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>what am i missing here? is it just a question of semantics and all
>indicators are lagging, or some lag less than others?
ALL INDICATORS LAG
Provided, of course, we are talking about the same thing! An indicator,
sofaras I am concerned, is derived from price (e.g. RSI, Stochastic, MACD,
etc, etc, and I have over 100 of them) and if that is the case they must
lag. On the Holy Grail is in front of price, so all the rest must lag.
Now, price action can, in certain circumstances, give you an INDICATION of
what it is likely to do next. For example, if a market has been steadily
climbing and then puts in a large up-thrust (a bar that opens on the low,
goes miles in the air, but cannot breathe in the rarified atmosphere for
lack of takers and then falls back to close on the low) it is an INDICATION
that the market cannot go further. It therefore will probably reverse. The
pattern is giving you an INDICATION of what is likely to happen next. What
actually happens next will depend on a lot of other factors as well. The
time frame you are in will count for a lot as well. The size of the market
you are in and the way that particular crowd behaves will count for a lot
too.
Take Today, in the T-Bonds (I only trade the T-Bonds, in case you didn't
know!!), after the Report at 7.30, the market made one of the best reversal
patterns going - a J-Hook. Look at it - I'll send you a .gif if you send
me a blank email with the heading "J-Hook" and you can see that that
particular price action occurred right on the Pivot. The strength was such
that it would probably go a reasonable distance, say Yesterday's High - in
this case 15 ticks worth or $500 a contract. If you sat there hoping for
more, you wouldn't have made much, because it made a very nice two-bar
reversal and came down to the Pivot again (tick, tick....)
The market then drifted around. The 9.00 o'clock Report took some stops out
and the it gently rose again to within a tick of Yesterday's High. In other
words it re-tested the High and guess what? You went short and for reasons
best known to other the market went back to the Pivot and with a nice strong
bar went through....
It then, very nearly, did another J-Hook, but certainly a two-bar reversal,
just as the Big Boys had returned to the fray - if you know how the bond pit
works, you will know what I mean. And as I write, it is now forming a
platform from which it may launch forth, or not, as the case may be. But I
will tell you something. It will be the price action which will tell you
in a much more reliable way than any indicator. That has to be a fact,
because the price action has to happen so that the indicator can indicate.
Without the price action you haven't got an indicator - but without an
indicator you still have price action. Which is the one to rely on? Is it
best to rely on indicators or reading the price action? Or, as I prefer to
call it, reading the tape?
No offence meant to anyone using whatever they think is best for them - but
can anyone argue with what I think of as a fact: ALL INDICATORS LAG.
Period.
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