Technical Indicators Do they Assist ?

Cyclical & Volatility Should Be Used To Advantage, Not To Combat.....It Is We As Traders, Who Should Be Lightning Quick To Detect & Adapt...Accordingly.....

Somebody Said, "It Is Not What You Trade, But How You Trade."

SavantGarde

SavantGarde,
Rightly pointed out ,to be used for advantage not combat.
Ajax,
Your analogy as price derivative is Lagging ,hence better to use price,personally slightly differ on this ,infact there are few indicators which are Leading & few methods ,derived from past price to Project in Future.
Whether that is useful is the bone of contention of this thread.
Asish

Hi asish,
Here is my collection of one such knowledge from the net. Written by Ryan Jones.

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Over the last few years, my trading friends have seen very little
information from me along the lines of various technical indicators and
oscillators. No doubt, there is more than enough commentary on the
subject. However, there is good reason why I do not spend a great deal of
time focusing on them.

I'll never forget reading a pretty basic book on technical analysis
written by a fairly well known author. The purpose of the book was to
simply introduce a number of popular technical indicators and the author's
favorite use of them. It was pretty boring stuff for the most part and
stopped reading through it after the first chapter. However, I did
skim a few chapters and began to notice a very odd pattern within the
book.

There was a chapter dedicated to the use of stochastics and then
another chapter dedicated to the use of another similar indicator. The main
difference was that the stochastics were based on looking at 14 bars
while the other indicator was based on looking at 7 bars. Outside of
that one factor, the two indicators are almost exactly the same thing.

Now, before I get to the really odd part about this, I want to point
out that most technical indicators are virtually the same thing. For the
most part, technical indicators are, in some way shape form or fashion,
showing you where prices are compared to where they have been. I'll
get to this in a second.

Nonetheless, despite the extreme similarity in the two indicators being
discussed in the book, the author provides his favorite use of
stochastics. Then, in the second indicator, he provided his favorite use of
that as well... except it was almost exactly the opposite of how he used
stochastics!

It seems to me, had this author known how similar the two indicators
were, he would not have stated that his favorite use of them was exactly
the opposite. But that drives home a problem that I have seen with
many traders. There is a misunderstanding of exactly what technical
indicators are doing. One of the best ways to explain this is to explain
what technical indicators are NOT doing.

95% (or more, there are exceptions, such as volume) of all technical
indicators are NOT giving you any information that is not already
available from the chart action itself. In other words, technical indicators
are NOT giving you any new information whatsoever. Technical
indicators are simply focusing on one aspect of chart information that is
already their. They simply make it easier to see a certain characteristic of
market action that may not otherwise be quite as obvious. That is it.

And, a majority of the time, the focus, or the aspect that is being
made more obvious is where the current price is compared to where it has
been in the past.

For example, in a nutshell, stochastics are simply showing where the
current price is compared to the 14 day range on a percentage basis. If
the range is 100 and the price is in the upper 10% of that range, the
stochastics are going to show a percentage of 90% or more. There are
various things that are added to this, such as taking a 3-day range of
this level instead of the raw and exact number itself, but you get the
idea of what it is focusing on.

Now, is this information anything that is not seen from the chart
itself? Of course not. It is simply not as obvious to the eye, and that is
the benefit of the indictor.

One thing is for sure though, technical indicators tell what is and
what has been, but not what is to come. There is nothing magical about
them, there is nothing new that is provided through them. So be very
careful in how much emphasis you put on them in your trading.

And that is the Truth About Trading.

Sincerely,
Ryan Jones
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Regards
R. S. Iyer

Nice one,so you like Azax say that technical indicators have less or no role to play in Future price projection.Let us see what others have to contribute.

hi ashish
Do you remember my advise to Satya Pinku in another old thread? Do you remember reaction of Saint to it and your reply to both of us?
Regards
R. S. Iyer

Here is some wisdom from Pradeep

Trading successfully and researching something are completely two different things. Transitioning from one role to another successfully is the key. Many times there is temptation to get too involved in research. Easy availability of software and tools also make this task easy. So temptation is to spend more time on research or keep tinkering. If you get caught in that role, your trading suffers. So I have clearly compartmentalized those two roles.

Many people have problem in role transition. I am in touch with some traders who are still fine tuning some of the ideas discussed here or researching other ideas. Many of them have the role transition problem. They are very successful in researching and developing and back testing ideas, but find it difficult to transition to trading the ideas successfully.

In organizational settings also you will find same things. Many people aspire for a role, but when they get it, they fail to perform in that role. Role transition is critical skill required if you want to go higher in hierarchy in organization. Same way role transition is the key in trading. Unless one is conscious of it, one can spend lot of time in roles not useful for trading.

Niranjanam,
You are very right until translated in money nothing is usefull.The original dialectical contradiction is whether TA helps to earn money ? there your ; 'role transition problem' & 'Compartmentalization' depicts a 'Search',a quest,so can we safely conclude like Ajaz that TA's role in money earning is limited,is your view.Thks for expressing that.
Asish

http://www.traderji.com/96667-post87.html

How do we react to this one the code of Ajay & Kalyan's addition.

No Asishda, i don't think this proves anything as to the usefulness of indicators in trading. We are simply seeking a filter that is smooth, non-lagging and (preferrably) non-linear and adaptive. Even if we succeed in arriving at such a filter, it's usefulness in trading will still need to be proved in the form of one more concrete system/s.

I think the best case we have as of now is the indicators posted by CV.

Regards,
Kalyan.

This kind of debate can go on and on without throwing up anything conclusive.

The bottomline is - if you find them useful then use them, if you don't find them useful don't use them.

Simple as that

Regards,
Kalyan.