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At 12:49 PM 3/24/98 -0000, Bill Eykyn wrote:
>What-O Chaps and Chappeses
>
>This is just to provoke thought, in case the market starts off slowly, with
>no reports - following a Larry Williams Oops Day, yesterday!
>
>Question: "Except for price action, don't all indicators lag?" How ever
>many cross-overs of how ever many moving averages, or how ever many
>oscilators cut the overbought/oversold lines, the fact remains that they all
>lag!
>
>At the right hand leading edge, the indicator may look as if it is about to
>give you a signal of a trend change, but by the next bar, it may have
>changed its mind. It will certainly be right when you look back on it. But
>at the precise moment when you need it most - just as you are wanting to put
>your money on it! - it is not quite telling you what you really want to
>know. Infuriating!
>
>I am a day-trader, so I am, of course, talking about very short time frames.
>Perhaps with much longer time frames, like days and weeks, these things
>work - at least sufficiently to give you an edge, hopefully! But on a 5
>minute chart, a one minute chart, a tick chart, the only indicator is price
>action - right in front of your eyes.
>
>This price action works constantly against the support and resistance that
>it meets in the market. That sup/res is based wholly on what has happened
>previously. The only edge you have (or need?) is the price recognition at
>these sup/res levels. After that, it all becomes history...
>
>Now, I have to admit that what I am saying is based only on trading the
>Bonds. Perhaps with other markets all the indicators discussed here are
>relevant and work and earn you money. Well, earn you more money than when
>they cause you to lose money! Or is the truth that they are indicators at
>that moment in time and that that moment in time passes, in that moment in
>time - goodbye!
>
>But sup/res in the market is there and stays there; the only question is:
>will it or won't it hold? The answer comes not from an indicator, but from
>the price action and the volume and noise associated with it. In the end it
>becomes a pattern recognition process. Give me a two-bar reversal or a deep
>down-thrust, etc (and the etc is another story!) against sup/res properly
>and previously identified and that will tell me more than any indicator I
>have come across yet (and 'yet' no doubt is yet another story!)
>
>Okay, guys, do I hear the jungle drums rumbling...
>
>Indicatingly
>
>Bill
>
>
Bill,
As I replied to another trader recently, how can the price all by itself
be the indicator? It has to involve some interpretation.
We need to research what factors do really correlate to the price to a
significant degree. We are talking statistics. Otherwise we are
comparing reading of tea-leaves with patterns in graphs with your gut-
feel as the arbitrator.
Pete
petena9090@xxxxxxxxxxxxxx
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