INDICATORS v PRICES

[rollingstone]

Some traders swear by using price action only with no indicators like tim_nn, very valid and profitable if you like that style.

Other trades (probably the majority) use the chart combined with various flavours of indicators, again valid and if you like this style can be profitable if you have a good enough system and follow the rules.

I fit in to the second catagory, I cannot function without indicators, problem I have is even when my system gives a good set-up I am sometimes swayed by watching the price action and this stops me entering a valid trade.

I have found that the best way to use a indicator based system is to watch the indicators without a price chart and only check price when your set-up is in place and you are ready to click the buy/sell button.

Today for instance, I missed a valid system entry because I was watching the candles even though my indicators were showing an obvious buy trade, I then entered a sell trade on a candle pattern that stopped out even though my indicators were not at the time showing a valid sell signal, and never showed one.

Once a valid trade is open I revert back to watching price and exit strategies, but while waiting for a trade I find price to be a distraction.

Obviously you have to know the ins and outs of the indicators you use and trust what they are telling you.

I find it very annoying when I have a valid buy signal for instance, but the next 5 minute candle is down, so i don't take the trade, then I end up missing the entry and not knowing whether to jump on board late or just resign myself to a missed trade and wait for the next one.

9 times out of 10 if I didn't have the candles showing I would enter without hesitation.

Does this sound like anyone elses trading experience ?

[socrates]

I know exactly how you feel, for that has happened to me often enough, being fooled by a down candle when a signal is showing long, and visa versa, and then missing the trade.

What I find helps is to pretend that I have a boss, and I have to show him all my trades at the end of the month, together with the charts for the month.
If there was a signal and no trade taken, then I better have a good reason, and if there was a trade taken and no signal apparent, then there had better be a damn good reason too.

I would say that if I did that more than once, I would risk being fired. My job is to take every valid signal I can, and nothing else.
This helps me anyway.

[rollingstone]

Good idea Socrates, If he was anything like my last boss I would never ever miss a valid trade again !

[rollingstone]

The other main thing I tend to do when I am watching prices as well as indicators is see the price start to fall while the indicators are not quite there, then jump in so as not to "miss" any more pips, only to see the market turn and the indicators not give a signal after all.

It's very hard when you think a sell trade is setting up and the market is tumbling not to jump in too early - The biggest lesson I have learnt in my trading is the discipline to wait for the set-up regardless of what price is doing, so this is another reason I prefer only looking at price AFTER the indicators have given a valid set-up.

[CrazyTrader]

This is where I recommend taking the trade on a higher high or lower low -in case the price is really turning against you. But I'm no expert.

[ddtrade]

Originally Posted by rollingstone

The other main thing I tend to do when I am watching prices as well as indicators is see the price start to fall while the indicators are not quite there, then jump in so as not to "miss" any more pips, only to see the market turn and the indicators not give a signal after all.

It's very hard when you think a sell trade is setting up and the market is tumbling not to jump in too early - The biggest lesson I have learnt in my trading is the discipline to wait for the set-up regardless of what price is doing, so this is another reason I prefer only looking at price AFTER the indicators have given a valid set-up.

May be you think that your system is not profitable enough. you shoul digest and know what good trades your system missed. and when sometimes price moves fairly with no signals.. than look at the screen and say hu hu hu thats another one missing smile and drink a glass of water. If you are still unhappy then improve your system.