strength to continue if I want to follow it. Following a weakened trend is somewhat illogical to me.

4X4X,

There's life without oscillators and other kind of indicators. You can use for example (just like TheSundanceKid wrote) trendlines, pattern recognition, candlestick patterns, and even calculating retracements and projections based on Fibonacci ratios.

Indeed, indicators like RSI and moving averages, DMI, Stochastics, etc etc, are lagging indicators. That means you will have to wait until the current bar closes before you get its real/final value of stochastics, MAs, RSI, etc etc.

Even trendlines could be lagging, because it would be better to consider a closing price above/below the trendlines to anticipate spikes.

But then again, those were just my thoughts.

Cheers!

[dekorai]

A Google search led me to the different chapters of Joe Ross' manual at http://www.nqoos.com/joe_ross_.htm

[davidwt]

Looks like I need to do some studying. Thank you Joe Ross. I have some observations about bar charts that may show my ignorance. First, I need to understand exactly what is meant by Price Action. The reason I am confused is that bar charts are not the actual raw data of price, but a summary by time frames. Being a summary, it does qualify as an indicator, since its a computationally derived set of values. At this point, I would say that a tick chart (that includes both bid/ask prices) is the only true non-indicator. Am I way-off base? Does it even matter?

[Joe Ross]

Hi davidwt,

Price Action is the movement of prices as you see it on a bar chart, regardless of time frame.

You are correct as to what a price bar is, in essence it is an indicator, but that doesn't matter. You still are relegated to trading what you see. Since all other indicators are base on those price bars, they are all secondary to the price action you see via the bar chart.

Let me give you an example of why it doesn't matter. When I was daytrading the full S&P 500 contract, before they cut it in half, the data I saw on my screen was at least 17 seconds old. I was using the fastest data feed available to me and the most cutting-edge computer I could find in order to cut the time down to 17 seconds.

From the time I saw the prices (17 seconds old) until I could hit my phone dialer, reach my private broker directly on the trading floor and receive a fill it was at very best 45 seconds. Yet I had to trade what I saw, and I still came out ahead every year that I traded the full S&P 500. The reality is that prices were constantly ticking up and down. I usually was filled at my price, which is all that mattered to me.

I hope that answers your question. You have to trade what you see regardless of time frame. That's all you have to go on.

Best,

JR