Price action and indicators

"The markets behave much like an opponent who is trying to teach you to trade poorly"

Eckhardt

The price bar is an indicator, it is wrong to separate the price bars from the indicators.

A price bar is sampling the market action in a time period and is indicating:Open,High,Low,Close.

This is an indicator per se. The Japanese candle sticks offer particularly good representations,on the other hand they are wider taking more place than the bar charts.

As Protagoras says "man is the measure of all things". And from human perspective it is important when using discretionary analysis to use the same settings, only in that way you can train your mind with the market patterns.

Price bars are robust because they do not allow you to change their settings inside your time horizon, and in that respect they allow human traders to train them-self to recognize patterns (according to their logical  price action strategy).

Most newcomers when they use technical indicators they try to manually and randomly fine tune them on past market history and by doing this they do curve fitting and by this they do not train their mind to recognize patterns as they change the inputs all the time.

(System traders they also do back-testing but machine back testing is precise and they do precise walk forward optimizations trying to avoid data mining bias as much as they can, they use many other validating techniques to challenge their system).

On the other side it is a massive disease to see on public forums screens full of indicators, which settings are changing all the time.

And of course, the best technical analysis authors when they use indicators they do not change their settings. They use the same settings for years. For example the alligator of Bill Williams or the indicators of Dinapoli indicators set, or Elder, there are much examples. What they search for robust indicators which do not produce tremendously different results by small changes in their parameters.

The core idea is to train the mind the relationship between the market and the indicator values on the most deep unconscious level by following some basic framework rules. It is the mind that does the job (transforming the indicator input into actionable trading signals) not the indicators.

In fact this works like training a neural network and this takes a lot of time. It is difficult because humans have many psychological limitations. That is why the education is not only intellectual but also on the emotional level the so called emotional intelligence.

And that can be achieved by human by looking at the same indicators again and again. It is advisable not to have much more than 3 indicators at all.