We can compare indicators with price action and say indicators react to the price action, and therefore are secondary because they are followers of price. But wait and listen to this argument. The price moves up or down or stays flat (in a range). The indicators reflect the movement of price as the price bar is completed or as the price bar is being completed.One price bar can go up and next one go down, indicator reflects it in the manner it is designed for to show the movement of price.So if we conclude that indicators do reflect in some manner the movement of price, what you see in an indicator is interpretation of the price movement. Indicator is a help to read price movement without having a real good knowledge of price action.The question is which indicators take into account the prior price movement to reflect the probabilities of future movement more than others.The leading indicators show past supply and demand patterns to predict future price movement in similar manner as price bars do.No difference. Leading indicators in my opinion are as follows: 1: indicators that are built around volume show importance of supply and demand.
2:CCI reflecting future movement based on previous price action.
3:MACD showing past and future trends.
4:Indicators built around ADX and DM.
5:Moving Averages to determine trends (It is a lagging indicator but helps to be on the right side of the market) Thanks
Masood
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We can compare indicators with price action and say indicators react to the price action, and therefore are secondary because they are followers of price. But wait and listen to this argument. The price moves up or down or stays flat (in a range). The indicators reflect the movement of price as the price bar is completed or as the price bar is being completed.One price bar can go up and next one go down, indicator reflects it in the manner it is designed for to show the movement of price.So if we conclude that indicators do reflect in some manner the movement of price, what you see in an indicator is interpretation of the price movement. Indicator is a help to read price movement without having a real good knowledge of price action.The question is which indicators take into account the prior price movement to reflect the probabilities of future movement more than others.The leading indicators show past supply and demand patterns to predict future price movement in similar manner as price bars do.No difference. Leading indicators in my opinion are as follows: 1: indicators that are built around volume show importance of supply and demand.
2:CCI reflecting future movement based on previous price action.
3:MACD showing past and future trends.
4:Indicators built around ADX and DM.
5:Moving Averages to determine trends (It is a lagging indicator but helps to be on the right side of the market) Thanks
Masood
It's not a question of which indicators "lead" or "predict." Different traders respond to different indicators in different manners. For example you clearly respond well to CCI, MACD, ADX and Moving Averages. It has nothing to do with those indicators be "better" but rather you are better at interpreting those indicators as opposed to others. Many traders have found an ability to interpret RSI, Stochastics or one of the many other indicators out there.
I think you are making a great point Masood but I think you're presentation of the idea is confusing predictive qualities with predicitive interpretation.
Blz
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RSI like MA also helps to see general mood of the market, choose 5 or 6 period and watch whether it below or above its 50 % line.
But, as it was discussed, many times before when one working with indicators should be extremely careful in order "not get "fooled" by indicators"
ADX is nice indi, but many, for example, think that as higher it is as stronger trend is, correct but with remark, that when ADX "reaches" some "high" levels it tells not about market continuing strength, but about possible trend reversal.
If anybody will remind me I will trying to find great article I've read about it wrote, seems, by one friend of Richie brothers.
If you're smart then all indicators are leading, if you're not so smart all indicators are lagging.
In other words if you look in back testing to what happened to the price after some measure of the indicator then its leading. If you look at the indicator just to see what the price is doing (if it goes up or down) so maybe you are candle blind.
Baruch
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