Chart Indicators unreliable ???

One of the common approach to condemning indicator tools is UNRELIABLE and NOT accurate. This sort of attacks come from people who are using charts and non chart users namely the quantitative financial groups.

We are dealing with a market that is NON-MONOTONOUS and it is dynamically alive moving at different ferocity. At time it is lethargic and other times it can be ferocious. My guess is that when we people do not take into aaccount of this and insist of using one approach for all different market conditions, it is highly probably one will end up with a yo-yo performance.

One should take time to understand the behavioral patterns of the indicators under different market velocity and strength. When one start to decipher the behavioral details, than one will appreciate the indicators better.

I am a avid user of Macd and MacdH despite my early unsuccessful attempts. After a hiatus and appreciating market trend better, I revisit Macd and MacdH thus began to appreciate the tools better. The developers of both MacdH and  Macd did not go into details how the indicators are related to trend except more as trading signals. However I went abit more to explore to understand how both Macd and MacdH are related to trend in action.

Similarly the usage of time frame(s) is also hotly debated. My conclusion is one need to look at an ANCHOR time frame with the option of one higher time frame above and one lower time frame below. Again no one seems to suggest how do we use them and when do we use which time frame beside the ANCHOR!!!!

Remember that all indicators available on the public domain are products of PRICE function formulated. They do not use TIME or incorporate TIME into the calculations.

We will encounter 3 situations when we use indicators to determine turning point.

1. Trend turn on time in synch with indicator.

2. Trend change before indicator change.

3.Trend change after indicator change.

Understanding the 3 above, one will appreciate how use the indicators in a more appreciative manner. Not many will accept and understand the 3 situations above and be prepared at all.

Like I said, they way we are wired mentally form our views how market SHOULD and MUST behave. One of this is about why this is the next course of action if these are the symptoms or signals. Well, the turth is there are only 3 possibilities with ONE of the 3 that will happen.

As I use to say and joke .....

IN THEORY ......YES  ... IN REALITY .... MEBE YES .... MEBE NO.

We are not dealing with linear mathematics and sciences. We are dealing non-linear paradigm. The outcome can be different than the theory.