This thread was discussed at
http://www.thespeculatingmaverick.com. I found it relevant so I decided to post it here.
My post:
"Ever since the outbreak of electronic trading, technical indicators such as stochastics, RSI, MACD, ADX, etc... have gained popularity among the trading public. There is obviously good money selling indicators and mechanical trading systems and the so called "hype" will never disappear. Books will continue to write about magical indicators and promoters wil continue to sell new indicators.
However, relying on indicators is the worst way to trade. As the name states, indicators indicate. In my opinion they are completely useless. Many successful traders do not rely on indicators. Floor traders do not rely on indicators. They do not have the luxury to sit in front of a monitor and base their decision because the RSI has crossed above 20. They rely on order flow.
Amatuers love indicators and they will continue to find new indicators that can show them the holy grail in trading. Unfortunately, this is all hype. The
number one indicator is
PRICE. Price is king. The day I took all my indicators off my charts and traded on price alone was the day I transformed into a profitable trader.
Understanding price behavior takes time and work. But the numerous amount of hours trying to find a reliable indicator and tweaking it is equivalent to learning price action. Trading is simple. There is no need to make it more complicated by plotting a hundred indicators on your charts.
Trading Wizard, Linda Bradford Raschke, said it best. “I've known hundreds of professional traders throughout my career. I don't want to disappoint you, but I know of only two who were able to make a steady living for themselves with a mechanical system.â€Â
Learn to trade price. Indicators will lie to you always. Price will never let you down.
Best of trading"