Is it true, you can trade without indicators and candlesticks?

[sopodo]

I been reading posts across the net about how some traders don't use indicators like moving averages as they are lagging indicators. Only taking past actions to predict future price movement. Some traders trade using candle sticks, the tape, pivot points, Fibonacci lines, while others trade doing all the above but no candlesticks. Then there are traders who only trade the tape. Is this all really possible?

I can't find hardly an information on tape reading, where do I start?

They say to trade the market you need to learn price action which is No1 way to predict future price movement and then you can master order flow and finally learn to read the tape to become a hot shot trader that can trade without indicators and choose whether or not to trade with candlesticks. This is all sounds awesome, but is it possible?

 

[DionysusToast]

The truth is that indicators and candlesticks don't work.

You cannot trade with them.

What you say about the tape/order flow is possible but quite difficult. Figuring it out on your own will be hard as there's virtually no information out there on how to do it.

You need to find someone that can do this & is willing to show you IMO.

 

[barjon]

quite good article here http://www.traderslog.com/tape-reading/

 

[DionysusToast]

Interesting article but incorrect.

For example:

If we are watching a high, low, or opening price as a pivot point, we are watching to see whether there is any impulsive price action as the market approaches the point or moves further away from it. What is “impulsive action?” I like to call it a “whoosh.” The market moves rapidly as if just coming to life for the first time. It is usually a series of ticks in one direction without a tick in the opposite direction. The market is tipping its hand. A sequence like this tends to consolidate or pause a bit before being followed by more impulsive action. This is quite easy to see in a market like the S&P’s if you look on a short-term time frame. If we quantify these “whooshes,” which we can do in several ways, we will see that the market tends to have continuation moves at least 2/3′s of the time. Not bad for arriving at a “positive expectation” simply by following price action.

This is in fact, total nonsense.

Let's say you go back to the high of the day. We know that people will have gotten short there & have their stops above this place. When the price is pushed above the high by a tick or three, there will be a "whoosh" or waterfall or a bunch of sudden long trades. This will last a few seconds and is the market buy orders triggered by the stop losses above the high. This has absolutely zero bearing on whether the market will then continue higher or go back down.

It will NOT go up 2/3s of the time. That is nonsense. It is what happens AFTER these stops getting hit that is important, not the hitting of stops itself.

The hitting of stops was a goal. The goal has now been reached. What happens next is a different kettle of fish indeed.

 

[Shakone]

The truth is that indicators and candlesticks don't work.

You cannot trade with them.

What you say about the tape/order flow is possible but quite difficult. Figuring it out on your own will be hard as there's virtually no information out there on how to do it.

You need to find someone that can do this & is willing to show you IMO.

What is it about them that doesn't work? Didn't you use indicators on your own thread? Don't you also have bars or candles on your charts?

The answer to the original poster question, seems to be yes

 

[wallstreetwarrior87]

I been reading posts across the net about how some traders don't use indicators like moving averages as they are lagging indicators. Only taking past actions to predict future price movement. Some traders trade using candle sticks, the tape, pivot points, Fibonacci lines, while others trade doing all the above but no candlesticks. Then there are traders who only trade the tape. Is this all really possible?

I can't find hardly an information on tape reading, where do I start?

They say to trade the market you need to learn price action which is No1 way to predict future price movement and then you can master order flow and finally learn to read the tape to become a hot shot trader that can trade without indicators and choose whether or not to trade with candlesticks. This is all sounds awesome, but is it possible?

When you say "trade using candlesticks" do you mean a la Steve Nison, pin bars, doji etc.

Its very general, and if it is Steve Nison or something along theses lines then im afraid it wont help you master order flow.

 

[Splitlink]

When you say "trade using candlesticks" do you mean a la Steve Nison, pin bars, doji etc.

Its very general, and if it is Steve Nison or something along theses lines then im afraid it wont help you master order flow.

Yes, you can trade without anything you don't like and be successful. I use averages because I like the feeling that I am trading withg the trend. I like the simple, clean look of bars, not candlesticks, although I have a look at candles , now and again, for pinbars, which show up more quickly.

 

[DionysusToast]

What is it about them that doesn't work? Didn't you use indicators on your own thread? Don't you also have bars or candles on your charts?

The answer to the original poster question, seems to be yes

I will certianly use an indicator on a scanner. For instance, if I am looking for something that has sold off, I can scan using any old oscillator and because of the math involved, I know it will show me stocks that have sold off.

This does not mean that an indicator can be used to define an entry. You wouldn't see me using an oscillator to define an overbrought condition and then for me to buy. This would be nonsense.

For candles - again, you can use candle patterns to narrow down what you will look at but this does not give you an entry. So - if I am looking across the universe of stocks for a stock that has sold off and then had a very good day, I will use oscillators and some aspects of candlestick analysis to show me in which stocks this occured.

Can you trade this ? Nope ? Can it help you to look at 20 stocks instead of 8000 ? Yes.

The magic would of course be in what you did next.

 

[Shakone]

For candles - again, you can use candle patterns to narrow down what you will look at but this does not give you an entry. So - if I am looking across the universe of stocks for a stock that has sold off and then had a very good day, I will use oscillators and some aspects of candlestick analysis to show me in which stocks this occured.

Can you trade this ? Nope ? Can it help you to look at 20 stocks instead of 8000 ? Yes.

The magic would of course be in what you did next.

Don't you think this is the same as what bar chart people do? They look at their bar or candle chart, observe 8000 bars, and filter it down using bar patters, or like Split, they filter it down using moving average and a particular bar formuation, into 20 or so out of the 8000 that have good potential? Then they enter based maybe on support or resistance being broken, retraced to, enter around the bar, half way up the bar etc. whatever they think is right.

I dont' see any magic in that, maybe because I don't have the magic

Is there anything that occurs with price, that can't be represented on time bar charts (from seconds to days) or tick bar charts (from 1 tick up). If there isn't anything, that would mean this other 'magic' factor, is just highly skilled interpretation of the bar info (including volume if you wish), rather than anything that can't be obtained from the chart.

Of course there is outside info which has an effect on price, but that too will be visible on a chart at some point.

 

[Prawnsandwich]

Don't you think this is the same as what bar chart people do? They look at their bar or candle chart, observe 8000 bars, and filter it down using bar patters, or like Split, they filter it down using moving average and a particular bar formuation, into 20 or so out of the 8000 that have good potential? Then they enter based maybe on support or resistance being broken, retraced to, enter around the bar, half way up the bar etc. whatever they think is right.

I dont' see any magic in that, maybe because I don't have the magic

Is there anything that occurs with price, that can't be represented on time bar charts (from seconds to days) or tick bar charts (from 1 tick up). If there isn't anything, that would mean this other 'magic' factor, is just highly skilled interpretation of the bar info (including volume if you wish), rather than anything that can't be obtained from the chart

This discussion has been had many many times before......basically DT has confirmed that he does in fact trade using candlesticks and indicators......

 

[DionysusToast]

Don't you think this is the same as what bar chart people do? They look at their bar or candle chart, observe 8000 bars, and filter it down using bar patters, or like Split, they filter it down using moving average and a particular bar formuation, into 20 or so out of the 8000 that have good potential? Then they enter based maybe on support or resistance being broken, retraced to, enter around the bar, half way up the bar etc. whatever they think is right.

I dont' see any magic in that, maybe because I don't have the magic

Is there anything that occurs with price, that can't be represented on time bar charts (from seconds to days) or tick bar charts (from 1 tick up). If there isn't anything, that would mean this other 'magic' factor, is just highly skilled interpretation of the bar info (including volume if you wish), rather than anything that can't be obtained from the chart.

Of course there is outside info which has an effect on price, but that too will be visible on a chart at some point.

There's a subtle difference.

There is a school of people that think particular candlestick patterns are predictive. There is also a school of people that think particular indicators are predictive.

Long term (as this relates to a thread of mine on taking longer term positions in stocks), what is important is the story. Has this stock been beaten down too hard ? Is it a good company ? Are people likely to take an interest now that those who follow TA will think it's bottomed out ? Are there lots of people with short positions who will need to buy if the price rises.

Indicators & looking at the prior days move will lead you to a group of stocks that have been beaten down and are showing their first 'green shoots'. It is purely historical and bears no relationship to what may happen in the future.

Short term - even the above doesn't matter that much. What matters more is the buying/selling pressure and how to read that. This is not possible using indicators and candlesticks.

 

[DionysusToast]

This discussion has been had many many times before......basically DT has confirmed that he does in fact trade using candlesticks and indicators......

I'll make an exception then....

If a bunch of muppets jump on a candle formation and in doing so, trap themselves on the wrong side of a move, I will take a nibble.

So - knowing what the muppets do helps. Mostly they read books by Nison.

Are you a muppet PS ?

 

[barjon]

..............The truth is that indicators and candlesticks don't work.............

.

It's certainly true that nothing "works" in the sense that you can just sit back and watch the money roll in.

It's a bit like a car. That has loads of things that "work" like engine, wheels, accelerator, brakes, speedo, rev counter etc, but it won't get to your destination left to its own devices - it's the driver that does that and the only bit that really "works".

However, our driver is - either consciously or sub-consciously - taking note of those "working" things in the car as he goes along and different drivers place different emphasis on different "working" elements.

Mind you, put a learner driver (novice trader) in an F1 racing car (day trading) and it wouldn't be a surprise if 95% of them didn't finish the race

jon

 

[DionysusToast]

Jon - a car has an engine. If it had 30 bunny rabbits under the hood, it would not function as a car, regardless of the drive.

30 bunny rabbits = indicators & candlesticks

 

[Prawnsandwich]

I'll make an exception then....

If a bunch of muppets jump on a candle formation and in doing so, trap themselves on the wrong side of a move, I will take a nibble.

So - knowing what the muppets do helps. Mostly they read books by Nison.

Are you a muppet PS ?

"Its time to play the music its time to get things right......on the muppet show tonight"......

Definitely getting like the muppet show on this thread,, claiming that you don't use candles / indicators then going on to confirm that you do......claiming that its the long term company picture thats important when your recent posts have been scalping 20-30 cents on day trades....

In your post above you again confirm that you are using a candlestick pattern to trade albeit from the opposite side....but the point is that you are looking at a visual representation of price in the form of a chart / candles / bars

The main point of the OPs original query is whether you can trade without any bars / candles ie just tape read, rather than whether trading on the basis of complicated / inpractical candle patterns is effective which is the query you responded to (and seems to be the theme to your life)

.....and of course there are pure tape readers out there who dont look at charts, but most effective traders would use candles / bars / charts, and mostly in a fairly basic effective methodology as noted by Shakeone......

 

[arabianights]

candlesticks and indicator are 99% voodoo... do you think george soros sold the pound short because he'd seen a head and sholders pattern... of course not...

 

[Shakone]

True, but don't you think when he did sell short, that created something in the charts, and others jumped on for a profitable ride?

That aside, it was druckenmiller's idea to short the pound, and Druckenmiller uses charts/technical analysis among other things.

 

[Splitlink]

Don't you think this is the same as what bar chart people do? They look at their bar or candle chart, observe 8000 bars, and filter it down using bar patters, or like Split, they filter it down using moving average and a particular bar formuation, into 20 or so out of the 8000 that have good potential? Then they enter based maybe on support or resistance being broken, retraced to, enter around the bar, half way up the bar etc. whatever they think is right.

I dont' see any magic in that, maybe because I don't have the magic

Is there anything that occurs with price, that can't be represented on time bar charts (from seconds to days) or tick bar charts (from 1 tick up). If there isn't anything, that would mean this other 'magic' factor, is just highly skilled interpretation of the bar info (including volume if you wish), rather than anything that can't be obtained from the chart.

Of course there is outside info which has an effect on price, but that too will be visible on a chart at some point.

Is that what I do? I've often wondered what the hell I'm doing. You make it sound as if I'm halfway there!

Split

 

[arabianights]

True, but don't you think when he did sell short, that created something in the charts, and others jumped on for a profitable ride?

That aside, it was druckenmiller's idea to short the pound, and Druckenmiller uses charts/technical analysis among other things.

Druckenmiller has given up

 

[Shakone]

Only this year wasn't it? After very impressive returns for decades