Why relying on indicators is the worst way to trade

FX:USDCHF   U.S. Dollar / Swiss Franc
443 0 4
It is simple. The longer the periods are which you set in your indicator, the longer it takes until the old data shows up again.

Here is a ridiculous example. On January 15 the USDCHF             price fell dramatically. Using the MACD default periods of 12,26 it takes 12 bars until this price change shows up on the MACD histogram and then after 26 bars the old data is finally entirely processed. I have set the smoothing of the MACD (the signal) to period 2 and used SMA not EMA , to make this effect visible, but is happens anyway.

Having this knowledge I can place this old data from the January price fall anywhere on the chart. I can make March 20 start to look like an uptrend by changing the MACD fast period to 46 (this is then day 46 since January 15) . Or I can do the same and make April 15 look like as if the price will go up there, although it is the old data from January....

Conclusion: Don't use high periods on indicators, especially on oscillators like the MACD . Even the default MACD periods are way too slow and show up 12 bars later, which means 12 days later on a daily chart and then it takes until bar 26 (26 days later) until the old data is removed.

P.S. Here is another example. I can make the MACD glitch as long or short as I like:

and I can move it anywhere I like

EN English
EN English (UK)
EN English (IN)
DE Deutsch
FR Français
ES Español
IT Italiano
PL Polski
TR Türkçe
RU Русский
PT Português
ID Bahasa Indonesia
MS Bahasa Melayu
TH ภาษาไทย
VI Tiếng Việt
JA 日本語
KO 한국어
ZH 简体中文
ZH 繁體中文
AR العربية
Home Stock Screener Forex Signal Finder Cryptocurrency Signal Finder Economic Calendar How It Works Chart Features House Rules Moderators Website & Broker Solutions Widgets Stock Charting Library Feature Request Blog & News FAQ Help & Wiki Twitter
Profile Profile Settings Account and Billing My Support Tickets Contact Support Ideas Published Followers Following Private Messages Chat Sign Out