I've been reading a lot of posts on FF by traders who regard the use of technical indicators as flawed or fallacious, the "cause" of their losing trades and possibly large sums of money, even their entire accounts. Some posts have been rather elegantly composed, their authors expressing quite clearly their disgust, distrust, and even despair when it comes to the use (or more precisely, misuse) of technical indicators in their trading logic (or more precisely, illogic). Moreover, some of these traders, having tossed technical indicators away as a reliable means of price prediction, become evangelists for something they call "price action," part of their convictions based on the notion that technical indicators somehow fail because they are "lagging," while the so-called price-action is up-to-the-moment and an infinitely better barometer of market sentiment.
However, the real reason why they love price-action is because by embracing it (and trading completely "naked," religiously keeping their charts free of any technical indicators), they have managed to transform themselves into consistently profitable traders, almost overnight. Thus reborn, they become fervent missionaries who spread the gospel of price-action with evangelistic zeal, seeking to convert the masses who are lost and losing, who are still under the blinding spell of "worthless" technical indicators.
Every trader has his own unique persepctive of the market and how best to profit from it. (As someone famously said, "The market is all perception.") But when I see someone trying to use a hammer on a screw, or a screwdriver on a nail, I cannot help but at least attempt to offer a few suggestions based on what I know about hammers and screwdrivers. Thus, the purpose of this thread is to explain how technical indicators can be useful (and even invaluable) tools in making good trading decisions. In the coming posts, I will try to explain how I use technical indicators in my trading, and to demonstrate how they can be instrumental to consistently profitable trading. Personally, I have no shortage of consistently profitable methods which are based entirely on the usage of traditional technical indicators, so I can vouch for their efficacy from an experiential (and not just theoretical) perspective.
However, the real reason why they love price-action is because by embracing it (and trading completely "naked," religiously keeping their charts free of any technical indicators), they have managed to transform themselves into consistently profitable traders, almost overnight. Thus reborn, they become fervent missionaries who spread the gospel of price-action with evangelistic zeal, seeking to convert the masses who are lost and losing, who are still under the blinding spell of "worthless" technical indicators.
Every trader has his own unique persepctive of the market and how best to profit from it. (As someone famously said, "The market is all perception.") But when I see someone trying to use a hammer on a screw, or a screwdriver on a nail, I cannot help but at least attempt to offer a few suggestions based on what I know about hammers and screwdrivers. Thus, the purpose of this thread is to explain how technical indicators can be useful (and even invaluable) tools in making good trading decisions. In the coming posts, I will try to explain how I use technical indicators in my trading, and to demonstrate how they can be instrumental to consistently profitable trading. Personally, I have no shortage of consistently profitable methods which are based entirely on the usage of traditional technical indicators, so I can vouch for their efficacy from an experiential (and not just theoretical) perspective.