The concept of an ideal indicator - page 3
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
When discussing indicators, it is precisely when discussing indicators that you have to move away from the specifics, i.e. ask yourself what the "ideal indicator" is,
or you could put the question like this: "What do I need to not be afraid of the market".
!!! Do not be afraid of the market!!!
Agree to "not be afraid of the market" - predicting the future is not the main quality!
The TS should "predict" the future. Indicator does not predict. An indicator shows.
(A car does not predict the situation on the road, but has gauges. There is no "crossroads indicator", no "left turn indicator", no "traffic rules observance indicator" in a car)
so: what should a perfect indicator show?)
When thinking about indicators, it is necessary to abstract away from the specifics, i.e. to define an "ideal indicator",
or you could put the question like this: "What do I need to not be afraid of the market".
!!! Do not be afraid of the market!!!
Agree to "not be afraid of the market" - predicting the future is not the main quality!
The TS should "predict" the future. Indicator does not predict. An indicator shows.
(A car does not predict the situation on the road, but has gauges. A car has no "crossroads indicator", no "left turn indicator", no "traffic rule observance indicator")
So: What would a perfect indicator show?)
You know, like arrows - up - down, buy - sell. In principle, some sophisticated neural network (like Vettag) could do something close to it on a limited time horizon. The market changes, but it remains as efficient as possible. The indicator should change accordingly.
What should the indicator show?
What is the purpose of the indicator?
The arrows are the result of processing the indicator's readings, it is a filter for the indicator, it is a discrete scale, it is a piece of TS, i.e. the arrows are not the indicator itself but its mechanical product.
What should the indicator show?
What is the purpose of the indicator?
Obviously, the ideal indicator must show the true market condition at the moment, after which a certain change of condition should occur or there shouldn't be any significant change of market condition in the nearest future with the certain scale.
Obviously, the ideal indicator should show the true state of the market at the moment,
after which there should be a known change of condition or no significant change of market condition in the near future of a certain scale.
I agree with the first part - an ideal indicator must show the "true" state of the market. But the second part is an intricacy that can kill a good idea.
2. The trend indicator would be good, and it would give a confidence probability of continuation, and set the walls, + inner period, + strong levels showed, + the current volatility compared....
But if we look at what we have - none of the known indicators is designed for such a range of services.
I agree with the first part - an ideal indicator should show the 'true' state of the market. But the second part is the quirks that can kill a good idea.
The second part is a logical consequence of the first, provided that the indicator readings are interpreted unambiguously.
The second part is a logical consequence of the first, provided the indicator readings are interpreted unambiguously.
Example of indicator rejected due to failure to predict the future =ZigZag, as well as many other methods with an edge effect.
The mental attitude "looking for predictions", which was formed during the first steps of the acquaintance with the market, - prevents the use of the whole arsenal of TA.