Indicators are overhyped... The truth about them...

[TraderABC]

Originally Posted by MickMason

Lots of statements, but not all fact.

How would something like Fibonacci fit into your 'all indicators are garbage' theory? It's been around quite a while, is public knowledge, still 'works', and I guess could be classed as a technical indicator?


Mick

Please forgive me for not being clearer. I did not say that they are all garbage, many decades ago they may have worked well before there became overused through better calculators and computers. Fibonacci is not as clear cut as many pure technical indicators and as such not all of its variations have been worked out and like elliot wave it still has potential subjective elements within it that have not been fully exploited yet.

[TraderABC]

Originally Posted by taotra

Markets may act irrational, but indicators work just as well. The reason oscillators, on daily charts, failed is because the euro was in a trend from 1.23 to 1.34. Any MA would have caught that and ridden it all the way to the top.

If markets are irrational then rational indicators (or whatever) would not work well. Of course oscillator fail when the market is trending, the question is when does the market start and end to trend? By the time you find out, you may be too late to take significant profits.

[TraderABC]

Originally Posted by taotra

Most indicators were never designed to predict.

Unfortunately many people do. And I probably believed in the indicators before I tested the gospel.

Even if they were, development would be based on statistical probability. And as we all know, probability is not certainty.

Talking about statistics, I've ran that. No or very slim statistical correlation between some indicators, with spread the probability is often against you.

That's just plain false. Some people always try to argue that things change in trading. What has worked in the past, doesn't seem to work anymore, etc.

Have you seen currency charts ~30 years ago? You see a huge difference. See the attached pic below.

The fact is, nothing changes in trading and it doesn't matter which market it is. There are only 3 directions: up, down, sideways (technically there are only 2 because if you go down to the tick level there is practically always an up or down, but that's splitting hairs), and 2 levels of volatility: high and low.

I politely disagree. First of all price goes in 2 direction (sideways is against you due to spread especially on non-volitile and expensive cross pairs).

2nd Volatility (and price behaviour) changes and that DOES change a lot.
For example I used to have an excellent strategy with reverse stops that totally rocked. Very quickly afterwards the market changed and the strategy
bombed.... If market does not change than many strategies will work equally well, empericly I've found that not to be the case. Setting a small risk to reward ratio can be good in a non-volitile market, but in more volatile markets the whipsaws would saw you to death....

[TraderABC]

Here is a pic showing some oscillators side by side. Notice how similiar they are to each other. They are almost identical even if taken using different parameters... Some are smoother some are more edgy, some show more detail, some less, but its all one ***.

[MickMason]

Originally Posted by TraderABC

Please forgive me for not being clearer. I did not say that they are all garbage, many decades ago they may have worked well before there became overused through better calculators and computers. Fibonacci is not as clear cut as many pure technical indicators and as such not all of its variations have been worked out and like elliot wave it still has potential subjective elements within it that have not been fully exploited yet.

To a trader any indicator which doesn't indicate with some degree of accuracy can only be classified as garbage. Ok, that aside, looking at Fibonacci levels in various time frames shows beyond any doubt that even in their simplest form they still have a high degree of accuracy. Their use is widespread among technicians and traders, it's no secret, yet still they maintain that high degree of accuracy after all these years. If time erodes the efficiency of an indicator, as you suggest, why should Fibonacci be any different?

Mick

[mvitachi]

IMHO "Techinical indicators" are indicators that guesses which way the price may move like a weatherman predicting weather for the next day to someone flipping a coin.

[graemenash]

Some lovely signals given by the oscillators in that chart posted above, if you know where to look...

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[MickMason]

Originally Posted by TraderABC

Here is a pic showing some oscillators side by side. Notice how similiar they are to each other. They are almost identical even if taken using different parameters... Some are smoother some are more edgy, some show more detail, some less, but its all one ***.

I think that's a gross misrepresentation of indicators and their potential. The signal, for want of a better word, is in the detail. Take individual bars on a bar chart or candles on a candlestick chart, to the naked untrained eye they all look alike, but in the detail lies a hidden 'message'!

I'm not trying to be argumentative here by the way, I just don't agree with what you're stating is fact.


Mick